Georgia health systems discard merger plans, averting FTC challenge

Posted on by • Posted in Competition, Federal Trade Commission, Federal Trade Commission (FTC), Health System, Hospital, Hospital Industry, Market Consolidation, Market Power, Mergers & Acquisitions, Pricing • Leave a comment
https://www.healthcaredive.com/news/georgia-health-systems-discard-merger-plans-averting-ftc-challenge/596136/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202021-03-04%20Healthcare%20Dive%20%5Bissue:32801%5D&utm_term=Healthcare%20Dive
Federal Trade Commission (FTC) Definition

Dive Brief:

  • The Federal Trade Commission has closed its investigation of the merger between Atrium Health Navicent and Houston Healthcare System following news the two have abandoned their plans for a deal.
  • FTC staff had recommended commissioners challenge the merger on grounds that it would have led to “significant harm” for area residents and businesses in the form of higher healthcare costs, the FTC alleged. 
  • The tie-up between two of the largest systems in central Georgia would also hamper investment in facilities, technologies and expanded access to services, according to a statement released Wednesday.

Dive Insight:

FTC Acting Chairwoman Rebecca Kelly Slaughter said in the statement, “This is great news for patients in central Georgia.”

When the deal was originally announced, Atrium Health Navicent promised to spend $150 million on Houston over a decade, earmarking the money for routine capital expenditures and strategic growth initiatives, according to a previous review of the transaction by the state attorney general’s office.

After engaging with consultants at Kaufman Hall in 2017, leaders at Houston, an independent system, decided they needed to find a strategic partner to weather long-term challenges and ultimately picked Navicent.

Navicent recently merged with North Carolina-based Atrium Health, formerly known as Carolinas HealthCare System. At the time, the deal gave Atrium a foothold in the state of Georgia.

Healthcare consolidation has continued at a steady clip despite the pandemic, and the FTC will be closely investigating any deal involving close competitors. The agency is seeking to expand its arsenal to block future mergers by researching new theories of harm.

The FTC attempted to block a hospital deal in Philadelphia last year but has since abandoned its challenge after a series of setbacks in court. The judge was not swayed that the consolidation of providers would lead to an increase in prices given the plethora of healthcare options in the area.

California investigates Providence after physicians’ complaint of religious limits on care at Hoag

Posted on by • Posted in Abortion, Attorney General, Ethical and Religious Directives, Health System, Investigation, Merger Conditions, State Attorney Generals (AG) • Leave a comment
https://www.beckershospitalreview.com/legal-regulatory-issues/california-investigates-providence-after-physicians-complaint-of-religious-limits-on-care.html?origin=BHRE&utm_source=BHRE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G
Hoag Memorial Hospital Presbyterian | Visit Newport Beach

Renton, Wash.-based Providence is being investigated by California’s attorney general, Xavier Becerra, over allegations that it inappropriately applied religious care restrictions at Hoag Memorial Hospital in Newport Beach, Calif., the Los Angeles Times reported March 3. 

Several women’s health specialists from Hoag submitted a confidential complaint to the attorney general’s office in October, prompting the investigation. The physicians claim Heritage Healthcare, Providence’s physician management division, refused to pay for contraceptive services for HMO patients at Hoag and delayed miscarriage treatment authorizations, among other allegations, according to the complaint referenced by the news outlet. 

The physicians also reported Heritage specifically referenced the Ethical and Religious Directives for Catholic Health Care Services, which are put forth by the United States Conference of Catholic Bishops, in at least one instance when it declined to pay for a patient’s intrauterine device insertion.   

Applying the directives would be in violation of conditions set by now-Vice President Kamala Harris, who approved an affiliation between Hoag and Irvine, Calif.-based St. Joseph Health, a Catholic healthcare system, when she was California’s attorney general in 2014. In 2016, St. Joseph merged with Providence, which required Providence to maintain the pre-merger conditions related to women’s health services at Hoag. The only service for which Hoag was subjected to a ban was “direct abortions,” according to the Los Angeles Times report. 

In a letter sent to the involved institutions March 2, Mr. Becerra requested Providence provide documents related to the issues by March 23. 

“This office is monitoring whether the Catholic Ethical and Religious Directives are or have been applied to any aspect of a service, procedure, or other activity associated with a medical billing code, with the exception of direct abortions, performed by Hoag obstetrician/gynecologists,” the letter reads. 

In an emailed statement to the Los Angeles Times, Providence said it “welcomes the Attorney General’s request for further information, and is confident that the review will demonstrate that Providence has always complied with all requirements under the merger conditions.”

In May, Hoag filed a lawsuit seeking to end its affiliation with Providence. 

To read the full Los Angeles Times report, click here. 

