Nonprofit Hospital Consolidation to Continue in 2019

Despite increased scrutiny from regulators, nonprofit health systems will remain active through mergers and acquisitions this year, according to a new Moody’s report.

The deluge of M&A activity among nonprofit health systems is expected to continue on in 2019, with the potential for some “unconventional relationships,” according to a Moody’s report released Friday morning.

Driven by tight financial conditions challenging the nonprofit hospital business model, as well as the entrance of nontraditional corporate players to healthcare and the potential changes to the ACA, more M&A activity is expected throughout the year.

Moody’s expects nonprofit health systems to engage in partnerships with other hospitals but also seek to align with companies specializing in data analytics or ridesharing services to continue the transition from inpatient care to outpatient care.

Nonprofit health systems are also aiming to increase their footing when negotiating with payers, which involves strategic decisions to diversity service options and increase their geographic reach.

The report cites ProMedica’s acquisition of HCR Manorcare and Tower Health’s purchase of five for-profit acute care hospitals as examples of nonprofit systems taking a short-term credit hit to gain stable long-term positioning for the organization.

Though M&A activity is expected to be widespread and a primary objective for many nonprofit systems, the Moody’s report warned that additional scrutiny from state and federal regulators is on the way.

The requirements put in place on the CHI-Dignity Health merger by California Attorney General Xavier Becerra, along with price increase restrictions imposed by Massachusetts Attorney General Maura Healey on CareGroup and Lahey Health, are cited as examples of the terms health systems should expect to meet.

For-profits will tap into capital markets

The Moody’s report also indicates that for-profit hospitals will delve further into capital markets so long as they remain receptive and buoyed by low interest rates. This approach could lead to lower interest costs and improve liquidity, which would bolster their credit standing.

Jessica Gladstone, Moody’s associate managing director and lead analyst on for-profit hospitals, told HealthLeaders that rising interest rates would a material impact on many for-profit hospitals.

“High cash interest costs relative to earnings are already consuming the majority of cash for many FP hospital companies,” Gladstone said. “For companies with floating rate debt, rising interest rates (depending on the amount of the increase) could leave some FP hospitals with very little free cash flow left to pay down debt or otherwise invest to grow operations.”

Gladstone added that while many of the same headwinds facing for-profit hospitals remain a challenge in 2019, executives can be encouraged by the opportunities ahead to refinance high-cost debt and achieve cost savings.

Several deals are listed as potential opportunities that could benefit for-profit healthcare organizations in 2019 regarding changes to capital structure, interest cost savings, as well as M&A activity:

Additional highlights from the Moody’s report:

  • Expect smaller community and regional nonprofit hospitals to join cooperatives to gain leverage at the negotiating table on supply costs among other price points.
  • Growing investment by private equity firms in physician practices and ambulatory services, will put a pinch on nonprofit systems.
  • The entrance of Amazon, Walmart, and Apple can’t be discounted as another driver of M&A activity in 2019.
  • Vertical mergers like CVS-Aetna and the continued rise of telemedicine will drive patients away from traditional areas of care delivery, like hospitals.
  • Though major changes to the ACA remain unlikely due to the split government in Congress, smaller changes could still make a significant impact.
  • The report cites potential changes to site-neutral payments, Medicare quality-factor penalties, and DSH payment reductions as examples.





Hospital executives believe Amazon can deliver on its hype as a healthcare disrupter

Out of all the technology giants with ambitions in healthcare, hospital executives have overwhelmingly put their faith in Amazon, according to a new survey.

A full 59% of executives say Amazon will have the biggest impact, according to the survey by Reaction Data. Respondents cited resources available to the retail and technology behemoth, the company’s current influence and name recognition.

Comparatively, 14% said Apple, with its foray into EHRs, would be the most influential, followed by Google at 8% and Microsoft at 7%

Among healthcare CEOs—which accounted for 26 of the survey’s 97 respondents—75% said Amazon would make the biggest impact.

About 80% of survey respondents were from the C-suite, including chief nursing officers, chief financial officers and chief information officers. 

