The Association Between Continuity of Marketplace Coverage During Pregnancy and Receipt of Prenatal Care

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The Association Between Continuity of Marketplace Coverage During Pregnancy and Receipt of Prenatal Care
The Association Between Continuity of Marketplace Coverage During Pregnancy and Receipt of Prenatal Care | The Incidental Economist

Pregnancy is a significant life event, one that typically leads to substantially more interaction with the health care system than average. In the United States (US), pregnant people usually have about one health care visit per month of pregnancy, during which they receive a myriad of services. However, access to high quality prenatal care — and enough of it — is often limited by one’s health insurance coverage.

When the Affordable Care Act was enacted, it established the individual Marketplaces from which those who are ineligible for Medicaid, Medicare, and/or employer-sponsored insurance can purchase coverage. However, pregnancy is not considered a qualifying life event, so an individual cannot just sign up for coverage once they find out they’re pregnant; they must wait until the next open enrollment period or the birth of their child, whichever comes first. Thus, they may be stuck without coverage during pregnancy. This can have a significant impact on access to appropriate prenatal care.

New Research

A recent study in Health Affairs looked at Marketplace enrollment patterns for pregnant people and the impact of Marketplace insurance coverage on their health and care utilization.

The authors are Sarah Gordon and Melissa Garrido from Boston University School of Public Health (BUSPH) Health, Law, Policy, and Management Department (HLPM) and VA Boston Healthcare System; Charlotte Alger from BUSPH HLPM; and Eugene Declercq from BUSPH Community Health Sciences Department.

The authors used data from the Pregnancy Risk Surveillance and Monitoring System (PRAMS) from 2016 to 2018. Developed by the Centers for Disease Control and Prevention, PRAMS is a self-reported survey within 40 states and New York City and is representative of 83 percent of all US births. State health departments pull a representative sample of recent births from birth certificate registries and reach out via mail and telephone to the selected mothers. The survey asks respondents about health status and behaviors, health care use, and insurance coverage.

With these data, they studied two questions. First, they assessed how likely pregnant people were to be enrolled in Marketplace insurance coverage preconception, during pregnancy, and/or postpartum. Sample size for this question was 6491 and the authors used simple descriptive analysis techniques.

Second, they studied how Marketplace enrollment impacted individuals’ receipt of prenatal care, such as the number of prenatal visits, receipt of care within the first trimester, and receipt of specific health care services like flu shots and screenings for intimate partner violence and depression. The sample size for this question was 3443, limited to individuals who reported Marketplace coverage during pregnancy. The authors used logistic regression models and inverse probability of treatment weights to conduct these analyses.

Findings

For enrollment, the authors found that about one third of respondents had continual Marketplace coverage, from preconception to postpartum. Of those who were only enrolled in the Marketplace preconception, over 70 percent reported Medicaid coverage during pregnancy. Of those who were only enrolled in the Marketplace postpartum, almost 50 percent reported Medicaid coverage and one third reported employer-sponsored insurance coverage during pregnancy.

For impact of enrollment during pregnancy, the authors compared those with continuous coverage (preconception to postpartum) to those who only enrolled in the Marketplace during pregnancy. Those with continuous Marketplace coverage were more likely to have “adequate” or “more than adequate” prenatal care use. (The authors defined these classifications using the Adequacy of Prenatal Care Utilization Index which measures timing and quantity of care.) Those with continuous coverage were also more likely to initiate prenatal care in the first trimester, though over 80 percent of respondents in both groups did so. The authors did not find any significant differences in the likelihood of receipt of particular prenatal services, such as flu shots or social/mental health screenings.

Limitations

There were several limitations to this study due to the nature of the PRAMS data set. For example, PRAMS is self-reported, subject to both recall bias and response bias. Plus, the survey is not conducted in all states and, thus, assumptions must be made about generalizability. Lastly, PRAMS simply includes a finite set of questions; this is certainly understandable but does limit researchers’ analyses.

