NC hospital system tries another megamerger

https://www.axios.com/newsletters/axios-vitals-f500be38-f71e-4984-955b-efc69e20a435.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

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Atrium Health struck out a year ago when it attempted to merge with in-state rival UNC Health Care, Bob reports. Now, the hospital system has inked a new deal to combine with Wake Forest Baptist Health, which is 90 minutes away from its headquarters.

Why it matters: Research overwhelmingly shows these kinds of regional hospital mergers lead to higher health care prices (and, consequently, premiums) because providers gain negotiating leverage and make it harder for health insurers to exclude them from networks.

Between the lines: The primary hook that Atrium and Wake Forest are selling is that they would build a new medical school in Charlotte. Because who could be against more doctors and research?

  • The organizations didn’t mention how, or if, they would try to keep costs and prices down.
  • The combined system would have almost $10 billion of revenue, which is roughly the size of Boston Scientific.

 

Illinois hospital moves to suspend services, gives employees 60-day notice of closing

https://www.beckershospitalreview.com/finance/illinois-hospital-moves-to-suspend-services-gives-employees-60-day-notice-of-closing.html

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Citing a staff shortage, Los Angeles-based Pipeline Health announced plans April 9 to suspend services at Westlake Hospital in Melrose Park, Ill. That plan was put on hold after a Cook County Circuit Court judge held that the abrupt closure could have “irreparable harm” to the community, according to the Chicago Sun Times.

In late January, Pipeline acquired Westlake Hospital and two other facilities from Dallas-based Tenet Healthcare. A few weeks after the transaction closed, Pipeline revealed plans to shut down 230-bed Westlake Hospital, citing declining inpatient stays and losses of nearly $2 million a month.

Pipeline said staffing rates have significantly declined in the weeks since it filed the application to close Westlake Hospital.

“Our utmost priority is safety and quality of patient care,” Pipeline Health CEO Jim Edwards said in an April 9 press release. “With declining staffing rates and more attrition expected, a temporary suspension of services is necessary to assure safe and sufficient operations. This action is being taken after considering all alternatives and with the best interest of our patients in mind.”

In addition to announcing the suspension of services, Pipeline also said it gave hospital employees a 60-day notice of closure, which is required by state and federal law.

Pipeline’s plan to immediately suspend services at the hospital was put on hold yesterday evening, when Judge Eve Reilly granted the village of Melrose Park a temporary restraining order to prevent the hospital from closing. The restraining order prevents Pipeline from closing the hospital, cutting services or laying off workers until after the state Health Facilities and Services Review Board considers the application to shut down the hospital on April 30, according to the Chicago Tribune.

The board could postpone the application due a pending lawsuit against Pipeline over the closure, according to the Chicago Tribune.

The village of Melrose Park sued Pipeline in March, alleging Pipeline acquired Westlake Hospital under false pretenses. The lawsuit alleges Pipeline and its owners kept their plans to shut down the hospital secret until after the transaction with Tenet closed to avoid opposition from village leaders and community members.

Pipeline recently filed a motion to dismiss the lawsuit, arguing its application for change of ownership made no promise to keep Westlake Hospital open and that the hospital’s financial troubles were not fully evident at the time the change of ownership was prepared.

“The complete impact of Westlake’s 2018 devastating net operating loss was not known until the year’s end and had not fully occurred in September 2018 when Pipeline submitted its application for change of ownership or even when that application was granted,” Pipeline said in a press release.

Pipeline said Westlake Hospital ended 2018 with a net operating loss of $14 million, and those losses are projected to worsen over time.

 

Western Maryland Health System, UPMC to pursue merger

https://www.beckershospitalreview.com/hospital-transactions-and-valuation/western-maryland-health-system-upmc-to-pursue-merger.html?origin=cfoe&utm_source=cfoe

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Cumberland, Md.-based Western Maryland Health System has signed a nonbinding letter of intent with Pittsburgh-based UPMC to pursue a merger.

The systems entered a clinical affiliation in February 2018.  Over the next few months they will engage in further due diligence and research to reach a definitive merger agreement.

A merger would “allow WMHS to maintain clinical excellence in western Maryland and throughout the region for years to come,” said Barry Ronan, president and CEO of the Maryland health system. “Since we became clinically affiliated with UPMC in 2018, we have a stronger clinical and operational position, allowing a broad range of nationally recognized care here locally for the people of Allegany County and surrounding counties in Maryland, Pennsylvania and West Virginia.”