While Amazon alone may be generating significant excitement in boardrooms, a previous survey by HealthEdge shows consumers are largely skeptical about Amazon’s partnership with JPMorgan and Berkshire Hathaway.

Amazon’s push into healthcare “has been a shot across the bow for the entire industry,” Rita Numerof, Ph.D., president of Numerof & Associates told FierceHealthcare. The company’s consistent and deliberate investments indicate they are serious about making substantial changes within the industry.

“Amazon is known for its relentless focus on the consumer and its ability to use data systematically to identify and meet unmet needs in an accessible manner,” she said. “Unfortunately, access, consumer engagement, and segmentation haven’t been the hallmark of healthcare delivery.”

Executives were also bullish on telemedicine, with 29% saying the technology would have the biggest impact on healthcare, followed by artificial intelligence at 20%. That’s less surprising given that nearly 75% of respondents were already using telehealth in some way.However, 51% of respondents said telemedicine is revenue neutral, and key focus areas were split equally around rural patients, follow-up care and managing specific populations.




Why Apple’s Move On Medical Records Marks A Tectonic Shift

(Courtesy of Apple)


Apple has just announced a major upgrade that will allow customers with iPhones and iPads access to their own health records.

This announcement actually amounts to far less than meets the eye, but it could well also mark a tectonic shift in the health care landscape.

It is less than meets the eye because the data enabled is a mere trickle compared to the torrent of health care data that we all generate during our medical visits.

It’s also only a uni-directional data flow from the health care institutions — the hospitals, the medical practices — to your personal health record. Data will not flow in the other direction. You cannot update an incorrect observation in your health record, nor can you add missing facts or missing medications to your “official” health record. At least, not yet.

It’s also not a magic switch that will allow everyone access to their health care records. It requires that hospitals agree to work with Apple to provide this data at a reasonably timely interval or on demand. Currently, only a small number of hospitals have agreed to do so.

So why might this announcement be earth-shaking? Because it represents the first time a mass consumer platform that is in the hands of tens of millions of consumers daily and for hours on end — the iOS operating system — will get officially sanctioned health care observations from the formal institutional health care system.

This immediately enables a number of productive, cost-saving, pain-saving and even life-saving scenarios.

• First, when you show up at a health care system other than the one you normally visit and see an unfamiliar doctor or nurse, this data will let you speed up and make much more accurate the getting-to-know-you phase of the visit. It will help you avoid repeated, unnecessary, expensive and painful testing.

• Now that our data is on this accessible platform, we’ve opened the gates to a world of innovators — some commercial, some nonprofit — to provide decision support, advice and recommendations based on these accurately and authoritatively transmitted health care data.

For example, genetic tests are mostly reported these days without the genetics company knowing your health care details or sometimes even your age. Now, with the clinical information that you can make available, you can give permission to these third-party applications or apps on your iPhone to access these crucial health data.

These companies will now be able to deliver interpretation of your results that are not generic but truly customized to your particular circumstance, just as has been promised to us under the rubric of precision medicine.

• Third-party telemedicine services such as Teladoc or AmericanWell currently allow you to speak to a licensed doctor, including a video connection, within minutes using your smartphone to get a clinical opinion. Now, they will not have to rely only upon the patients’ recounting of their signs and symptoms, or their recollection of laboratory tests or scraps of their record that they have available.

These will be able to be presented in an integrated fashion as part of the telemedicine encounter, which will thereby enable essentially the practice of medicine across state barriers in a way that has previously been artisanal at best.

The fundamental shift that is enabling this transition is the selected health care systems that have voluntarily agreed to transfer data in a well-formatted, accurate messaging that can be represented faithfully on the digital consumer platform.

This represents a major crack in the previously implicit understanding between electronic health record providers and health care systems that data about their patients would only travel in ways that would not increase the ability of patients to get health care elsewhere.

Companies have attempted multiple workarounds to attain this goal, but this represents a major step forward: Now, it’s the electronic health record systems themselves and the providers that are enabling this to happen. Of course, this was functionality that was mandated multiple times by U.S. legislation, but there always were apparently small details that limited the actual implementation.