Discussion

With the connection between insurance coverage and access to care clear, several notable policy questions arise from this study. Classifying pregnancy as a qualifying life event is perhaps the most obvious. As mentioned previously, pregnancy is not a qualifying life event, though the birth of a child is. (Only two states have implemented policies to the contrary.) Allowing an individual to sign up for health insurance coverage once pregnant, rather than waiting until birth or the next open enrollment period, could improve access to prenatal care and even improve maternal and child health outcomes.

Another related policy implication is determining what type of insurance is ideal for pregnant individuals. The authors found that individuals without Marketplace coverage often have other types of coverage, at least temporarily. What type of insurance is best or most cost-effective for pregnant people — and the benefits of coverage continuity regardless of type — could be studied further.

The study did not touch on the quality of prenatal care but that is also worth discussion. In the US, pregnant people tend to receive far more prenatal care than other countries but that doesn’t mean the quality is better, nor do maternal health outcomes suggest that’s true. In fact, the US’ maternal health outcomes are some of the worst in the industrial world.

Pregnancy is full of changes, expenses, and challenges. Determining how Marketplace insurance coverage — which has been around for a decade — access to care, and maternal and child health outcomes all interact from preconception to postpartum warrants more study.

Britain authorizes Merck’s molnupiravir, the world’s first approval of oral covid-19 treatment pill

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Regulators in Britain granted approval to the experimental drug molnupiravir from U.S. pharmaceutical giant Merck on Thursday, marking the first authorization from a public health body for an oral antiviral treatment for covid-19 in adults.

Experts have said that if widely authorized, the medicine could have huge potential to help fight the coronavirus pandemic: Pills are easier to take, manufacture and store, making them particularly useful in lower- to middle-income countries with weaker infrastructure and limited vaccine supplies.

“We will continue to move with both rigor and urgency to bring molnupiravir to patients around the world as quickly as possible,”Merck President Robert M. Davis said in a statement.

The company, which added that it would submit applications to other regulatory agencies, has applied to the U.S. Food and Drug Administration for emergency use authorization, while the European Medicines Agency has launched a rolling review of the drug.

“Today is a historic day for our country,” British Health Secretary Sajid Javid said in Thursday’s announcement. “This will be a game changer for the most vulnerable … who will soon be able to receive the ground-breaking treatment.”

In a global clinical trial, the pill reduced hospitalizations and deaths by nearly half among higher-risk adult coronavirus patients diagnosed with mild to moderate illness, according to Merck, which developed the drug with Ridgeback Biotherapeutics after it was discovered at Emory University. The first dose given to a volunteer in the trial was in the United Kingdom.

The U.K. medicines regulator approved the use of the treatment in people who are above 60 years old or have at least one other factor that puts them at risk of covid-19 developing into severe illness, such as obesity and heart disease. The agency found it “safe and effective” at curbing the risk after “a rigorous review.”

Britain became known during the pandemic for its speed in authorizing vaccines. It was the first country in the world to approve a coronavirus vaccine tested in a large clinical trial when it granted emergency-use authorization to the Pfizer-BioNTech shot last December.

The United States has made an advance purchase of 1.7 million courses of molnupiravir at a cost of about $1.2 billion, or roughly $700 per treatment course. Other countries have also reached agreements with Merck to buy the pills, including Australia, Singapore and South Korea.

The U.S. drugmakersaid it expects to produce 10 million courses of the treatment by the end of this year, along with at least 20 million in 2022, and that it plans to adopt a “tiered pricing approach” taking into account each country’s ability to pay.

The firm has also agreed to share its license for the pill with several Indian manufacturers and with a U.N.-backed nonprofit organization to allow production around the world and help boost access to more than 100 low- and middle-income countries.

