Hospitals Pan Senate ACA Repeal Plan

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he hospital sector offers unanimous thumbs down to the Senate’s proposal to repeal and replace the Affordable Care Act.

The nation’s largest hospital associations united in rejecting the Senate’s proposal to repeal and replace the Affordable Care Act, and urged lawmakers to “hit reset” and “go back to the drawing board.”

Senate Airs Obamacare Repeal ‘Draft’

The response to the Senate plan released Thursday was virtually identical to the unanimous disdain shown this spring for the House Republicans’ American Health Care Act.

That is not surprising because the two bills are fundamentally the same on key points. They both eliminate the individual mandate, slash Medicaid, and eliminate a 3.8% tax on investment income above $200,000 that is a key funding source for Obamacare.

Moody’s Investors Service said Thursday the Senate bill would hurt hospitals.

“Under the proposed Senate bill, both for-profit and not-for-profit hospitals would face weaker demand for services and higher rates of uncompensated care expense, with the most significant impact on the sector occurring after 2020 when the changes to federal Medicaid funding are phased in,” said Daniel Steingart, a vice president at Moody’s.

“Transitioning federal Medicaid payments to a per-capita, or block grant system, and freezing Medicaid expansion would reduce the number of people with insurance and increase hospitals’ exposure to bad debt and uncompensated care costs.”

The nonpartisan Congressional Budget Office has yet score the bill, but by some estimates as many as 11 million people who gained coverage under the Medicaid expansion would be booted from the rolls under the Senate plan.

Hospitals Say ‘Hit Reset’

Rick Pollack, president and CEO of the American Hospital Association, said the Senate Better Care Reconciliation Act “moves in the opposite direction” from “key principles” the AHA had set down to protect health insurance coverage, particularly for vulnerable patients.

84% of Execs: Artificial Intelligence Will Transform Healthcare

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Artificial intelligence has the potential to completely revolutionize the way healthcare systems interact with their patients.

More than 80 percent of healthcare executives polled by Accenture believe that artificial intelligence is on track to completely revolutionize healthcare, and a similar number believe that the advent of machine learning and digital healthcare is driving a significant restructuring of industry economics.

“AI is the new UI,” proclaims the report. “It’s a new world where artificial intelligence is moving beyond a back-end tool for the healthcare enterprise to the forefront of the consumer and clinician experience.”

“AI is taking on more sophisticated roles, with the potential to make every technology interface both simple and smart – setting a high bar for how future interactions work.”

The report envisions a healthcare environment where AI can take over the majority of processes currently overseen by humans.  Consumer relations and patient engagement are likely to be among the first tasks to undergo the shift.

Eighty-four percent of executives believe that AI will fundamentally alter how they gain information from patients and interact with consumers.  A similar number have prioritized the implementation of centralized platforms that take advantage of messaging bots and other services.

More than three-quarters believe that these decisions will make or break their ability to develop a competitive advantage over their peers in the near future.  Eighty-two percent agree that industry leadership will be defined by how well healthcare organizations architect comprehensive, seamless digital ecosystems that truly understand what motivates the choices of their patients.

“The new frontier of digital experience is technology specifically designed for individual human behavior,” the report asserts. “Healthcare leaders recognize that as technology shrinks the gap between effective human and machine cooperation, accounting for unique human behavior expands not only the quality of the experience, but also the effectiveness of technology solutions.”


Collaboration, Big Data Help Phoenix Children’s Focus on Value-Based Care

The exterior of Phoenix Children's Hospital in Arizona

Phoenix Children’s collaborative approach to value-based care relies on community input, big data analytics, and a physician-driven quality measurement program.

Mergers, acquisitions, and new partnerships can be a scary prospect for healthcare organizations, no matter which side of the negotiating table they are occupying.

In addition to potential cultural changes, staffing adjustments, and new workflows to adopt, organizations joining forces in the era of value-based care often have to adopt to new electronic health record systems and accept different strategies for measuring their quality, productivity, and outcomes.

While a successful union can rescue revenue cycles, and bring renewed vitality to flagging providers, healthcare organizations must carefully navigate the delicate acquisition process to ensure that new members of the team have the skills and tools required to reach their full potential.

At Phoenix Children’s, one of the largest pediatric health systems in the country, a desire to offer comprehensive care to the community has led to a firm reliance on big data analytics to gather actionable financial and clinical insights from a rapidly growing provider network.

Over the last three years, Phoenix Children’s has brought more than 100 independent practices into the fold, says Chad Johnson, Senior Vice President and Executive Director of the Phoenix Children’s Care Network – and full data transparency is a fundamental requirement for each and every new member of the team.