So has the new era arrived yet? This announcement is the clarion call, but it may not be the new age yet.

It remains fragile in that health care systems can choose to participate or not to participate. The health care record vendors can choose to be more helpful or less helpful to this effort. New regulatory obstacles may be placed to limit the use and reuse of this data.

But the mere fact of this small beginning shows that it is technically and organizationally possible.

In this era when we expect access to information that is important to us in all parts of our lives — from the news, to our financial information, to our personalized weather — the shift to similarly fluid access to our medical data and the creation of a far larger ecosystem of interpretation and health care decision making will gain increasing support.

It will undoubtedly generate business plans and enterprises seeking to birth their unicorns into this $3 trillion sector of the economy representing one-sixth of our gross domestic product.

Furthermore, because the data-messaging standards that are used in this system were developed not by Apple but by a community of informaticians and data scientists working with various research entities such as the National Institutes of Health, these standards are open, so other consumer health platforms such as Google’s Android should have no particular problem in immediately following suit.

Full disclosure: I have a dog in this fight. I worked with colleagues at Harvard and Boston Children’s Hospital to develop automated consumer access to health-record data with funding from the NIH and the Office of the National Coordinator for National Projects such as the huge study All Of Us.

But I am also a doctor and a patient, and I can tell you what I’m planning to do with this new Apple capability: Develop an app to tell any patient with enough data on their iPhone what questions they should ask their doctor about their diagnosis.

Geisinger, Dignity Health among first hospitals to pilot Apple’s medical records system

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Danville, Pa.-based Geisinger Health System, San Francisco-based Dignity Health and Baltimore-based Johns Hopkins Medicine will be among the first 12 hospitals nationwide to pilot Apple’s medical records system, The San Diego Union-Tribune reports.

Here are six things to know about the pilot program.

1. Apple announced its intent Jan. 24 to integrate patient health records into its Health app to make it easier for consumers to review their medical data. IPhone users would need to download the 11.3 “beta” version of iOS to access the feature, according to The San Diego Union-Tribune.

2. While many hospitals and health systems already provide patient portals and other programs for patients to access their health information, Apple aims to embed patient data from multiple providers into the iPhone’s main system. This “deep integration” function could help improve smartphone users’ health by allowing patients to grant permission for other app developers to use the data to help provide the best deals on medications and connect patients taking the same medications, among other features, the report states.

3. Because the health records are stored on the patient’s device, users can send that information to any provider they choose — even those whose EHR systems are not directly compatible with the system the patient’s primary provider uses, according to Cheryl Pegus, MD, director of the division of general internal medicine and clinical innovation at the New York City-based NYU School of Medicine.

4. The challenge Apple and other tech companies with similar aspirations face, according to Dr. Pegus, is designing systems that do not inundate patients with irrelevant information.

“The key is to find a way to utilize this health data where someone puts in the right algorithms that really cause the most relevant data to bubble to the top so then you can message it how you want to. If that can happen, that’s going to be a great use,” Dr. Pegus said.

5. It is unclear if Apple’s medical records system will be able to synchronize physicians’ notes, the report states. The health records data will reside on Apple servers unless a patient’s phone automatically backs up the data to the company’s iCloud service.

6. Other hospitals involved in the pilot program include Chicago-based Rush University Medical Center; Los Angeles-based Cedars-Sinai Medical Center; and Philadelphia-based Penn Medicine.

To view the full list of participants, click here.


Apple explored buying a medical-clinic start-up as part of a bigger push into health care

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  • Apple’s health team was until recently deep in talks to buy Crossover Health, the venture-backed start-up that runs its on-site medical clinic.
  • It’s not clear if Apple wanted to own and operate a network of health clinics, like its retail stores, or simply partner to sell products with a health-related angle, like the Apple Watch

Apple has considered an expansion into health care clinics, and had talks to buy a start-up called Crossover Health, which works with big employers to build and run on-site medical clinics, according to three sources familiar.

