Holiday Season Thanks
Seattle Children’s sues Texas attorney general
Seattle Children’s Hospital has filed a lawsuit against the Texas Office of the Attorney General after the agency requested documents related to gender transition policies and such care provided to Texas children, NBC affiliate KXAN reported Dec. 20.
In a lawsuit filed Dec. 7, Seattle Children’s argues that the Texas attorney general does not have the jurisdiction to demand patient records from the hospital. It also states that Washington’s Shield Law, signed by Gov. Jay Inslee on April 27, protects it from requests made by states that “restrict or criminalize reproductive and gender-affirming care,” according to the report.
The Shield Law creates a cause of action for interference with protected healthcare services, which protects against lawsuits filed in other states related to reproductive or gender-affirming care that is lawful in Washington. Those harmed by such out-of-state lawsuits can also file a countersuit in Washington for damages and recover their costs and attorneys’ fees.
The Texas attorney general said it is investigating misrepresentations involving gender transitioning and reassignment treatments and procedures that allegedly violated the Texas Deceptive Trade Practices-Consumer Protection Act. It has demanded that Seattle Children’s provide the following documents:
- All medications prescribed by the hospital to Texas children
- The number of Texas children treated by the hospital
- Diagnosis for every medication provided by the hospital to Texas children
- Texas labs that performed tests for the hospital before prescribing medications
- Protocol/guidance for treating Texas children diagnosed with gender identity disorder, gender dysphoria or endocrine disorders
- Protocol/guidance on how to “wean” a Texas child off gender transitioning care
Seattle Children’s maintains that it does not have property, accounts, nor employees who provide gender-affirming care or administrative services for that care in Texas, according to affidavits obtained by KXAN. Hospital leaders also said that Seattle Children’s has not marketed or advertised this type of care in Texas either.
Attorneys for the hospitals argue that the demands are an “improper attempt” to enforce Texas’ SB 14 bill — signed June 2 by Gov. Greg Abbott — and investigate healthcare services that did not occur in Texas.
“Seattle Children’s took legal action to protect private patient information related to gender-affirming care services at our organization sought by the Texas attorney general,” a spokesperson for the hospital told Becker’s. “Seattle Children’s complies with the law for all healthcare services provided. Due to active litigation, we cannot comment further at this time.”
The Texas attorney general’s office did not respond to Becker’s request for comment.
Healthcare’s trap of overqualified workers
The post-pandemic labor force has 1.5 million fewer individuals with some post-secondary education short of a bachelor’s degree. This shortfall is hitting healthcare hardest, affecting wages and qualification levels among jobholders.
Job vacancies requiring a post-secondary certificate or associate degree, particularly in healthcare, remain high. The mismatch between the supply of workers with this education level and the ongoing demand for them is leading to increased wages and greater reliance on more educated workers, according to a December 2023 bulletin from the Federal Reserve Bank of Kansas City.
Five takeaways from the bank’s report:
1. Before the pandemic, job openings across educational groups moved together and subsequently peaked together in mid-2022. Since then, while vacancies for most groups have fallen, the number of job vacancies requiring some college education remains 60% above its pre-pandemic level.
2. Vacancies for jobs requiring some college education are concentrated in healthcare. As of August 2023, about 50% of all open jobs posted in 2023 that required an associate degree or non-degree certificate were in healthcare.
3. As a result of the high demand, healthcare employers are turning to more educated workers to fill positions with requirements for some college education. Healthcare employment among workers with some college education has dropped by about 400,000 since 2019; healthcare employment among workers with a bachelor’s degree or more has increased by 600,000.
4. Combined, these factors can place upward pressure on healthcare wages. The supply-demand mismatch can lead employers to offer higher wages to competitively attract qualified workers. Employers turning to workers with more education, who are generally more expensive, will increase the average wage in these occupations.
5. From 2019 to 2023, overall wages for healthcare workers rose by nearly 25%, an increase the bank partially attributes to both increased wages within educational groups and composition effects. The shift in employment toward higher-educated workers accounts for an additional 2.7 percentage points of the total wage increase, for instance.
Will health system M&A soar or dive?
The health system deal market heated up in 2023.