The ability to use big data analytics to measure productivity, quality, and financial success within a comprehensive network of care will be vital for Phoenix Children’s as it continues an ambitious move into value-based reimbursements.

“During 2017, we’re moving around 100,000 lives into fully risk-based models,” Johnson explained to  “We’re doing this because we believe that the way to truly influence outcomes is to own the medical management of our populations.  Hospitals will need to have a much larger footprint – a larger, integrated network – that includes independent primary care and specialty groups under one umbrella.”

“We want to move aggressively down this path because we feel that unless you’re willing to take that step, you’re never going to be able to really bend that cost curve,” he added. “We’re confident that we can step up to the plate and succeed in a risk-based environment with the strategies we’re cultivating.”

Number one on the list of challenges as the health network shoulders more financial risk is how to accurately and consistently measure quality across so many disparate locations and provider types.

“We’ve had to integrate data from these practices, which are all using a variety of EHRs, and then figure out how to consume that data and present it so that it can be used for optimizing care and to verify quality improvements across the network,” Johnson said.

“We use this data to target interventions, and to improve the management of our populations, our performance on quality metrics, our utilization, and total cost of care.  That data becomes the number one essential driver of many of the decisions that we’re going to make within our pediatric health enterprise.”

The Secret of Success for Independent and Thriving Hospitals?

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Consolidation remains a major trend in the healthcare industry, especially among hospitals. In 2016, there were 102 announced partnership and transaction deals, compared to 66 in 2010, according to a Kaufman, Hall & Associates analysis. In the current climate of declining reimbursements and greater emphasis on value-based care, many hospital executives see mergers as a necessary way of reigning in costs and benefiting from economies of scale. Yet, a significant number of acute care hospitals remain independent and even thrive. A recent article highlighted Marin General Hospital, which separated from Sutter in 2008 but has performed well enough on its own to fund construction of a new $400 million replacement hospital. What do high-performing independent hospitals have in common? An analysis of Definitive Healthcare data suggests independent hospitals with consistently strong operating margins have limited competition from other facilities, high discharge volumes, and a greater proportion of private payers.

Under the analysis, a high-performing hospital was classified as a facility with a median operating margin of at least four percent during a five-year period from 2011 to 2015, as four percent is often cited as the traditional minimum necessary for a hospital to be able to raise capital effectively. 143 out of around 1,450 independent hospitals met this condition, according to Definitive Healthcare data. Of them, 67 were non-profit, 56 were proprietary (for-profit) companies, and 30 were government owned.

A favorable payor mix and higher-than-average discharge volume appear to be the most common characteristics among the selected hospitals. The median payor mix for independent hospitals was 38 percent private/other, 6 percent Medicaid, and 51 percent Medicare, compared to 50 percent private, 6 percent Medicaid, and 41 percent Medicare at hospitals with median margins over four percent. The greater percentage of private payors means higher reimbursement rates per procedure and can reflect the presence of a more affluent patient base. The larger volume of discharges compared to the overall median, 1,662 to 792, also helps explain their higher margins. Despite the trend towards outpatient treatment, inpatient care is still necessary and tends to be more profitable for hospitals. Some facilities actually witnessed discharge increases from 2011 to 2015, possibly indicating a growing area population, but they were the minority and the trend did not always coincide with a stable operating margin.

Geography also appears to be an important factor. Isolated hospitals with limited competition have a natural advantage, being the only source of inpatient care within the immediate area. Some independent critical access hospitals, which by definition are geographically isolated, do have strong margins, but so do many regular acute care hospitals. Of the top 10 non-critical access facilities by median operating margin, eight are located at least 15 miles from the next-closest hospital, making them the primary destinations in terms of convenience and emergency care for local residents.

The company status of independent hospitals is also associated with high profitability. While proprietary hospitals constituted only around 10 percent of all independent hospitals, they were 37 percent of all those with median margins over four percent. In addition, they tended to have the highest margins overall. Of the top 30 hospitals by median margin, only three identified as non-profits or government-owned hospitals. Nearly all were specialty hospitals, which are generally more profitable than acute-care hospitals as they usually have more favorable payor mixes and focus on a single high-margin specialty, such as surgery or orthopedics. Non-profits came next, while government-owned facilities were the least likely to have strong margins. Of course, the margin of a government-owned hospital is less significant due to its ability to leverage tax revenues to support operations.

While financially strong independent hospitals appear to benefit largely from circumstances beyond their control, such as patient income, insignificant competition, and fundamental organizational structure, they are not a guarantee of success. Previous research, such as that here, has identified other characteristics that are equally if not more critical to an independent hospitals’ fortunes. Among them are strong business and clinical planning, high levels of cooperation with both local providers and national institutions (such as those covering specialty consults and clinical trials access), and capable leadership. Obviously, such qualities are easier described than achieved, but if attained, could be enough to create a strong, thriving hospital even in spite of unfavorable geography, payor mixes, or organization type.

