Physicians acquire 35-hospital health system from private equity firm

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Sources: Boston-based Steward Health Care System to relocate ...

The 35-hospital system announced June 2 that a management group of Steward physicians led by the company’s CEO and founder acquired a controlling interest of Steward from Cerberus Capital Management, a private equity firm. The physicians will control 90 percent of the company and Medical Properties Trust will maintain its 10 percent stake. 

“The COVID-19 global pandemic has exposed serious deficiencies in the world’s health care systems, with a disproportionate impact on underserved communities and populations,” Steward CEO and Founder Ralph de la Torre, MD, said in a news release. “We believe that future health care management must completely integrate long-term clinical needs with investments. As physicians first, we will focus on creating structures and timelines that meet the long-term needs of our communities and the short-term needs of our patients.”

Steward was founded more than a decade ago, and Cerberus invested in the company in 2010. Today, Steward has 35 hospitals in nine states and more than 40,000 employees. 

 

 

 

 

29 hospital bankruptcies in 2020

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Hospital Bankruptcy | HENRY KOTULA

From reimbursement landscape challenges to dwindling patient volumes, many factors lead hospitals to file for bankruptcy. At least 29 hospitals across the U.S. have filed for bankruptcy this year, and the financial challenges caused by the COVID-19 pandemic may force more hospitals to enter bankruptcy in coming months.

COVID-19 has created a cash crunch for many hospitals across the nation. They’re estimated to lose $200 billion between March 1 and June 30, according to a report from the American Hospital Association. More than $161 billion of the expected revenue losses will come from canceled services, including nonelective surgeries and outpatient treatment. Moody’s Investors Service said the sharp declines in revenue and cash flow caused by the suspension of elective procedures could cause more hospitals to default on their credit agreements this year than in 2019.

The hospitals that have filed for bankruptcy this year, which are part of the health systems listed below, have not cited the pandemic as a factor that pushed them into bankruptcy. Though most of the hospitals are operating as normal throughout the bankruptcy process, at least two of the hospitals that entered bankruptcy this year have shut down.

Quorum Health
Brentwood, Tenn.-based Quorum Health and its 23 hospitals filed for Chapter 11 bankruptcy April 7. The company, a spinoff of Franklin, Tenn.-based Community Health Systems, said the bankruptcy filing is part of a plan to recapitalize the business and reduce its debt load.

Randolph Health
Randolph Health, a single-hospital system based in Asheboro, N.C., filed for Chapter 11 bankruptcy March 6. Randolph Health leaders have taken several steps in recent years to improve the health system’s financial picture, and they’ve made progress toward that goal. Entering Chapter 11 bankruptcy will allow Randolph Health to restructure its debt, which officials said is necessary to ensure the health system continues to provide care for many more years.

Faith Community Health System
Faith Community Health System, a single-hospital system based in Jacksboro, Texas, filed for bankruptcy protection on Feb. 29. The health system, part of the Jack County (Texas) Hospital District, entered Chapter 9 bankruptcy — a bankruptcy proceeding that offers distressed municipalities protection from creditors while a repayment plan is negotiated.

Pinnacle Healthcare System
Overland Park, Kan.-based Pinnacle Healthcare System and its hospitals in Missouri and Kansas filed for Chapter 11 bankruptcy on Feb. 12. Pinnacle Regional Hospital in Boonville, Mo., formerly known as Cooper County Memorial Hospital, entered bankruptcy about a month after it abruptly shut down. Pinnacle Regional Hospital in Overland Park, formerly called Blue Valley Hospital, closed about two months after entering bankruptcy.

Thomas Health
South Charleston, W.Va.-based Thomas Health and its two hospitals filed for Chapter 11 bankruptcy on Jan. 10. In an affidavit filed in the bankruptcy case, Thomas Health President and CEO Daniel J. Lauffer cited several reasons the health system is facing financial challenges, including reduced reimbursement rates and patient outmigration. The health system said the bankruptcy process will help it address its long-term debt and pursue strategic opportunities.

 

 

 

Private equity lands $1.5B in Medicare loans

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One-Click To Private Equity Yields Up To 9%

Private equity companies have borrowed at least $1.5 billion from HHS through two programs intended to provide funding to healthcare providers facing financial damage due to the COVID-19 pandemic, according to Bloomberg‘s analysis of more than 40,000 loans disclosed by HHS. 

The Medicare loans were made to hospitals, clinics and treatment centers controlled by private equity firms through two programs administered by CMS: the Advance Payments Program and the Accelerated Payments Program. Those programs were expanded earlier this year to help offset the financial impact of COVID-19.

