‘I only see the potential for massive financial loss’: Former Spectrum CFO doubts value of Beaumont merger

Posted on by • Posted in Board, Divestitures, Health System, Hospital, Hospital Industry, Margin Improvement, Market Consolidation, Market Power, Mergers & Acquisitions, Strategic Alignment, Strategy • Leave a comment
https://www.beckershospitalreview.com/finance/i-only-see-the-potential-for-massive-financial-loss-former-spectrum-cfo-doubts-value-of-beaumont-merger.html?origin=CFOE&utm_source=CFOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G
I only see the potential for massive financial loss': Former Spectrum CFO doubts value of Beaumont merger

Michael Freed, the former CFO of Spectrum Health, said he was “stunned” when he heard that the Grand Rapids, Mich.-based system plans to pursue a merger with Southfield, Mich.-based Beaumont Health, for myriad reasons. 

In a June 24 open letter to Spectrum’s board of directors, Mr. Freed said during his tenure they discussed possible mergers routinely and that a Spectrum-Beaumont combination “brought nothing new with it” and wouldn’t enhance value. 

“The markets didn’t overlap, so there were no significant administrative savings opportunities. The ability of each hospital to grow wasn’t enhanced by adding the other to the ‘system,'” Mr. Freed wrote. “In short, I never saw how such a merger could improve health, enhance value or make care more affordable. I still don’t.”

Mr. Freed was Spectrum’s CFO from May 1995 to December 2013. During his tenure, he helped oversee the formation of Spectrum and a substantive period of growth for the Michigan system. Mr. Freed also served as CEO of Spectrum’s health plan, Priority Health, from May 2012 until he retired in January 2016.

In his letter, Mr. Freed outlined several reasons he was “stunned” by the pursuit of the merger that would create a health system with 22 hospitals, 305 outpatient centers and about $13 billion in operating revenue.

Mr. Freed wrote that the merger with Beaumont, which is based in Southfield, Mich., may not be in the best interest of West Michigan. He said the combination of the two systems raises questions about whether governance truly will remain in the region and with Spectrum, if financial transparency will continue and if Spectrum will continue to honor the consent decree it signed in 1997 establishing a set of operational guidelines. 

If the merger moves forward, “debt can be placed on the books of West Michigan while investments EARNED IN West Michigan could be spent in SE Michigan … and vice versa,” Mr. Freed wrote. “If this entity should someday merge with other out-of-state entities, West Michigan could find itself investing in healthcare in other states as well, rather than in its own health.”

Mr. Freed raised concerns over the agreement between Spectrum and Beaumont to create a 16-person board of directors, seven of whom would come from Spectrum and seven from Beaumont. The CEO would come from Spectrum, and one new board member will be appointed. 

“While this structure looks to favor Spectrum Health initially, it would only take the hiring of a board member more favorable to Beaumont Health and the replacement of the CEO (in favor of Beaumont Health) for Spectrum Health to find itself outvoted 9 to 7 on key issues,” Mr. Freed said.

Additionally, Mr. Freed noted that the merger has the potential for massive financial losses to West Michigan. In particular, Mr. Freed said losses would stem from the financial assets of Spectrum and Priority Health no longer residing in West Michigan. 

“I’ll admit, I don’t see any value in this merger,” Mr. Freed wrote. “I only see the potential for massive financial loss, both historically and an undetermined amount going forward, to the region that produced all of Spectrum Health.” 

Mr. Freed urged the Spectrum board to take a few steps before moving forward with the merger, including selling or divesting Priority Health. 

“When you sign the documents that will permanently change this region, your signature will forever hold you accountable for the repercussions,” Mr. Freed wrote. “Please sign carefully.” 

Spectrum Health told MiBiz it remains committed to the commitments in the 1997 consent agreement and that it “remains enthusiastic” about the merger.

“Spectrum Health is fully committed to fulfilling its consent decree obligations and will continue to uphold its tenets,” the health system said. “We remain confident that creating a new system not only meets our current obligations to our local communities but will also improve the health of individuals in West Michigan and throughout the state.”