Despite A Growing Appetite, Buffet-Style Flat-Fee Clinics Shutter In Seattle

Despite A Growing Appetite, Buffet-Style Flat-Fee Clinics Shutter In Seattle

In recent years, a small but growing number of practices embraced a buffet approach to primary care, offering patients unlimited services for a modest flat fee instead of billing them a la carte for every office visit and test. But after a pioneering practice shut its doors earlier this month, some question whether “direct primary care,” as it’s called, can succeed.

Many doctors and patients say they like the arrangement. Direct primary care practices typically don’t accept insurance, which frees physicians from treatment preapprovals and claims paperwork. They say that allows them more time and energy for their patients. Patients can consult with their doctor or a nurse practitioner as often they need to, typically for around $100 a month. (Some employers buy the service for their workers.) Patients need to carry a regular insurance plan for hospitalization, specialists and other services. In the long run, the result should be better patient health and lower health care costs overall.

But some health care experts are concerned that the set-up encourages the “worried well” to get more care than they need. They describe unlimited primary care as a blunt instrument that doesn’t necessarily improve the odds that patients will get evidence-based services that improve their health. Others argue it’s important to find a way to provide cost-effective primary care within the health insurance context, not outside it.

Although only a sliver of practices do direct primary care, the number is on the rise, said Shawn Martin, a senior vice president at the American Academy of Family Physicians. He puts the figure at about 3 percent.

Seattle-based Qliance, founded in 2007, was an early leader in this type of care. With startup funding from high-profile investors Jeff Bezos and Michael Dell, by 2015 the company was serving 35,000 patients at several clinics in the Seattle area, including individuals, workers at companies like Expedia and Comcast and Medicaid patients through a contract with the state’s Medicaid insurer. The company said medical claims for Qliance patients were 20 percent lower than those of other patients because Qliance members went to the emergency room less often, were hospitalized less frequently and saw fewer specialists, among other things.

By early 2017, though, Qliance was faltering. The company had lost some large employer clients, and its patient base had shrunk to 13,000. On June 15, it closed five of its clinics. Dr. Erika Bliss, the company’s CEO, said that in general the market is reluctant to pay what it takes for primary care to flourish, and in some cases payers were resistant to rewarding the company, even when Qliance exceeded targets on quality and savings. She will continue to operate one site that provides occupational health for Seattle firefighters.

“The bottom line is it’s not for free,” she said. “You can’t do this for $25 [per person] per month. If we start doing it for $50 to $100 per month then we can start doing serious primary care.”

The closure took January Gens by surprise. A Qliance patient for a couple of years, Gens, 45, had worked with her primary care doctor there to manage crippling pain from endometriosis. The $79 monthly fee was worth every penny, she thought. She had been able to reduce the dosage of some of her medications and was awaiting a referral to start physical therapy when she learned that Qliance was shutting down. Now she’s not sure what she’ll do.

“I had felt very lucky to have found Qliance, to know I had a doctor and could always be seen when needed without causing more damage to the family budget,” Gens said. “Now it’s just gone.”

But for people who are generally healthy and without symptoms that need to be diagnosed, “unlimited primary care is no guarantee that the services that are provided will improve the health of those people,” he said.Patients who have chronic conditions that need ongoing management may benefit from direct primary care, said Dr. A. Mark Fendrick, an internist who directs the University of Michigan’s Center for Value-Based Insurance Design.

As an example, Fendrick noted that the annual checkup, one of the most popular primary care services, isn’t clinically helpful for most people, according to the Choosing Wisely initiative, a program of the ABIM Foundation that identifies overused and unnecessary medical services.

An examination of research related to direct primary care practices found that they charged patients an average $77.38 per month. “Concierge” medical practices are similar to direct primary care, but their monthly fees are typically higher — averaging $182.76 — and they generally bill insurers for their services, the study found. However, the study, published in the November-December 2015 issue of the Journal of the American Board of Family Medicine, concluded that there was a paucity of data related to the quality of care provided by these practices.

Some analysts say that while they’re sympathetic to doctors’ frustration with large numbers of patients, insurance companies’ intrusion into patient care and billing hassles, the answer isn’t to turn their backs on insurance.

“I think absolutely this type of care could be done inside insurance, but it means we have to learn how to pay within the system for the things that doctors should be doing and are doing in direct primary care,” said Robert Berenson, a fellow at the Urban Institute.