HHS approved loans totaling more than $60 million to subsidiaries of companies owned by private equity firm KKR, which has roughly $58 billion of cash to invest, according to Bloomberg. Healthcare facilities owned by private equity firm Apollo Global Management received $500 million in loans, and Cerberus Capital Management’s Steward Health Care System received roughly $400 million in loans. Steward physicians announced June 2 that they’re acquiring the health system from Cerberus.

CMS Administrator Seema Verma said the goal of the programs was to get funds to healthcare providers as quickly as possible. The loan applications did not include questions about beneficial ownership of the healthcare companies seeking loans. 

“We don’t look into ownership, what we look into is are they Medicare-enrolled providers,” Ms. Verma told Bloomberg.

Access the full Bloomberg article here.

 

 

 

Americans’ deepening financial stress will make the coronavirus a lot harder to contain

Posted on by • Posted in 2020 Election Issues, Clinical Testing, Contact Tracing, Coronavirus, Crisis, Crisis Management, Deferred Healthcare, Economic Crisis, Employer-Based Health Insurance, Health Insurance Coverage Adequacy, Health Policy, High Deductible Health Plans, High Drug Prices, High Prices, Infection Control, Infection Control Plan, Infectious Virus, Out of Pocket Expenses, Pandemic, Underinsured, Unemployment, Unemployment Insurance, Uninsured • Leave a comment

https://theconversation.com/americans-deepening-financial-stress-will-make-the-coronavirus-a-lot-harder-to-contain-139741

Americans' deepening financial stress will make the coronavirus a ...

Preventing deaths from COVID-19 depends on people who get it seeking treatment – which also allows authorities to track down whom they came in contact with to reduce spread.

But, as the economic pain and joblessness caused by the statewide lockdowns continue to grow, more Americans are experiencing severe strains on their personal finances. This threatens our ability to contain the pandemic because those feeling the most financial stress are much less likely to seek medical care if they experience coronavirus symptoms, according to my analysis of a recent Federal Reserve survey.

As an economist who studies how individuals make health care choices, I worry that in the coming months even more people will consider forgoing vital treatment to pay rent or some other bill – especially as the extended unemployment benefits, rent moratoriums and other relief are set to expire soon.

‘Just getting by’

The Fed conducts a survey of the economic health of U.S. households every quarter, most recently near the end of 2019. In April, it conducted a supplementary but similar survey to quickly gauge how people were handling the coronavirus crisis. Results of both surveys were released on May 14.

The Fed tries to measure financial stress in three key ways. Its surveys ask respondents if they are unable to pay all their monthly bills, couldn’t cover a US$400 emergency expense, or are “just getting by” or worse.

Even before the pandemic hit, the picture wasn’t pretty. In October, when the fourth-quarter survey was conducted, 42% of employed respondents reported fitting at least one of these descriptions, while over 8% said they fit all three. Those figures jumped to 72% and 20% for low-income workers.

But by April, tens of millions of people who had jobs in October lost them as most nonessential businesses across the U.S. either closed or reduced their services. The unemployment rate shot up to 14.7% that month – the highest since the Great Depression – and is expected to climb further when the May data are released on June 5.

The Fed’s April survey, however, paints an even broader picture of the economic impact of the pandemic. In that survey, about 28% of the previously employed respondents said they either lost their job, were being furloughed, had their hours cut or were taking unpaid leave. This has been financially devastating to many, with 68% of this group reporting one of the stresses listed above and 28% saying they were experiencing all three, regardless of income level.

Forgoing medical care

Separate questions in the surveys demonstrate just how strong the link is between financial and physical health.

The October survey also asks those respondents if they had skipped a doctor’s visit during the previous 12 months because of the cost. More than 20% of those who reported one of these financial stresses said they had, while almost 46% of those with all three said so.

In April, the Fed asked a more timely question: “If you got sick with symptoms of the coronavirus, would you try to contact a doctor?”

A third of those respondents who also said they’re experiencing all three financial stresses said “no.” This is especially significant because, unlike the October question, it describes a current, known threat, rather than referring to a previous medical issue of unknown severity. And the widely reported urgency and seriousness of the coronavirus suggests someone wouldn’t treat the decision to seek a doctor’s care or advice lightly.

Relieving the stress

That was back in April, less than a month into the coronavirus lockdowns. If the same questions were asked today, I believe the numbers would look a lot worse.

In the middle of a serious pandemic, we don’t want sick people avoiding treatment because they’re worried they won’t be able to put food on the table. This would likely worsen the spread of the coronavirus and make it a whole lot harder to contain.

As Congress debates additional measures to mitigate the economic and financial effects of the pandemic, it would be wise to keep in mind the connection between financial stress and individual decisions to seek medical care.