Access the full letter here. 

Reducing Administrative Costs in US Health Care: Assessing Single Payer and Its Alternatives

Posted on by • Posted in Administrative Costs, Health Policy, Medicare for All, Payer Contracting, Single Payer Health System, Single Payer Healthcare System • Leave a comment
Reducing Administrative Costs in US Health Care: Assessing Single Payer and Its Alternatives

Administrative costs in the US healthcare system are known to be higher than those in any other country, even than other countries with private health insurance systems. There also is widespread agreement the excessive US costs generate little, if any, value, and that they impose a tremendous burden on physicians. With administrative costs even for primary care services approaching $100,000 per year per physician, there is a growing recognition that reducing healthcare-related administrative costs is a policy priority.

Despite the longstanding concerns about these escalating costs, there is little understanding of what generates them and how we can reduce them. To the degree there has been any academic inquiry into administrative costs imposed on US providers, it has compared them to the much lower costs in other countries with nationalized systems. These comparisons are unflattering to the US system and are designed to encourage wholesale healthcare reform.

Our paper published in Health Services Research begins at the retail level, focusing on the specific administrative costs inflicted by our payment system on providers. We examine the complex contractual arrangements between insurers and physicians and measure the efforts that physicians must endure to get paid.  It then offers a simulation model to estimate how certain policy reforms would result in nationwide administrative savings.

Currently, each health plan and each physician or physician group (and each hospital) negotiates over a contract for services on a periodic basis. Our analysis examines three separate costs that result from this type of market structure: architectural costs (the enormous number of contracts that are generated annually to provide services to patients), contractual complexity (the difficulty of following all of the requirements of each agreement to receive payment), and compliance costs (the costs of not following the rules in submitting a bill).

Based on this framework, we ask two questions: First, what if physicians entered into simpler contracts with insurers? And second, what if physicians (who accept patients with many kinds of insurance) agreed to a single boilerplate contract with all insurers rather than individualized contracts with each insurer? Put more simply, what if contracts were simpler and standardized?

Our simulation predicts that simplifying contracts would reduce billing costs by nearly 50%, standardizing contracts would reduce those costs by about 30%, and both simplifying and standardizing contracts would reduce those costs by over 60% percent.

We then used the model to estimate administrative cost savings from a single payer “Medicare-for-All” model. Consistent with claims made by advocates for nationalized health insurance, we estimate that a Medicare-for-All plan would reduce administrative costs between 33-53%, largely by standardizing contracts. But these cost savings are less than those generated from standardizing and simplifying contracts within our current system of private health insurance because we modeled that a Medicare-For-All plan would retain Medicare’s complex payment models and have increased compliance costs compared to private payers.

We think this is good news. Though we find that a single-payer system will reduce certain administrative costs, we also find that reforms to our current multi-payer system could generate at least as great a reduction.

There might be benefits to pursuing national health reform, but we can reduce burdensome administrative costs through much simple and less disruptive paths.  The even better news from this study is that we can now have a more precise understanding of where administrative costs arise in our health system, and we have the means to evaluate the effects of other kinds of reforms. Understanding is the prerequisite to reforming.

Medicare spending on advertised drugs

Posted on by • Posted in Advertising, Direct to Consumer Advertising, General Accounting Office (GAO), Health Policy, High Deductible Health Plans, Marketing, Medicare, Medicare Part D, Pharmaceutical Industry, Prescription Drugs • Leave a comment
https://www.axios.com/newsletters/axios-vitals-1cb248e0-f589-463d-97c7-8453c9144002.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top
Medicare beneficiaries spent more on advertised drugs, study finds - Axios

Prescription drugs with some of the highest Medicare spending also had the highest level of direct-to-consumer advertising, a recently-released GAO report found.

By the numbers: The GAO found the Medicare program and its beneficiaries spent nearly $324 billion on prescription drugs advertised to beneficiaries and other consumers between 2016 and 2018.

This amount is more than half (58%) of total Medicare Parts B and D spending on drugs during that time, the most recent data available.