The move stood out in a pandemic that has seen pharmaceutical companies lobbying to keep rights to vaccines. Some advocacy organizations, however, have criticized Merck for leaving out upper-middle-income countries hit hard by the pandemic.

Suerie Moon, co-director of the Global Health Center in Geneva, described the first approval of molnupiravir as “a big step forward.”

“I would say it’s very significant in terms of giving patients and the public a large confidence that this treatment can be widely used,” she said.

The drug — which received a type of conditional market authorization for products that fulfill an unmet medical need — will go by the name Lagevrio in Britain. It works by introducing errors that garble the genetic code of the virus and prevent it from making copies of itself. The window in which it can be administered and still work may be narrow, though, and the British regulator recommended taking it “as soon as possible” after a positive coronavirus test and within five days of symptoms onset.

The U.K. health secretary, Javid, called it “an excellent addition to our armory,” while urging people to keep getting their covid-19 shots. Doctors maintain the vaccines remain the principal tool against the coronavirus, as they seek to help prevent people from catching it rather than treating the disease after infection.

The pill is notably easy to use compared to monoclonal antibodies, a costly treatment that is infused or injected. Virologists have said they are hopeful that as well as limiting the risk of developing severe illness, the treatment could help reduce transmission of the virus too.

Federal judge rules HHS’ efforts to punish pharma over 340B restrictions ‘arbitrary and capricious’

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https://www.fiercehealthcare.com/hospitals/federal-judge-rules-hhs-efforts-to-punish-pharmas-over-340b-restrictions-arbitrary-and?utm_source=email&utm_medium=email&utm_campaign=HC-NL-FierceHealthFinance&oly_enc_id=8564C4000334E5C

The pharmaceutical industry scored a muted win in its long-running feud with the Department of Health and Human Services (HHS) over 340B program discounts Friday when a federal court judge granted Eli Lilly’s bid to vacate two administrative actions aimed at drugmakers.

U.S. District Court Judge Sarah Evans Barker ruled that a December advisory opinion from HHS’ Office of the General Counsel and a May enforcement letter from the Health Resources and Services Administration (HRSA) were “arbitrary and capricious” and in violation of the Administrative Procedures Act.

But while Barker ordered the two actions to be set aside and vacated, she also specified that HHS did not exceed its statutory authority or act unconstitutionally in regard to the May enforcement letter.

“Lilly is encouraged by Friday’s opinion, which confirms that the government’s enforcement decision against it was improper,” the drugmaker said in an email statement.

Further, the judge determined that Lilly and other drug manufacturers are not permitted under the current 340B statute “to impose unilateral extra-statutory restrictions on its offer to sell 340B drugs to covered entities utilizing multiple contract pharmacy arrangements.”

HHS may have “suddenly” changed its views on whether the agency could enforce penalties against drugmakers restricting sales of the discounted products to contract pharmacies, but the law as written makes it impossible to discern whether Congress intended for drug manufacturers to have “unlimited delivery obligations … untethered to the particular covered entity’s actual distribution needs,” the judge wrote.

As such, Barker underscored the need for lawmakers to settle the ambiguity with new, explicit legislation.

“We have no insight into why there is apparently so much reluctance to promulgate a holistic legislative proposal to bring clarity to the scope of the regulated parties’ obligations and entitlements … rather than engage in piecemeal interpretations and after the fact patchwork characterizing the history of the agency’s attempts to manage this program,” Barker wrote in the Friday order.

“What we have come to see, however, is that the 340B program can no longer be held together and implemented fairly for all concerned with non-binding interpretive guidelines and mixed, sometimes inconsistent messaging by the agency regarding the source and extent of its authority to enforce statutory compliance in the area of contract pharmacies.”

Eli Lilly’s case against HHS is the latest in a lengthy dispute between the agency and a slew of pharmaceutical companies including AstraZeneca, Novartis, Novo Nordisk, Sanofi and United Therapeutics.