Crossover Health is one of a small number of companies that specialize in working with self-insured employers to provide medical and wellness services on or near to campus. Among its clients are Apple and Facebook.

Crossover also has clinics in New York and the Bay Area, and touts its digital features like same-day appointments via a mobile app.

The Apple-Crossover talks went on for months but didn’t materialize into a deal, one of the sources said. Apple also approached nationwide primary care group One Medical, said two other sources.

Crossover Health did not respond to a request for comment. Apple declined to comment.

The discussions about expanding into primary care have been happening inside Apple’s health team for more than a year, one of the people said. It is not yet clear whether Apple would build out its own network of primary care clinics, in a similar manner to its highly successful retail stores, or simply partner with existing players.

It’s also possible Apple will just decide not to make this move.

Some experts see a move into primary care as a way to build out its retail footprint. Apple’s worldwide network of more than 300 stores has been one of its most important sales channels.

Canaan’s Nina Kjellson, a prominent health tech investor who has no knowledge of Apple’s plans, believes the move is plausible. “It would help build credibility with Apple Watch and other health apps,” she explained.

“Apple has cracked a nut in terms of consumer delight, and in the health care setting a non-trivial proportion of satisfaction comes from the quality of interaction in the waiting room and physical space,” she continued.

Richard Milani, chief clinical transformation officer at Ochsner Health System in New Orleans, which was one of the first hospitals to use the Apple Watch as a patient health monitoring tool, agrees it might make sense.

“Such a move wouldn’t surprise me as Apple has demonstrated that its interest in health care isn’t superficial,” said Milani. “Primary care is in great need of re-imagining and rethinking.”

Apple has a lot of health-related projects going on

Apple is expected to make a big move into health care in the coming years. CEO Tim Cook has said recently that he sees health as a “business opportunity,” rather than a philanthropic endeavor.

“There’s much more in the health area,” he said in an interview with Fortune. “There’s a lot of stuff I can’t tell you about that we’re working on, some of which it’s clear there’s a commercial business there.”

In the U.S., the demand for primary care services is outstripping the supply of physicians. According to some estimates, there could be a shortage of up to 35,000 primary care doctors by 2025.

In recent years, Apple has hired dozens of doctors, health consultants and other medical experts, working on campus. As CNBC recently reported, it scooped up Stanford’s rising star in digital health Sumbul Desai for a senior leadership role.

Apple is working with the U.S. Food and Drug Administration on finding better ways to fast-track digital health software through the regulatory approval process. It is also partnered up with researchers at Stanford to determine whether the Apple Watch is accurate and sensitive enough to be used as a tool to screen for a heart rhythm disorder known as atrial fibrillation.

It has other research and development projects, including a teamworking on a sensor to non-invasively and continuously track blood sugar levels.

The company is also working to make the iPhone the central repository for patient health information. Already, it has developed software tools for health developers to make it easier to recruit patients for clinical studies (ResearchKit) and share health information with third-party developers with consent (HealthKit).


What’s up with Apple in healthcare?

In recent months, Apple has been sending out smoke signals suggesting a major thrust into healthcare. The tech giant has bolstered its health team with four recent high-profile hires and forged partnerships with large healthcare systems. These include a clinical trial partnership with Beth Israel Deaconess Hospital and a precision medicine initiative with Scripps Translational Science Institute, according to Politico.

The company has also partnered with IBM, Johnson & Johnson and Medtronic on cognitive computing platform called Watson Health Cloud. The platform offers tailored data analytics services to clinicians.

With a current health team of about 100 strong, including medical device and medical sensor experts, the Cupertino, CA company appears poised to move beyond fitness apps to fully regulated medical technologies and clinical support systems.

In August, Apple confirmed its first digital health acquisition, personal health record startup Gliimpse. The Redwood, CA-based firm, which has raised about $1 million in seed funding, hopes to advance interoperability by aggregating health data into a single digital patient record.

Apple sets its sights on patient care management

Apple sets its sights on patient care management

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