Big, industry-shaking acquisitions including Oakland, Calif.-based Kaiser Permanente’s purchase of Danville, Pa.-based Geisinger, could redefine healthcare delivery with an eye toward value. Regional deals, such as Detroit-based Henry Ford Health’s planned joint venture with Ascension Michigan and St. Louis-based BJC HealthCare’s plan to acquire Saint Luke’s Health System to create a $10 billion organization, have also made waves.
There were 18 hospital and health system transactions announced in the third quarter, up from 10 transactions over the same time period in 2022, according to Kaufman Hall’s third quarter M&A report. Financial pressures with inflation catapulting staffing and supply costs, and reimbursement rates growing much more slowly, have forced some systems to look for a buyer while others aim to increase market share.
Academic health systems are also seeking community partners at a higher rate than in the past, according to the Kaufman Hall report.
But not all announced deals have gone according to plan.
The Federal Trade Commission is scrutinizing deals more closely than ever before to ensure costs don’t increase after an acquisition in some cases. In other cases, the two partners aren’t able to agree upon the details after announcing their plans. The dissolved merger between Sioux Falls, S.D.-based Sanford Health and Minneapolis-based Fairview Health Services fell apart amid contention in Minnesota, and West Des Moines, Iowa-based UnityPoint Health’s plans to merge with Presbyterian Healthcare Services in Albuquerque, N.M., was halted without a publicly stated reason.
Will there be more or fewer health system deals in the next three years?
Seth Ciabotti, CEO of MSU Health Care at Michigan State University in East Lansing, thinks so, at least when it comes to academic medical centers.
“There will be more consolidation to mitigate risk,” he told Becker’s. “I believe we are heading down a path of having only a dozen or so non-academic medical centers/health systems being left in the near future in the U.S.”
Mark Behl, president and CEO of NorthBay Health in Fairfield, Calif., has a similar outlook for the next three years.
“I suspect we will see more mergers and acquisitions with a continued desire to grow larger and remain relevant,” he told Becker’s. “Independent regional health systems will fight for relevance, and sometimes survival.”
And health systems won’t be the only buyers. Private equity, health insurers and non-traditional owners are on the hunt for health systems. General Catalyst has strengthened its healthcare presence recently and announced it plans to acquire a system in the near future.
“I believe that over the next three years, the landscape of acquisitions, divestitures and joint ventures will continue to reshape the healthcare industry,” said Dennis Sunderman, system director of HR M&A, non-employee and provider services at CommonSpirit Health, told Becker’s. “Current and proposed legislation, the continued evolution of ownership groups, nonprofit, for profit, and private equity, and the drive to hire and retain exceptionally talented teams, will lead to new innovations and an enhanced focus on the associates affected by the transaction.”
Health systems will need to optimize their operations to expand their value-based care efforts and digital transformation, including telehealth and remote patient monitoring services. Not all systems have the expertise and resources to fully make this transition, but with the right partners and strategic alignments, they can accelerate care transformation.
“There will likely be more collaborations and partnerships to expand services and increase access versus brick and mortar acquisitions,” said Cliff Megerian, MD, CEO of University Hospitals in Cleveland. “Innovative thinking is critical for success and quite frankly survival in our industry, so health systems should already be investing in growing in-house expertise dedicated to ideating new models of care, but in three years, these efforts should be producing tangible results.”
Michelle Fortune, BSN, CEO of Atrium St. Luke’s Hospital in Columbus, N.C., pointed to recent collaborations between Mercy, Microsoft and Mayo Clinic as examples of how health systems can partner on important initiatives such as improved data sharing, generative AI, digital transformation and more.
“I expect to see an increase in collaborations and connections between health systems to a degree that has never existed before as part of the focus on bringing the right care to people across the full continuum, when and where they need it,” she said.
Kaufman Hall sees more minority ownership deals ahead, which allows the smaller system to maintain near-autonomy while benefiting from the resources of a larger system.
“Health systems are also engaging in creative transaction structures that allow partners to maintain their independence while building strategic alliances that enhance access to care,” the report notes. “Announced transactions in Q3 included [Charlottesville, Va.-based] UVA Health’s acquisition of 5% ownership interest in [Newport News, Va.-based] Riverside Health System as part of a strategic alliance design ‘to expand patient access to innovative care for complex medical conditions, transplantation, and the latest clinical trials.'”