 

 

Consolidating Retail Medicine: Positioning Single Specialty Practices for Acquisition

https://gallery.mailchimp.com/d610d4deb64a452522c5c8e05/files/6c3cd18d-1b68-4860-8a68-30eb1b09e5bd/CBC_59_032719.pdf

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Funded by Private Equity, the ongoing consolidation of solo and small-group physician practices into Physician Practice Management organizations reflects a maturing healthcare marketplace that is repositioning to deliver single specialty care services in retail settings.

Time is running out for solo and small group practices. To position themselves for successful consolidation transactions now and in the future, operators and buyers need to understand the fundamental market dynamics shaping valuations.

Jefferson CEO Dr. Stephen Klasko renews contract through 2024 — 5 notes from his tenure

https://www.beckershospitalreview.com/hospital-management-administration/jefferson-ceo-dr-stephen-klasko-renews-contract-through-2024-5-notes-from-his-tenure.html

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Stephen Klasko, MD, president of Thomas Jefferson University and CEO of Jefferson Health, signed another five-year contract with the Philadelphia-based health system, a spokesperson told Becker’s Hospital Review March 20.

Five things to know about the contract and Dr. Klasko’s first five years with Jefferson:

1. Dr. Klasko, who began leading the health system in 2013, will serve as president of Thomas Jefferson University and CEO of Jefferson Health through 2024.

2. Under Dr. Klasko, Jefferson has grown from three to 14 hospitals. Jefferson’s growth has largely taken place by merging boards across regions. The system has pending deals with Philadelphia-based Einstein Healthcare Network and Temple University’s Fox Chase Cancer Center, also in Philadelphia.

3. At the same time, Jefferson Health has gone from a $1.5 billion system to a more than $5 billion system, generating more than $100 million in savings and efficiencies.

4. New philanthropic initiatives led to the Sidney Kimmel Foundation in Philadelphia donating $110 million to Jefferson Medical College in 2014, representing the largest gift in its history. The college was renamed the Sidney Kimmel Medical College that same year.

5. Under Dr. Klasko’s leadership, Thomas Jefferson University now hosts design curriculum for medical students and operates the No. 3 fashion school in the country.

 

 

POPULATION HEALTH TRENDS TO WATCH, TRENDS TO QUESTION IN 2019

https://www.healthleadersmedia.com/clinical-care/population-health-trends-watch-trends-question-2019?utm_source=silverpop&utm_medium=email&utm_campaign=ENL_190319_LDR_BRIEFING_resend%20(1)&spMailingID=15320844&spUserID=MTY3ODg4NTg1MzQ4S0&spJobID=1601503618&spReportId=MTYwMTUwMzYxOAS2

Healthcare organizations cannot afford to ignore consumers in 2019, as a number of major trends shape the future of care delivery (and a number of other trends warrant more critical thinking).

This article was first published March 18, 2019, by MedPage Today.

By Joyce Frieden, news editor, MedPage Today

PHILADELPHIA — The consumer will be where it’s at for population health in 2019, David Nash, MD, MBA, said here Monday at a Population Health Colloquium sponsored by Thomas Jefferson University.

“Whatever business model empowers the consumer, wherever she is,” including at home, will spell success, according to Nash, who is dean of Jefferson’s School of Population Health. “That’s where population health must go.”

Nash noted that back in 1990, Kodak, Sears, and General Electric were the most important companies in the Dow Jones Industrial Average; all those companies have disappeared or almost disappeared today.

“If we ignore the consumer, it will be at our peril,” Nash said, citing home healthcare, telehealth, and the use of wearables among the trends to watch in the coming year.