The 340B program requires drugmakers to offer discounted products to safety net hospitals, community health centers and other providers as a condition of participation in Medicare and Medicaid.

Beginning in July 2020, however, the drugmakers announced they would no longer provide 340B-discounted products to contract pharmacies or would be limiting sales unless a 340B-covered entity provided claims data ensuring there were no duplicative discounts being applied.

In response, HHS’ Office of the General Counsel issued the December advisory opinion, which stated that the restrictions violated federal law, and later through HRSA delivered enforcement letters threatening penalties to the six companies.

HHS’ pushback has generally taken a beating in the courts. In June, the agency decided to pull the December advisory opinion to “avoid confusion and unnecessary litigation” after courts took the side of AstraZeneca and struck down a motion from HHS to dismiss the case.

The drugmakers have dug in their heels throughout the process, refusing to reverse their policies even as HRSA issued new (now remanded) warnings in late September.

Industry supporters of HHS’ position focused on the silver lining of Friday’s decision.

In a statement, Maureen Testoni, president and CEO of 340B Health, a membership organization of more than 1,400 340B participants, said the group was encouraged by Barker’s position on the “unilateral” restrictions on drug discounts for contract pharmacies.

“We are encouraged that the court upheld HRSA’s view that Lilly is violating the law as one that ‘best aligns with congressional intent’ of the 340B program,” she said in a statement. “We urge the government to continue its work to enforce the law and restore the statutory drug discounts that enable 340B hospitals to care for patients with low incomes and those living in rural parts of the country.”

Lower volumes, higher wages, supply chain disruption all dragged down hospital

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Hospitals’ performances declined “by almost every metric” during September as volumes dropped, average patient stays rose and expenses increased “dramatically” due to labor and supply chain issues, Kaufman Hall wrote in its latest monthly report.

Although revenue increased compared to this time last year, the industry analyst said that these pressures have led median change in hospital operating margin to decline 18.2% from August to September, not including CARES act funding.

These declines were greatest across regions heavily affected by the recent delta surge, with the west part of the country seeing the largest year-over-year drop in its median change in operating EBITDA margin (38%), Kaufman Hall wrote.

Hospital size also played a role in margin performance, they wrote, with hospitals containing more than 500 beds seeing year-over-year declines of 36% while those with 25 or fewer beds actually seeing their margins increase year over year.

Adjusted discharges dropped 5.1% month over month but remained up 11.4% year over year. Patient days similarly dropped 1.4% month over month, “reflecting a decrease in COVID-19-related hospitalizations,” but are still up 11.4% year over year, according to the report. Notably, the average length of stay saw increases across the board—0.7% month over month and 4.8% year over year.

Expenses and revenues continued their hand-in-hand climb during September.

For the former, total expenses grew 2.2% month over month and 11.2% year over year. Labor expenses increased 1.4% month over month at the same time as workers per patient bed declined, the group wrote. Other non-labor expenses, including drugs and medical supplies, also saw a 1.3% month-over-month increase.

“Multiple factors are contributing to alarming and sustained increases in hospital expenses,” Erik Swanson, a senior vice president of data and analytics with Kaufman Hall. “Growth in labor expenses are outpacing increases in hours worked, suggesting hospitals are paying more due to nationwide labor shortages. Rising supply and drug expenses also point to worldwide supply chain issues.”

Hospital revenues saw their seventh consecutive month of year-to-date increases when compared to 2020 and 2019 alike, “due in part to yearly rate changes and the continued rise in higher acuity cases,” Kaufman Hall wrote. Specifically, gross operating revenues minus CARES grew 12.3% year over year from 2020 and 12.3% year over year from 2019, with inpatient revenue rising faster than outpatient revenue.

Month over month was a different story, however, with gross operating revenue without CARES dropping 1.4%. While inpatient revenue was up 1.5% from August, a 3.3% decline in outpatient revenue “suggests that consumer worries about accessing care during the recent delta surge have led to another downswing,” Kaufman Hall wrote.  