ACA enrollment continues at a record pace
https://nxslink.thehill.com/view/6230d94bc22ca34bdd8447c8k3p6r.11v6/ce256994
Affordable Care Act (ACA) enrollment appears poised to reach record levels once again as signups grew by more than a third of what they were this time last year, a fact the White House is using to continue to draw attention to former President Trump’s threats to try again to repeal the law.
More than 15 million people have signed up for plans in states that use HealthCare.gov, representing a 33 percent increase from last year. The Biden administration estimates 19 million will sign up for plans by the Jan. 16 deadline.
On Dec. 15, the deadline for coverage starting Jan. 1, more than 745,000 people selected a plan through HealthCare.gov — the most in a day in history, the Department of Health and Human Services said.
For 2023 plans, more than 16.3 million people signed up through HealthCare.gov last year, another record. Of those who enrolled for this year, 22 percent were new to the marketplace.
This year’s enrollment had some unusual factors that may have played a part in boosting enrollment. Those who were disenrolled from Medicaid this year during the “unwinding” period were allowed to sign up for ACA plans earlier than normal.
There was also stronger insurer participation in the program this year, providing significantly more options for customers to choose from.
“Thanks to policies I signed into law, millions of Americans are saving hundreds or thousands of dollars on health insurance premiums,” President Biden said on Wednesday.
“Extreme Republicans want to stop these efforts in their tracks,” he added. “At every turn, extreme Republicans continue to side with special interests to keep prescription drug prices high and to deny millions of people health coverage.”
Happy Holidays
Merry Christmas
So Much to Worry About
If you are a hospital executive—and if you are reading this, you probably are—then you have no shortage of worries. The worry list is long:
- Trying to control expenses.
- Dealing with declining revenue, especially when considered on an after-inflation basis.
- Struggling with ongoing staffing issues that have no immediate solutions.
- Solving the longstanding problem of patient access to appointments and service.
And the list could go on and on.
But maybe the biggest concern is one that is not on many worry lists: the remarkable development of artificial intelligence (AI) and how AI is relentlessly pushing into business practice generally and into healthcare more specifically.
While the long-term worry is how your hospital will carefully and properly adopt AI inside the business and clinical parts of your organization, the more immediate and short-term worry is whether you, as an executive, understand AI in a way that you can be ultimately useful to your organization.
Full disclosure: I can’t help here much. For me, AI is a pretty big black box. But when I confront this kind of business problem I start reading and learning. One of the most useful AI articles I have come across is “The Optimists: The Full Story of Microsoft’s Relationship with OpenAI,” which was published in the December 11, 2023, issue of The New Yorker magazine. The article was written by Charles Duhigg, a former winner of the Pulitzer Prize.
I am hoping that for your own professional development you will read the Duhigg article, but just in case, here are the highlights:
- Microsoft has reportedly invested $13 billion in the for-profit arm of OpenAI.
- Using OpenAI technology, Microsoft has built a series of AI assistants into Word, Outlook, and PowerPoint. These AI assistants are now known as Office Copilots.
- Knowledgeable commentators say these Microsoft applications are only moderately sophisticated but, honestly, they seem rather remarkable to me. Here are some of Duhiggs’s examples of requests Office Copilot users can make:
- “Tell me the pros and cons of each plan described on that video call.”
- “What’s the most profitable product in these twenty spreadsheets?”
- How about writing projects? Duhigg notes that the Office Copilot can:
- Create a financial narrative of the past decade based on a company’s last ten executive summaries.
- Turn a memo into a PowerPoint.
- Compile a to-do list for Teams video attendees, in multiple languages, after listening in on a meeting.
- Later in the article Duhigg details the functionality of the Word Copilot:
- “You can ask it to reduce a five-page document to ten bullet points…[o]r…it can take the ten bullet points and transform them into a five-page document.”
- It can write a memo based on previous emails you have written.
- “You can ask, ‘Did I forget to include anything that usually appears in a contract like this?,’ and the Copilot will review your previous contracts.”
Duhigg reports that Microsoft previously acquired a company called GitHub. GitHub is “a website where users shared code and collaborated on software.” Microsoft operates GitHub as an independent division. GitHub has been a very big success and is used by software engineers and, in a short period of time, has grown to over 100 million users.
