Dallas-based Tenet Healthcare will close Abrazo Maryvale Campus, a 232-bed hospital in Phoenix, by the end of the year.
The hospital is closing primarily because of dwindling patient volumes, said Frank Molinaro, market CEO for Abrazo Community Health Network, which encompasses six acute care hospitals.
“Over the past several years Abrazo Maryvale has experienced a significant decline in community demand for its services,” said Mr. Molinaro. “The Abrazo Community Health Network’s top priority is delivering high-quality, cost-effective care to residents of the greater Phoenix area, and we are properly allocating our resources to meet our patients’ and our communities’ healthcare needs.”
Although the hospital will remain open until Dec. 18, it will no longer admit patients after Dec. 1. “We will assist patients and their physicians in transitioning their care to other Abrazo Network facilities or the healthcare provider of their choice,” said Mr. Molinaro.
Officials said the closure of Abrazo Maryvale should not impact the community’s access to care, as there are four acute care hospitals and 11 urgent care centers within the 6-mile area surrounding Abrazo Maryvale.
The closure of the hospital will affect around 300 employees. All Abrazo Maryvale employees who are in good standing will receive priority for open positions within Abrazo Community Health Network and its affiliated partners, said Mr. Molinaro.
Tenet, Abrazo Maryvale’s parent company, is exploring a number of strategic options, including the sale of assets, divisions or the entire company. The 77-hospital chain ended the second quarter of this year with a net loss of $56 million, compared to a net loss of $44 million in the same period of the year prior. Tenet will release its earnings for the third quarter in November.
Recent advancements in heart valves and minimally invasive surgery technology have paved the way for even more patients to qualify for endovascular/interventional procedures. Yet these patients present with very complex medical conditions and are at a high risk for poor outcomes. In an effort to improve these poor outcomes and accommodate surgeon and interventionist needs, many hospitals have implemented hybrid operating rooms (typically an OR with a fixed C-arm angiographic system), and many more are considering it.
Hybrid ORs come with steep price tags—some may cost more than $2 million. Add on another $3 million or more for the appropriate OR equipment, integration systems, and facility renovation costs, and your project may now cost north of $5 million.
Cardiac surgeons clearly have a vested interest in hybrid ORs. But how can a hospital ensure that other physicians, their support staff and senior hospital/system leadership are also engaged in the planning of this very complex set-up?
Every successful project starts with an actively engaged foundational team. A hybrid OR project team should include vascular, neurovascular, and cardiothoracic surgeons; interventional cardiologists; interventional radiologists; OR nursing staff; cath lab nursing staff; and the radiology technicians from both the cath lab and interventional radiology. Involvement by the IT team is essential, as they will be key personnel in the integration of equipment booms, the system’s table, and the video monitors. The biomedical engineering department should be part of this initial team as well — they will be the “first responders” whenever there’s a technical glitch. Finally, administrative leaders from the surgical, cardiac, and radiology departments need to be on board as volume projections must be made and Finance has to be engaged to determine if the cost can be justified.
Managing this very large team is challenging with so many different opinions and interests to consider. Each clinical specialty has somewhat unique needs requiring specific equipment placements. While room drawings from various suppliers are helpful, only the most adept clinical user generally has the ability to imagine what they mean for your planned space. The 2-dimensional AutoCAD drawings an architect might develop during the planning stages are tough to interpret if you are not used to reading them. While 3-dimensional and REVIT models are more useful than the 2-D ones, an actual live space—or even a mock-up—really allows clinicians to understand the spatial relationships much more clearly.
One of the best ways to see how hybrid ORs work in actual practice is to visit clinical sites where they are currently installed and talk with frontline staff about their specific challenges. Ask users how they changed the room’s configuration when new clinical services began using the room. Delve into how they manage consumable supplies and where they are stored. Where are their video monitors placed? Are there any limitations due to the size of the room? Did they choose a floor-mounted or a ceiling-mounted C-arm? Why? Ask why they selected their particular angiographic system and how they coordinated the various installation efforts. In addition to all your fact-finding, you must keep your CEO, COO, and other leadership up-to-date with your progress. This may be one of the largest capital expenditures of the year, and in some hospitals it may be the largest of the decade.
After all the fact-finding and installation challenges, your hybrid OR is almost ready. But before it’s fully operational, conduct some role-playing exercises to ensure that staff are well versed in how things will work in advance of the first official hybrid procedure. You may want OR staff to observe a cath procedure and for cath lab staff to observe an OR procedure. Slight differences – or actually major differences—in practice can create cause a great deal of confusion when staff expectations are mixed in a hybrid OR. Make sure credentialing and quality criteria are in place.
Once the hybrid OR is finally in full swing, monitor surgeon and interventionalist usage—monitor “actual” versus “projected” in the number of procedures to assure that goals are met.
With proper planning, a hybrid OR benefits both patients and your hospital’s performance. You may be so successful that you have to start all over again—with planning a second hybrid OR.
Eighty-seven hospital and health system transactions have occurred as of the end of the third quarter of 2017, leading some experts to suggest the total number of deals in 2017 may exceed the 102 deals completed in 2016, according to a recent analysis from Kaufman, Hall & Associates.
Kaufman Hall analysts report 29 transactions were announced during the third quarter, down slightly from the 31 deals announced during the second quarter of 2017.