The Pandemic is a long way from over

Posted on by • Posted in Asymptomatic Transmission, Coronavirus, Coronavirus Mutation, Infection Control, Infection Control Plan, Infectious Virus, Mortality, Pandemic, Personal Protective Equipment (PPE), Public Health, Public Opinion, Public Perception, Scientists, Social Distancing, Vaccine, Vaccine Distribution • Leave a comment
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Michigan healthcare CEO gets 15 years in prison for $150M fraud

Posted on by • Posted in Conspiracy, Dept of Justice (DOJ), False Claims Act, Fraud, Fraud and Abuse, Kickbacks, Medicare Fraud, Money Laundering, Prison, Prison Sentence, Restitution, Rev Cycle Management, Revenue Cycle, Unnecessary Care, Wire Fraud • Leave a comment
https://www.beckershospitalreview.com/legal-regulatory-issues/michigan-healthcare-ceo-gets-15-years-in-prison-for-150m-fraud.html?origin=CEOE&utm_source=CEOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G
IIG trade finance fund caught in alleged Ponzi scheme | Global Trade Review (GTR)

The CEO of a chain of medical clinics in Michigan and Ohio was sentenced March 3 to 15 years in prison and ordered to pay $51 million in restitution for his role in a $150 million healthcare fraud scheme, according to the U.S. Justice Department. 

Mashiyat Rashid was sentenced after pleading guilty in 2018 to money laundering and conspiracy to commit healthcare fraud and wire fraud. Twenty other defendants, including 12 physicians, have been convicted for their involvement in the scheme. 

Mr. Rashid, who served as CEO of Tri-County Wellness Group from 2008 to 2016, developed and approved a corporate policy to administer unnecessary back injections to patients in exchange for prescriptions of over 6.6 million doses of medically unnecessary opioids, according to the Justice Department. 

Many patients experienced pain from the unnecessary injections, and some developed adverse conditions, including open holes in their backs, according to testimony at Mr. Rashid’s trial. Physicians at the clinics denied patients, including those addicted to opioids, medication until they agreed to get the injections, according to court documents. 

According to evidence presented at trial, Mr. Rashid only hired physicians who were willing to administer the unnecessary injections in exchange for a split of the Medicare reimbursements for the procedures. Tri-County Wellness Group was paid more for facet joint injections than any other medical clinic in the U.S., according to the Justice Department. 

Proceeds of the fraud were used to fund private jets and to buy luxury cars, real estate and tickets to NBA games, prosecutors said. Mr. Rashid was ordered to forfeit to the U.S. government $11.5 million in proceeds traceable to the healthcare fraud scheme, including commercial and residential real estate and Detroit Pistons season tickets. 

Chicago’s Mercy Hospital has a potential buyer

Posted on by • Posted in Bankruptcy, Capital Budget, Capital Expenditure, Chapter 11, Debt Levels, Financial Viability, Financially Distressed, Health System, Hospital, Hospital Industry, Investment, Mergers & Acquisitions, Safety Net Hospitals, Safety-Net Providers • Leave a comment
https://www.beckershospitalreview.com/hospital-transactions-and-valuation/chicago-s-mercy-hospital-has-a-potential-buyer.html?origin=CEOE&utm_source=CEOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G
Mercy Hospital, denied approval to close in Bronzeville, files for bankruptcy. Mayor Lightfoot calls it 'devastating for that community.' - Chicago Tribune

Mercy Hospital & Medical Center in Chicago has secured a nonbinding purchase agreement with Insight Chicago just months before it is slated to close its doors, according to the Chicago Tribune.

Under terms of the deal, still being negotiated, Insight Chicago would operate Mercy Hospital as a full-service, acute care facility. Insight Chicago is a nonprofit affiliated with a Flint, Mich.-based biomedical technology company.

The deal is subject to regulatory approval, but if it goes through, it would keep the 170-year-old safety-net hospital open. 

Securing a potential buyer is the latest in a series of events related to the Chicago hospital.

On Feb. 10, Mercy filed for bankruptcy protection, citing mounting financial losses and losses of staff that challenged its ability to provide safe patient care. 

The bankruptcy filing came just a few weeks after the Illinois Health Facilities and Services Review Board rejected a plan from Mercy’s owner, Trinity Health, to build an outpatient center in the neighborhood where it planned to close Mercy. The same board unanimously rejected Livonia, Mich.-based Trinity’s plan to close the hospital in December.

The December vote from the review board came after months of protests from physicians, healthcare advocates and community organizers, who said that closing the hospital would create a healthcare desert on Chicago’s South Side. 

Mercy said that until the pending deal with Insight Chicago is signed and approved by regulators, it still plans to close the facility. If the agreement is reached before the May 31 closure, Mercy will help transition services to Insight Chicago, according to the Chicago Sun-Times. 