Kaufman Hall’s reports incorporate data from more than 900 U.S. hospitals. The September numbers follow early warnings of delta-fueled recovery roadblocks from the group’s preceding monthly reports as well as recent hospital chain earnings calls highlighting high revenues, costs and COVID-19 patient counts.

Democrats Should Talk About Costs, Not Fairness, to Sell Drug Pricing to Voters

Posted on by • Posted in Fairness, Health Insurance Coverage Adequacy, Health Policy, Hidden Fees, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, Leadership Messaging, Medicare Drug Price Negotiation, Messaging, Out of Pocket Expenses, State of the Union • Leave a comment

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Democrats Should Talk About Costs, Not Fairness, to Sell Drug Pricing to Voters | Time

Here in Washington, the conversation about politics is often framed as a spectrum, a straight line with poles at the end that are hard-wired opposites. Team Blue to the left and Team Red to the right. But in reality, the chatter might more accurately be framed as a loop, with the far ends bending back on themselves like a lasso. Eventually, the far-right voices and the far-left voices meet at the weird spot where Rand Paul supporters find common ground with The Squad.

It’s often at the knot between the two ends of that scale that we find some of the loudest voices on any given issue: foreign aid, vaccine mandates, the surveillance state. Right now, as Congress is considering a massive spending package on roads and bridges, pre-K and paid family leave, lawmakers have been debating a point on which political opponents agree: drug prices are too high.

Drug pricing is one of those rare sweet spots where it seems everyone in Washington can agree that consumers are getting a raw deal. The motives behind that sentiment differ, of course: liberals want to make medical care more accessible and to curb the power of big pharma, and conservatives see drug prices divorced from pure capitalism. But everyone can rally around the end goal. No one gets excited to tuck away pennies on the paycheck to control acid reflux or prevent migraines.

The package under consideration tries to fix drug costs by ending the ban on feds negotiating with pharmaceutical companies. In a deal hashed out among Democrats, Medicare would be allowed to negotiate directly with drug companies on the prices of the 10 most expensive drugs by 2025. That number would double to 20 drugs three years later. Only established drugs that have been on the market at least nine years in most cases would be eligible, giving pharmaceutical companies almost a decade of unrestricted profitability. (Start-up biotech companies would be exempted from the process under the guise of giving newcomer innovators a leg-up.)

For individuals on private insurance, their drug costs would be tied to inflation, meaning no spiking costs if a drug becomes popular. Seniors, meanwhile, would have a $2,000 cap on what they’d be responsible for at the pharmacy.

Democrats have been working for years to make drug companies the enemy. In the current environment of woke capitalism, they’re an easy target for lawmakers in Washington to come after. Drugs, after all, aren’t luxury goods. They’re necessary. And for the government to give them a pass in ways few other industries enjoy, that just seems wrong to the far-left wing of the Democratic Party that has flirted with elements of socialism.

It turns out, maybe that messaging isn’t working. New polling, provided exclusively to TIME from centrist think tank Third Way, suggests the way the conversation is framed matters more than you’d think. In a poll of 1,000 likely voters in September, costs were their biggest hangup about the healthcare system, regardless of political identity. Almost 40% of respondents cited healthcare costs as the biggest flaw in the system.

What didn’t seem to bother people much? Fairness. That’s right. The spot where the far-right and the far-left tines of the political fork meet is usually seen as an objection to a system rigged against the consumers. But a meager 18% of respondents to the Third Way poll say profits were what’s wrong with the system. Grievance isn’t the most grievous of problems.

And if you dig a little deeper, you find other reasons Democrats might want to reconsider how they talk about drug prices in the twin infrastructure plans parked in Congress. In fact, there’s a 12-point gap in two competing reasons to address healthcare; lowering costs draws the support of 72% of respondents while making things fair wins backing from 60%.