As things stand now, the direct-care model can create difficulties for some patients. Take the situation where someone goes to his direct primary care provider for an earache, but antibiotics don’t work and he needs to be referred to an ear, nose and throat specialist. That patient, who likely has a high-deductible plan to provide non-primary care services, will probably be on the hook financially for the entire cost of care provided by the specialist rather than insurance paying a share.

Qliance’s Bliss scoffs at the idea that patients may get stuck paying more out-of-pocket if they have direct primary care. Most people these days have high-deductible health plans, she said. “The reality is that unless you have Medicaid, you are on the hook no matter what.”

Offering unlimited primary care inside the insurance system is no guarantee of success in any case. One such experiment, a subsidiary of UnitedHealthcare called Harken Health with clinics in the Chicago and Atlanta areas, announced it will shut down at the end of the year.

The company confirmed that it would phase out membership at the end of the year but didn’t respond to a request for further comment.

The New War On Sepsis

The New War On Sepsis

Dawn Nagel, a nurse at St. Joseph Hospital in Orange, Calif., knew she was going to have a busy day, with more than a dozen patients showing signs of sepsis. They included a 61-year-old mechanic with diabetes. An elderly man recovering from pneumonia. A new mom whose white blood cell count had shot up after she gave birth.

Nagel is among a new breed of nurses devoted to caring for patients with sepsis, a life-threatening condition that occurs when the body’s attempt to fight an infection causes widespread inflammation. She has a clear mission: identify and treat those patients quickly to minimize their chance of death. Nagel administers antibiotics, draws blood for testing, gives fluids and closely monitors her charges — all on a very tight timetable.

“We are the last line of defense,” Nagel said. “We’re here to save lives. If we are not closely monitoring them, they might get sicker and go into organ failure before you know it.”

Sepsis is the leading cause of death in U.S. hospitals, according to Sepsis Alliance, a nationwide advocacy group based in San Diego. More than 1 million people get severe sepsis each year in the U.S, and up to 50 percent of them die from it. It is also one of the most expensive conditions for hospitals to treat, costing $24 billion annually.

Most hospitals in the U.S. have programs aimed at reducing sepsis, but few have designated sepsis nurses and coordinators like St. Joseph’s. That needs to change, said Tom Ahrens, who sits on the advisory board of Sepsis Alliance.

“From a clinical point of view, from a cost point of view, they make a huge impact,” said Ahrens, a research scientist at Barnes-Jewish Hospital in St. Louis.

Trump Budget, Revised AHCA, Credit Negatives for NFP Hospitals

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The one-two punch of massive cuts to Medicaid that are proposed in both the new budget and the House Republicans’ revised American Healthcare Act would result in cuts of close to $1 trillion over 10 years, analysis shows.

Cutting Medicaid by more than $860 million over the next decade would be a credit negative for states and not-for-profit hospitals, both of which would be left scrambling for alternative funding to cover the loss, according to a new report from Moody’s Investors Service.

Last week the Trump administration unveiled a budget proposal that includes $610 billion in cuts to core Medicaid services, and an additional $250 million in reductions to Medicaid expansion programs created under the Affordable Care Act.

The following day, the Congressional Budget Office released its scoring of the revised American Health Care Act – the Republican plan to repeal and replace the Patient Protection and Affordable Care Act and estimated that it would reduce Medicaid spending by $834 million through 2026.

“The proposals significantly change the longstanding Medicaid financing system and are credit negative for states and not-for-profit hospitals,” Moody’s said in an issues brief.

For states that don’t have the luxury of ignoring budget imbalances, the changes would increase pressure to either kick people off Medicaid, increase the state share of Medicaid funding, or cut payments to hospitals and other providers, Moody’s says.

Hospitals, particularly those serving a high mix of Medicaid patients, could expect to see reimbursement cuts and more cases of uncompensated care as Medicaid patients lose the coverage they’d gained under the ACA’s expansion.

Medicaid is already a significant budget burden for states, consuming between 7% to 34% of state revenue and averaging 16%.

Under the ACA, bad debt expense at not-for-profit hospitals in states that expanded Medicaid eligibility declined on average by 15% to 20% since 2014, enhancing these hospitals’ cash flow. Similarly, the gains in insurance coverage lowered the nationwide uninsured rate to approximately 11%, with uninsured rates even lower in states that expanded their Medicaid rolls, Moody’s says.

“Although the budget would give states limited new flexibility to adjust their Medicaid programs, the measure overall reflects a significant cost shift away from federal funding to states,” Moody’s says. “This cost shift is significant and would force states to make difficult decisions about safety-net spending for hospitals that serve large numbers of indigent patients.”