OpenAI created an artificial intelligence tool that autocompletes software code. Despite reservations at Microsoft, GitHub President Nat Friedman decided to release the GitHub Copilot autocomplete tool. The result has been $100 million in revenue to GitHub in less than a year.
At the end of the article, Duhigg notes that these early AI business applications are both “impressive and banal.” Banal because they don’t yet live up to the sci-fi predictions for AI and its long-term impact on society.
Honestly, I don’t see it that way. This OpenAI/Microsoft collaboration is only scratching the surface and its potential uses are already endless, waiting to be invented by 100s of millions of users all over the world, including in healthcare. From my seat, the sky is the limit here. Almost anything seems possible.
I hope this summary of Mr. Duhigg’s exceptional article proves useful and advances your awareness of AI’s aggressive and rapid move into day-to-day business—here, through many of the Microsoft productivity programs that every one of us uses every day. In any case, I recommend that you read Duhigg’s entire article. It is most certainly worth your time.
3 Philadelphia hospitals reportedly up for grabs
Three Philadelphia-based hospitals are reportedly up for sale, according to an email notice from Los Angeles-based investment bank Xnergy, The Philadelphia Inquirer reported Dec. 19.
The names of three hospitals are not confirmed. And the notice, which was obtained by the publication, did not name an owner of the hospitals. However, it did describe the hospitals’ owner as one that has acute care facilities with an average of 136 beds.
Three Philadelphia-area hospitals fit the bed parameters in the notice: Bristol-based Lower Bucks Hospital, Philadelphia-based Roxborough Memorial Hospital, and Norristown-based Suburban Community Hospital. All three are owned by Ontario, Calif.-based Prime Healthcare Services, The Philadelphia Inquirer reported.
Roxborough and Lower Bucks were acquired by Prime in 2012, with Suburban acquired by Prime’s nonprofit affiliate Prime Healthcare Foundation in 2016. The hospitals have also seen significant annual operating loss over the last five years with a 43% combined inpatient volume drop, from 3,795 discharges in 2018 to 2,250 discharges in 2022, the publication shared.
Members of the Pennsylvania Association of Staff Nurses & Allied Professionals at both Suburban and Lower Bucks are also set to launch five-day strikes Dec. 22 due to ongoing labor contract negotiations for things like increased wages and important benefits, a union spokesperson told Becker’s.
“Prime Healthcare’s mission is to always do what’s best for our communities and patients, however, we do not comment on strategic merger and acquisition initiatives,” Elizabeth Nikels, vice president of communications and public relations for Prime Healthcare, said in an email response to Becker’s regarding the sale.
386 hospitals now owned by private equity firms: 6 things to know
Private equity firms have drawn significant policy interest and scrutiny amid recent reports of surprise billing, rising out-of-pocket costs for patients and increased healthcare spending in the U.S., according to Health Affairs.
The Private Equity Stakeholder Project has found at least 386 hospitals in the U.S. that are owned by private equity firms.
Six things to know:
1. The 386 private equity–owned hospitals represent 9% of all private hospitals and 30% of all proprietary for-profit hospitals.
2. Thirty-four percent of private equity-owned hospitals serve rural populations.
3. Texas is the state with the most private equity-owned hospitals (85).
4. While New Mexico has fewer private equity-owned hospitals (17), it has the highest proportion of private equity-backed hospitals compared to all private non-government hospitals at 43%.
5. More than 24% of private equity-owned facilities are psychiatric hospitals.
6. A few private equity firms dominate the list, according to the Private Equity Stakeholder Project:
- Apollo Global Management (LifePoint Health (Brentwood, Tenn.) and ScionHealth (Louisville, Ky.): 177 hospitals combined)
- Equity Group Investments (Ardent Health Services (Nashville, Tenn): 30 hospitals)
- One Equity Partners (Ernest Health (Albuquerque, N.M.): 27 hospitals)
- GoldenTree Asset Management and Davidson Kempner (Quorum Health (Brentwood, Tenn.): 21 hospitals)
- Bain Capital (Surgery Partners (Brentwood, Tenn.): 19 hospitals)
- Webster Equity Partners (Oceans Healthcare (Plano, Texas): 18 hospitals)
- Patient Square Capital (Summit Behavioral Health (Franklin, Tenn.): 11 hospitals)
HENRY KOTULA 