“This is kitchen table economics and it’s not a morality play,” says Jim Kessler, a co-founder of Third Way and its policy chief who is advising the Hill on messaging on the twin bills. “Those are winning messages, especially on healthcare. You’re going to keep the exact same system, but you’re going to get some help with costs.”

In other words, the chatter in the purple knot might feel most fulsome when talking about justice and weeding out the super-rich exploiters of capitalism. But, really, people just want to hold onto their cash. Protections against healthcare bankruptcy are super popular, suggesting the fear of losing everything to a hospital visit is real. Capitalism may well be exploitative but it’s tough to argue that a few extra bucks in the bank can make falling asleep easier at the end of the day.

So as Congress gets ready to move forward with drug prices in its infrastructure talks, lawmakers can find some comfort that the whole of the political spectrum agrees costs need to come down. And they don’t really care if it’s done in a fair way — as long as their savings doesn’t take a hit every 90 days.

The vaccines have kept older Americans out of the hospital

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https://www.axios.com/medicare-covid-hospitalizations-vaccines-0a43389b-994b-4180-b300-a328ef9da2c8.html

The vaccines have kept older Americans out of the hospital

The number of COVID-19 hospitalizations among older Americans dropped significantly since the vaccine rollout at the start of the year, new federal data show.

Why it matters: The vaccines have worked extremely well for one of the most vulnerable demographics. Roughly 97% of people 65 and older have at least one vaccine dose, and more than 85% of that age group is fully vaccinated, according to the CDC.

Yes, but: Certain portions of the Medicare population continue to be more susceptible to severe COVID-19 and hospitalization than others.

  • People who are covered by both Medicare and Medicaid — the poorest demographic, who often are in nursing homes — are 2.5 times more likely to be hospitalized, according to federal data.
  • Medicare enrollees who have kidney failure and compromised immune systems also are significantly more likely to be hospitalized from COVID-19 than old or disabled Medicare enrollees.

The future of hospitals will be outside of hospitals

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https://www.axios.com/the-future-of-hospitals-will-be-outside-of-hospitals-b3074182-a3cb-466e-89cb-66d2a0a27a72.html

Illustration of a medical red cross with beams of light cast from one side

Hospitals in the future will look far more tech-enabled and consumer-focused — when patients are actually even getting care in a hospital building itself.

Why it matters: Hospitals were already pushing more care outside their four walls before the pandemic. COVID accelerated that shift, forcing hospitals to reimagine what’s possible to deliver in patients’ homes, experts say.

The big picture: One way to picture what hospitals of the future will look like is to look at two brand new hospital buildings opened this fall by competing Pennsylvania health systems.

  • The buildings, by Penn Medicine and Highmark Health both offer hotel-like amenities such as better food, streaming services, and better-positioned outlets for cell phone charging. They’ve also made medical records more accessible to patients, executives say.
  • But they were also designed with the belief that, in the future, only the most complex care might be delivered in them.

State of play: Every medical room in Penn Medicine’s new $1.6 billion health pavilion can be turned into an ICU-capable room when needed.

  • It added 7% in costs to the project, but made sense considering the ICU demands of the pandemic and “not knowing what the future will be,” CEO Kevin Mahoney told Axios.
  • The hospital also offers patients bedside tablets that allow patients to control the light and temperature of the room, and to activate frosted privacy glass on the doors of their rooms.
  • The benefits are two-fold: patients really like it and it can help free up staff to focus on more critical tasks, Mahoney said.

“The pandemic was an amplifier for natural trends that were already starting to develop,” Highmark CEO David Holmberg told Axios. “The complexity of medical procedures [in hospitals] is going to be significantly higher.”

The bottom line: Tech advances will change the entire hospital experience no matter where the care is delivered.