  • Seven of the top 25 drugs in Part D and two of the top 25 drugs in Part B with the highest spending were also among the top 25 drugs with the highest consumer advertising spending that year.
  • For example, Trulicity, as well as Lyrica, Eliquis and Humira were among the top 25 drugs in Part D and direct-to-consumer advertising spending.
  • Keytruda and Botox were among the top 24 drugs in Part B and direct-to-consumer advertising spending.

Alzheimer’s drug presents Democrats’ new policy dilemma

Posted on by • Posted in Aduhelm, Alzheimer Drug, Controversy, Health Policy, High Drug Prices, Lobbyist, Medicare, Medicare 340B Drug Discount Program, Medicare Part D, Pharmaceutical Industry, Rationing Care, Value • Leave a comment
https://www.axios.com/newsletters/axios-vitals-1cb248e0-f589-463d-97c7-8453c9144002.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top
New Alzheimer's drug could be 'devastating' for Medicare - POLITICO

With a $56,000-a-year price tag, Biogen’s newly approved Alzheimer’s drug Aduhelm is dovetailing into the debate on Capitol Hill over how to lower prescription drug prices.

Why it matters: Democrats may be positioning themselves to push policy measures that assign value to drugs and then price them accordingly — a huge potential blow to the pharmaceutical industry.

To truly address its launch price, policymakers have to grapple with big questions the U.S. system currently avoids: How should we determine the value of a drug, and who gets to make that decision?

  • President Biden proposed giving an independent review board the power to determine the Medicare rate for new drugs that don’t have any competition.
  • Democrats’ most prominent drug legislation is a House bill that gives Medicare the power to negotiate drug prices.
  • Sen. Ron Wyden, the chairman of the Senate Finance Committee, recently called out Aduhelm by name in a document outlining the principles that will guide the Senate’s drug pricing bill, a hint that the Senate’s legislation will take a different direction than the House’s.

The bottom line: “Any kind of process for valuing new drugs like Aduhelm take you immediately into the controversial quagmire of how to quantify improvements in quality of life for people,” said KFF’s Larry Levitt.

More hospitals poised to require COVID-19 vaccines

Posted on by • Posted in Asymptomatic Transmission, Coronavirus, Coronavirus Delta Variant, Coronavirus Mutation, Do No Harm, Employee Mandate, Ethics, Evidence-Based Care, Health Policy, Health System, Hospital, Hospital Industry, Infection Control, Infection Control Plan, Infectious Virus, Leadership, Leadership Cares, Leadership Culture, Leadership Integrity, Leadership Intent, Leadership Legacy, Leadership Listens, Leadership Plan, Leadership Trust, Leadership Vision, Leadership Will, Medical Ethics, Pandemic, Public Health, Public Opinion, Public Perception, Public Safety, Quality of Care, Social Distancing, Vaccination, Vaccine, Vaccine Hesitancy Rate, Vaccine Mandate, Vaccine Safety, Vaccine Skepticism • Leave a comment
https://www.healthcaredive.com/news/more-hospitals-poised-to-require-covid-19-vaccines/602457/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202021-06-28%20Healthcare%20Dive%20%5Bissue:35120%5D&utm_term=Healthcare%20Dive

It’s “a trickle that will become a torrent,” Ashish Jha, dean at Brown University’s School of Public Health, tweeted.

More hospitals are likely to require employees receive a COVID-19 vaccine, experts said, to further protect the sick and vulnerable patients who rely on them for care.

A Houston-area hospital captured headlines after taking a firm stance on requiring vaccines that prevent severe illness of the coronavirus, which has killed more than 600,000 in the U.S. and ravaged the economy.

Houston Methodist employees who refused the vaccine were either terminated or resigned. A judge earlier this month sided with the hospital and tossed out an employee lawsuit that was seeking to block the mandated inoculation. The ruling may give other hospitals the green light to require the jab, and as more facilities put a similar policy in place, others are likely to follow, experts said.