Here are five findings from the analysis.
1. Eight transactions exceeding $1 billion in revenue have been announced in 2017 thus far. The figure is double the four such transactions announced in all of 2016.
2. The two largest transactions announced during the third quarter included the proposed merger between Charlotte, N.C.-based Carolinas HealthCare System and Chapel Hill, N.C.-based UNC Health Care — announced in September — and St. Louis-based Ascension’s proposed acquisition of Chicago-based Presence Health, announced in August.
3. Eight transactions announced during the third quarter of 2017 involved acquisitions by for-profit organizations, while 19 involved acquisitions by nonprofit institutions.
4. Three transactions announced thus far this year involved academic medical centers partnering with for-profit entities.
5. The three states with the highest number of transactions announced during the third quarter include New York, Pennsylvania and Illinois.
“Transactions among larger and like-sized organizations are rising as health systems across the country look to build scale and new capabilities for an uncertain healthcare environment,” said Anu Singh, managing director of Kaufman Hall. “These transactions are driven primarily by strategic imperatives and less so, by financial drivers … We’re also seeing an uptick in creative affiliations, with partnerships using non-traditional models to achieve their strategic goals in response to a new set of market factors that were not present a decade ago.”
The American Hospital Association released a report last week that said the benefits that not-for-profit hospitals provide to their local communities far outweigh foregone federal tax revenue. But Axios’ Bob Herman talked to some experts who said the AHA’s report has flaws and omissions that exaggerate hospitals’ community roles and understate the power of their tax exemptions.
AHA’s response: Mindy Hatton, the AHA’s top lawyer, responded with a statement to Axios. The report did not include property tax values, she said, because the analysis only covered federal exemptions, which “Congress has jurisdiction over.”
Altarum’s Center for Sustainable Health Spending’s Health Sector Economic Indicators released last month said a major reason for the growth slowdown in the second quarter was hospital spending, which grew just 1.3% rather than the expected 4% growth rate. Year-over-year hospital spending only increased by 1.1% in July. June saw the slowest growth rate year-over-year (0.8%) since January 1989.
Payer efforts to reduce hospital spending seem to be working. Insurers continue to look for more ways to reduce hospital utilization. Anthem said recently it will no longer pay for MRIs and CT scans at hospitals in 13 states unless the tests are an emergency, and that it would no longer cover “unnecessary” emergency department visits. The CMS is also proposing to make costs more site neutral by paying services at off-campus hospital outpatient departments at 25% of regular outpatients rates. The same proposal also includes a small increase (1.75%) for outpatient payments.
All of these efforts look to reduce hospital spending growth and utilization further and move that business to outpatient services, which are less expensive. This spending growth slowdown and move to outpatient services are affecting hospitals, which have responded through M&A activity and by cutting services, outsourcing and laying off staff.
In her blog post, Hempstead said ambulatory care has seen both utilization and job growth, as payers push patients to outpatient care rather than hospitals. “It remains to be seen whether there will need to be some recalibration on the ambulatory side as growth in demand levels off, financial pressures potentially intensify, and the delivery system continues to evolve,” she wrote.
Healthcare spending peaked in Q1 2015, as more Americans with insurance increased utilization of services, prescription drug use and the net cost of insurance, wrote Hempstead. However, that spending leveled off last year and continues to slow this year. She questioned whether we will soon return to pre-ACA spending growth levels.
In addition to ambulatory care, Hempstead said urgent care is a sector to watch. There are more than 7,500 urgent care centers and the sector has grown into a $25 billion industry. Plus, providers such as HCA Healthcare, Community Health Systems and Tenet Healthcare are all investing in urgent care centers and freestanding emergency departments.
However, Hempstead raises the questions: Has the urgent care industry grown too quickly? And is telemedicine a less costly and better alternative?
Nine hospitals in Vermont have signed on to participate next year in the state’s all-payer pilot.
OneCare Vermont, the accountable care organization that is heading the effort, estimated that 120,000 Vermont residents will be covered under the program in its second year, according to an article from Seven Days, compared with 30,000 in year one.
In all-payer models, providers are reimbursed based on patient outcomes, not on how many procedures are performed.
“It’s a huge step—120,000. I’m happy with it,” OneCare CEO Todd Moore told the publication.
OneCare announced that a variety of providers would be joining the model for 2018 in addition to the hospitals, according to an article from Vermont Business Magazine. The all-payer program will also include one hospital in New Hampshire, two federally qualified health centers and 19 skilled nursing facilities.
Twenty-four independent physician practices and 30 independent specialty practices have signed on as well, the magazine reports.
However, some major Vermont providers are hesitant, Seven Days reports. Community Health Centers of Burlington, for instance, has passed on joining the program for 2018 because it’s not prepared yet. Peter Gunther, the system’s chief medical officer, told the publication that joining would “take a lot of work” and officials are concerned that the program could increase the administrative burden on providers.
Vermont isn’t the only state to test an all-payer system; Maryland has operated under one for several years. By 2014, 95% of hospital revenue in the state had shifted to alternative payment models. Much of the success was related to its ability to form effective partnerships early on.
But the outlook isn’t completely sunny. Economists have argued that the program should shut down, as it’s more expensive than other models for operating healthcare.The head of the state’s hospital association has also noted that challenges, like allocating resources to mitigate risk, remain for providers.