  • Wearables will provide digital biomarkers to allow better patient monitoring from the home. “Smart” infrastructure will help patients find parking and navigate massive hospital campuses when they need to go into the hospital.
  • And 5G will allow doctors to pull up massive amounts of personalized data on a wireless screen in seconds, Hon Pak, chief medical officer at Samsung Electronics told Axios.
  • “The perspective we want to bring to the smart hospital is it’s not just about caring for the condition or the disease, but it’s about caring for the whole,” Pak said.

Deal to Lower Prescription Drug Prices

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Schumer announces deal to lower prescription drug prices

Texas Drug Prices Reduced By New Bill To Lower Prescription Prices

Democratic lawmakers have reached a deal on legislation to lower prescription drug prices to be included in President Biden‘s social spending package, Senate Majority Leader Charles Schumer (D-N.Y.) announced Tuesday.  

The agreement is less far-reaching than earlier Democratic proposals, but still represents progress on an issue the party has campaigned on for years.  

The agreement would allow Medicare to negotiate drug prices in limited instances, prevent drug companies from raising prices faster than inflation and cap out-of-pocket costs for seniors on Medicare at $2,000 per year.

Democrats scaled back their earlier sweeping measure because of concerns from a handful of moderates that it would have harmed innovation from drug companies to develop new treatments. Sen. Kyrsten Sinema (D-Ariz.), as well as Reps. Scott Peters (D-Calif.) and Kurt Schrader (D-Ore.) were among those moderates and helped lead negotiations with leadership over the compromise measure.

“It’s not everything we all wanted, many of us would have wanted to go much further, but it’s a big step in helping the American people deal with the price of drugs,” Schumer told reporters.

Sinema said in a statement that she supported the agreement. “The Senator welcomes a new agreement on a historic, transformative Medicare drug negotiation plan that will reduce out-of-pocket costs for seniors – ensuring drug prices cannot rise faster than inflation – save taxpayer dollars, and protect innovation to ensure Arizonans and Americans continue to have access to life-saving medications, and new cures and therapeutics,” Sinema’s office said.

One of the key compromises leading to a deal was limiting the scope of Medicare’s ability to negotiate lower drug prices, which has long been a signature Democratic proposal. Lawmakers agreed to limit Medicare’s ability to negotiate to older drugs that no longer have “exclusivity,” meaning the period when they are protected from competition. Earlier versions of Democrats’ bills would have allowed negotiation for newer drugs too.

A draft measure that circulated to lobbyists in recent days would allow negotiation for 10 drugs starting in 2025 and 30 drugs starting in 2028. Full details of the final measure have not yet been released.

UPMC CFO Edward Karlovich advises peers to ‘look beyond the challenges of today’

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https://www.beckershospitalreview.com/finance/upmc-cfo-edward-karlovich-advises-peers-to-look-beyond-the-challenges-of-today.html?origin=CFOE&utm_source=CFOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G
David B. Yoffie Quote: “The first rule demands that CEOs and entrepreneurs look beyond the immediate

Edward Karlovich serves as the executive vice president and CFO for UPMC, a $23 billion provider and insurer based in Pittsburgh. 

Since joining UPMC in 1990, Mr. Karlovich has served in several financial leadership roles. Most recently, he was vice president, CFO and chief of staff for UPMC’s Health Services Division. He became CFO of the entire integrated system with 40 hospitals in October 2020, after serving on an interim basis for about a year. 

Here, Mr. Karlovich shares with Becker’s the skills he thinks CFOs need to succeed today, some key capital projects in the works at UPMC and his organization’s top financial priorities. 

Editor’s note: Responses were lightly edited for length and clarity. 

Question: What is the most pressing issue facing hospital CFOs due to COVID-19?

Edward Karlovich: I would say the most pressing issue for me is disruption. COVID-19 has done many things to disrupt the way we think about our organization and business. Some disruptions we faced in the last year include staffing and supply chain challenges. UPMC did a great job weathering through the supply disruptions and labor challenges. We always had adequate personal protective equipment for our folks here. We also really made a conscientious decision last year to keep our workforce intact; we didn’t lay off workers, and we took care of people who needed time off because of COVID-19. We also made sure employees knew they had the support of our executive leadership team. In summary, COVID-19 has created a disruption, and we must think about how things are different now coming out of the disruption. 