Insight Chicago told local NPR affiliate WBEZ that it has a difficult task ahead to build community trust and address the financial issues that have plagued the Chicago hospital.

“I think the big main point we want to understand between now and then is the community needs to build trust with the community, and I think to build trust we have to tell the truth and be sincere,” Atif Bawahab, chief strategy officer at Insight, told WBEZ. “And there’s a reality of the situation as to why [the hospital] is going bankrupt and why several safety net hospitals are struggling.”

In its bankruptcy filing, Mercy said its losses have averaged about $5 million per month and reached $30.2 million for the first six months of fiscal year 2021. The hospital also said it has accumulated debt of more than $303.2 million over the last seven years, and the hospital needs more than $100 million in upgrades and modernizations.

Troubled Pennsylvania health system looks for a buyer

Posted on by • Posted in Acquisition, Credit Downgrade, Credit Quality, Credit Ratings, Divestitures, Financial Viability, Financially Distressed, Health System, Hospital, Hospital Industry, Mergers & Acquisitions • Leave a comment
https://www.beckershospitalreview.com/hospital-transactions-and-valuation/troubled-pennsylvania-health-system-looks-for-a-buyer.html?origin=CFOE&utm_source=CFOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G
Reading Hospital | Tower Health

West Reading, Pa.-based Tower Health is looking for a partner to buy the entire system, which comprises six hospitals, according to the Reading Eagle.

“We are compelled to pursue every possible avenue available to protect and preserve the future of care at all of our hospitals and facilities,” Tower said in a statement to The Philadelphia Inquirer on Feb. 26. “As part of this process, we will examine potential partnerships for the entire Tower Health system with like-minded health systems that share our same values and passion for clinical excellence.” 

The health system had previously said it was looking for buyers for its hospitals, with the exception of its flagship facility, Reading Hospital in West Reading, according to the Inquirer. 

On March 1, Tower Health was hit with a three-notch credit downgrade by Fitch Ratings. The credit rating agency said its long-term “B+” rating and negative outlook for the system reflect significant ongoing financial losses from the COVID-19 pandemic and operational challenges following the 2017 acquisition of five hospitals. 

S&P lowered its rating on Tower Health by two notches, to “BB-” from “BB+,” on March 2. 

Tower Health had operating losses of more than $415 million in fiscal year 2020, and it expects an operating loss of about $160 million in fiscal 2021, according to Fitch. 

Optum to acquire 715-physician group in Massachusetts

Posted on by • Posted in Health Insurance Industry, Market Consolidation, Market Trends, Medical Group, Mergers & Acquisitions, Physician, Physician Alignment • Leave a comment
https://www.beckershospitalreview.com/hospital-transactions-and-valuation/optum-to-acquire-715-physician-group-in-massachusetts.html?origin=CFOE&utm_source=CFOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G
Optum To Provide More Than Half Of UnitedHealth's 2020 Profits

UnitedHealth subsidiary Optum signed a definitive agreement to acquire Atrius Health, a 715-physician group based in Newton, Mass., according to The Boston Globe. 

Optum said March 2 the agreement was signed the evening of March 1 after UnitedHealth’s board approved the transaction. Atrius’ board also unanimously approved the deal. 

The deal will need approval from Massachusetts’ Health Policy Commission, the Department of Public Health and the Federal Trade Commission.

If the deal is approved, it would expand Optum’s presence in Massachusetts. The organization had previously acquired Worcester, Mass.-based Reliant Medical Group in April 2018. 

Optum reportedly had been interested in purchasing Atrius, which has 30 locations in Massachusetts, for a few years and submitted a bid for it in 2019 when the medical group was looking for a partner. In 2019, Atrius decided to remain independent. However, Atrius said it decided to reignite potential partnership talks again due to the pressures of the pandemic. 

“We looked at many alternatives and chose [Optum] because of cultural alignment, the benefit we could provide for patients, the stability it could provide for our practice, and the help we can provide to the commonwealth as it pertains to managing medical spend,” Atrius President and CEO Steven Strongwater, MD, told the Boston Business Journal. 

Genesis HealthCare plans to cut $236M in debt, delist stock from NYSE

Posted on by • Posted in Debt Levels, Nursing Home, Private Equity, Restructure, Securities and Exchange Commission (SEC) • Leave a comment
https://www.beckershospitalreview.com/finance/genesis-healthcare-plans-to-cut-236m-in-debt-delist-stock-from-nyse.html?origin=CFOE&utm_source=CFOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G
Genesis Corporate Headquarters | Paul Risk Construction

Kennett Square, Pa.-based Genesis HealthCare will institute a three-pronged restructuring plan to improve its financial metrics and cut debt by $236 million, the company said March 3. 