It’s “a trickle that will become a torrent,” Ashish Jha, professor and dean at Brown University’s School of Public Health, posted Thursday on Twitter.

3 large health systems in Massachusetts to require all workers to be vaccinated.

Given the critical need to protect vulnerable patients, its critical all hospitals do this.

Leading systems will do it soon.

Laggards will get there eventually.

Joining the growing tide of vaccine mandates are a variety of systems and hospitals, including Mass General Brigham in Boston, BJC Healthcare in St. Louis and Inova Health System in Virginia.

Some of the nation’s largest health systems have yet to mandate the shot, including Kaiser Permanente and CommonSpirit Health.

“Vaccination will only be required for Kaiser Permanente employees if a state or county where we operate mandates the vaccine for health care workers,” the company said in an email.

The American Hospital Association continues to hear that a growing number of its members are requiring the vaccine, with some exemptions. However, many member hospitals are waiting until the FDA grants full approval, a time when more safety and efficacy data will be made available.

“Getting vaccinated is especially critical for health care professionals because they work with patients with underlying health conditions whose immune systems may be compromised,” AHA, which has not taken on stance on the requirement, said in a statement.

The mandates raise ethical questions, some say, pointing to the profession’s promise to “do no harm.”

Arthur Caplan, head of medical ethics at New York University School of Medicine, said the codes of ethics that doctors and nurses says to put patients first, do no harm and protect the vulnerable.

“Of course they should be vaccinated,” he said. “If they don’t want to get vaccinated, I think they’re in the wrong profession.”

The Equal Employment Opportunity Commission said employment law does not prohibit employers from requiring the jab, essentially giving the green light to employers to put incentives and requirements in place for their workers. The EEOC is the federal agency tasked with ensuring that workplaces do not discriminate.

Some states are going against the tide and signing legislation that bars vaccine mandates, including Florida. The city of San Francisco will require hospital employees and workers in high-risk settings to get the vaccine. San Francisco, like other employers and universities, will require all city workers get inoculated.

The differing policy stances across the country creates additional hurdles for corporations with a large footprint.

More than 99% of US Covid-19 deaths are among unvaccinated patients

Posted on by • Posted in Asymptomatic Transmission, Centers for Disease Control & Prevention (CDC), Coronavirus, Coronavirus Delta Variant, Coronavirus Mutation, Food and Drug Administration (FDA), Infection Control, Infection Control Plan, Infectious Virus, Mortality, Pandemic, Public Health, Public Opinion, Public Perception, Public Safety, Social Distancing, Vaccination, Vaccine, Vaccine Distribution, Vaccine Hesitancy Rate, Vaccine Safety, Vaccine Skepticism • Leave a comment
https://www.advisory.com/daily-briefing/2021/06/28/vaccinations?utm_source=public_db&utm_medium=email&utm_campaign=2021jun28&utm_content=public_headline_public_x_x_x_x&elq_cid=4778863&x_id=
Almost All of the Current COVID-19 Deaths Are Among Those Unvaccinated

As the delta variant of the coronavirus spreads, especially among the unvaccinated, the Biden administration is gearing up for a new push to vaccinate the so-called “movable middle”—and some public health experts say FDA could advance that goal by fully approving Covid-19 vaccines.

Analysis reveals toll of US Covid-19 deaths among unvaccinated patients

According to an analysis by the Associated Press, nearly all recent Covid-19 deaths have occurred in unvaccinated individuals.

The AP analysis is based on data from CDC, although CDC has not itself released estimates of the share of Covid-19 deaths among unvaccinated patients.

According to the AP analysis, just 0.8% of Covid-19 deaths in May were among the fully vaccinated. Meanwhile, the share of hospitalized patients who were fully vaccinated was just 0.1% in May, with fewer than 1,200 fully vaccinated people hospitalized out of more than 853,000 hospitalizations.

Meanwhile, according to CDC, 54% of the U.S. population, including 66% of American adults, have received at least one dose of a Covid-19 vaccine, while 46.1% of the total population and 56.8% of American adults have received all required doses.