Q: What are some things you are doing to work through the change/disruption?

EK: From an organizational perspective, we embarked on what we call the “UPMC experience” a few years ago. We looked at the way we are doing things to understand the experience of our employees and patients. This prepared us to be more creative in our thinking as to how we address challenges and disruption. We also learned through this the importance of interdependencies. Our business, both provider and insurance side, discussed a need to tackle the disruptions in an integrated way and discussed a need to communicate changes effectively. This year, we provided about 40 news conferences to get the standard message out across all of our regions. We also have a 90,000-plus employee organization which allows you to move around resources to deal with some challenges and disruptions. 

Q: What are UPMC’s top financial priorities for 2022?

EK: From a financial perspective, we want to maintain a positive margin to support our capital investments and employees. To do this, we are focused on a few things. First, supporting our operating employees to ensure they can perform to the best of their ability. They are the ones who make the difference each and every day. Second, we want to make sure we, as a finance team, can provide the things that the organization needs to be successful. This includes, but is not limited to, making sure supply chain folks can get all needed supplies and ensuring we have the cash collections needed to fund our organization. Another priority is making sure we provide the advice and guidance needed to invest our dollars effectively so we can prepare for the next challenge.

Q: What are a few key capital projects UPMC has in the works?

EK: UPMC is a premier provider in our community, and we operate a number of specialty hospitals in the area. We are the primary pediatric, psychiatric, women’s health and oncology provider in the region. Over the past couple of years, we’ve embarked on a journey to provide new facilities in western Pennsylvania for these major programs. We are also investing heavily in a vision and rehabilitation institute, which is a $500 million project that will put our clinicians, researchers and other providers together to drive breakthroughs in vision care and rehabilitation.  

We also are going to embark on a new tower for UPMC Presbyterian Oakland Campus [in Pittsburgh]. It is going to be the largest capital project we’ve embarked on since I’ve been here. This project will be more than $1 billion and is so important to the community. 

The third thing we are looking at is enhancing our oncology services and product at UPMC Shadyside [in Pittsburgh]. What we’ve recognized is that we are the provider and insurer of choice in western Pennsylvania, and we have to invest in this community for the next 50 to 100 years. 

Q: What skills are essential for hospital and health system CFOs to thrive in today’s healthcare landscape?

EK: The technical skills are given as CFO. To get in that leadership position, you have to be able to perform the necessary tasks. However, to make your organization better, I could boil it down to four things. First, you have to be a partner to your other senior leaders. Finance doesn’t exist in a vacuum. You have to be in the room with those folks, helping them manage and drive the business. The second thing is flexibility. If you think about what we experienced as an industry over the last two years, if you weren’t flexible, you were going to be seriously challenged.  Flexibility is such an important attribute because the pace of change is going to accelerate in our industry. Third, I’d say talent recognition is a key skill. It is important to be able to find talent as well as mentor and develop them as employees who can provide a great service to the organization. Fourth, you have to embody integrity. There is no doubt in my mind that integrity is a core value that is essential to everything you do as a finance leader. You have to maintain your integrity at all times. Those are essential skills. If you’re going to be a successful CFO now, you have to have those skills outside of the technical.

Q: What is one piece of advice you would offer to another healthcare CFO, and why?

EK: I’d say, look beyond the challenges of today. It’s not just about what you can actually see and envision in front of you. Try to look at the implications that are not necessarily top of mind. What the future holds is uncertain for all of us in healthcare now. You need to be thinking about what things might be coming down the road that will change our business and commitment to our communities dramatically. Try to brainstorm around that. Trying to think forward and speculate about what might happen is very valuable.