Genesis HealthCare is a holding company with subsidiaries that provide services to more than 325 skilled nursing facilities and assisted or senior living communities in 24 states. 

As part of its financial improvement strategy, Genesis agreed to end master lease agreements at 51 assisted or senior living facilities leased from Welltower and transition them to new operators. Genesis expects to receive $86 million from the deal, which it will use to repay a portion of its debt obligations to Welltower. 

Genesis will also receive $170 million in debt reduction from Welltower after completing the transaction. 

The company also signed a definitive agreement for a capital infusion of $50 million from ReGen Healthcare, which ups its ownership interest in Genesis to 25 percent.  

The third part of the strategy is that it will voluntarily delist its Class A common stock from the New York Stock Exchange and deregister its common stock under the Securities Exchange Act of 1934.

“The severity of the pandemic dramatically impacted patient admissions, revenues and costs, compounding the pressures of our long-term, lease-related debt obligations,” said Genesis CEO Robert Fish. “These restructuring transactions improve the financial and operational stability of the company significantly and build on the encouraging signs we are seeing as COVID-19 case rates continue to materially decline and residents, patients and staff are vaccinated.”

Risking lives in pursuit of profits

Posted on by • Posted in Nursing Home, Outcomes, Oversight, Private Equity, Profit Margin, Profit Model, Profit Motive, Regulation, Return on Investment, Shareholder Primacy, Staffing Issues • Leave a comment

https://mailchi.mp/05e4ff455445/the-weekly-gist-february-26-2021?e=d1e747d2d8

Benefit of Private Equity in Healthcare? Lessons from Nursing Homes

Finding a good long-term care facility for a loved one has always been a difficult process. A new National Bureau of Economic Research working paper suggests that families should also be paying attention to who owns the facility, finding a significant increase in mortality in nursing homes owned by private equity investors.

Examining Medicare data from over 18,000 nursing homes, 1,674 of which were owned by private equity (PE) firms, researchers found that PE ownership increased Medicare patient mortality by 10 percent—translating to a possible 20,150 additional lives lost. PE-owned facilities were also 11 percent more expensive.

Counterintuitively, lower-acuity patients had the greatest increase in mortality. Researchers found staffing decreased by 1.4 percent in PE-owned facilities, suggesting that shorter-staffed facilities may be forced to shift attention to sicker patients, leading to greater adverse effects on patients requiring less care.

Antipsychotic use, which carries a higher risk in the elderly, was also a whopping 50 percent higher.

Nursing homes are low-margin businesses, with profits of just 1-2 percent per year—and PE ownership did not improve financial performance.

Researchers found private equity profited from three strategies: “monitoring fees” paid to services also owned by the PE firm, lease payments after real estate sales, and tax benefits from increased interest payments, concluding that PE is shifting operating costs away from patient care in order to increase return on investment. Private equity investment in care delivery assets has skyrocketed over the past decade.

This study draws the most direct correlation between PE investment and an adverse impact on patient outcomes that we’ve seen so far, highlighting the need for increased regulatory scrutiny to ensure that patient safety isn’t sacrificed for investor returns.

The pandemic brought a “double whammy” to pediatric volumes

Posted on by • Posted in Children's Health, Children's Hospital, Emergency Care, Pandemic, Public Health, Urgent Care, Utilization Trends • Leave a comment

https://mailchi.mp/05e4ff455445/the-weekly-gist-february-26-2021?e=d1e747d2d8

Sick Little Girl In Hospital Bed Stock Photo, Picture And Royalty Free Image. Image 30227571.

Even as surgery and office visit volume rebounds, hospitals across the country continue to report that emergency department volume remains persistently depressed, down 10 to 20 percent compared to before the pandemic. The shift is even more drastic in pediatrics, with some pediatric hospitals and programs reporting that emergency care volume is seeing double the rate of decline.

Pediatric volume has been hit with a “double whammy”: with many schools and day cares still closed, contagious illnesses have plummeted. Fewer kids in youth sports means fewer injuries. And unlike adult hospitals, pediatric facilities haven’t filled their beds with COVID patients. “Of all our services, pediatric hospitalists have taken the greatest hit,” one children’s hospital physician leader shared. “Their service is usually full this time of the year with flu and RSV [respiratory syncytial virus]. But with kids not interacting with each other, general pediatric admissions have cratered.” Empty EDs have led some pediatric hospitals to shutter adjacent urgent care clinics: “It doesn’t make sense to operate an empty ED and an empty after-hours clinic”.

For patients, however, this can bring unexpected financial consequences, as they’ll now get an ED bill for services they would formerly have received in urgent care. But while pediatric hospitals have taken a greater volume hit, they’re also likely to see a faster rebound. Once kids are back to school and sports, the usual illnesses and injuries will likely return, and we’d guess parents won’t hesitate to seek care.