Nash, who is a columnist for MedPage Today, also cited these other trends to watch:

  • The growth of Medicare Advantage and managed Medicaid. “These are two programs that are working,” he said. “They’re working because they deliver value — high-quality care with fewer errors — and they follow our mantra: no outcome, no income.”
  • Tax reform. “Whatever your politics are [on this issue], park it at the door,” he said. “The sugar high is over, and now we’re in a carbohydrate coma. We’ve got the biggest deficits in American history; if we continue to spend money we don’t have, what will that do to healthcare? I think it will bite us in the butt when [it] comes to the Medicare trust fund.”
  • Precision medicine and population health. “[There is a notion] that precision medicine and population health are actually kissing cousins,” said Nash. “They are inexorably linked.”
  • Continued deal-making. The CVS/Aetna, UnitedHealth Group/DaVita, and Humana’s deals with Kindred Healthcare and Curo Health Services are just some of the more recent examples, he said. And he noted, the healthcare company formed by Amazon, Berkshire Hathaway, and JPMorgan Chase now has a name: Haven. “It’s a place where they’re going to figure it all out and they’ll let us know when they do.”
  • Continued delivery system consolidation. “Big surprise there,” he said sarcastically. “The real question is will they deliver value? Will they deliver synergies?” Nash noted that his own institution is a good example of this trend, having gone from one or two hospitals 5 years ago to 16 today with another two in the works.
  • Population health technology. “The gravy train of public money into this sector will [soon] be over; now the real challenge is for the IT [information technology] systems on top of those legacy companies; can they create the patient registry information and close the feedback loop, and give doctors, nurses, and pharmacists the information they need to improve care?”
  • The rise of “population health intelligence.” “That’s our term for predictive analytics, big data, artificial intelligence, and augmented intelligence … It says we don’t want to create software writers — we want doctors, nurses, pharmacists, and others who can glean the usable information from the terabyte of information coming our way, to [know how to interpret it].”
  • Pharmaceutical industry disruption. “This is really under the thumb of consumers … It’s all about price, price, price,” Nash said. “We’ve got to find a way to rationalize the pricing system. If we don’t, we’re going to end up with price controls, and as everybody in this room with a background in this area knows, those don’t work either.”
  • More venture capital money. Nash described his recent experience at the JPMorgan Chase annual healthcare conference, where people were paying $1,000 a night for hotel rooms that would normally cost $250, and being charged $20 just to sit in the lobby of one hotel. “What was going on there? It was more private-sector venture money coming into our industry than ever before. [These investors] know that when there’s $1 trillion of waste in an industry, it’s ripe for disruption.”
  • Workforce development. This is needed for the entire industry, said Nash. “More folks know a lot more [now] about population health, quality measurement and management, Lean 6 Sigma, and improving processes and reducing waste. The only way we’re going to reduce that waste of $1 trillion is to have the right kind of workforce ready to go.”

Lawton Burns, PhD, MBA, director of the Wharton Center of Health Management and Economics at the University of Pennsylvania here, urged the audience to look critically at some of these possible trends.

“You need to look for evidence for everything you hear,” said Burns, who coauthored an article with his colleague Mark Pauly, PhD, about the need to question some of the commonly accepted principles of the healthcare business.

Some of the ideas that merit more critical thinking, said Burns and Pauly, are as follows:

  • Economies of scale
     
  • Synergy
     
  • Consolidation
     
  • Big data
     
  • Platforms
     
  • One-stop shops
     
  • Disruption
     
  • Killer apps
     
  • Consumer engagement

“I’m not saying there’s anything wrong with those 10 things, but we ought to seriously consider” whether they’re real trends, Burns said. As for moving “from volume to value” in healthcare reimbursement, that idea “is more aspiration than reality” at this point, he said. “This is a slow-moving train.”

Burns also questioned the motives behind some recent healthcare consolidations. In reality, “most providers are positioning themselves to dominate local markets and stick it to the payers — let’s be honest,” he said. “You have to think when you hear about providers doing a merger, you have to think what’s the public rationale and what’s the private rationale? The private one is [often] more sinister than you realize.”

“IF WE IGNORE THE CONSUMER, IT WILL BE AT OUR PERIL.”

 

 

 

 

Hospital Mergers Improve Health? Evidence Shows the Opposite

https://theincidentaleconomist.com/wordpress/hospital-mergers-improve-health-evidence-shows-the-opposite/

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Many things affect your health. Genetics. Lifestyle. Modern medicine. The environment in which you live and work.

But although we rarely consider it, the degree of competition among health care organizations does so as well.

Markets for both hospitals and physicians have become more concentrated in recent years. Although higher prices are the consequences most often discussed, such consolidation can also result in worse health care. Studies show that rates of mortality and of major health setbacks grow when competition falls.

This runs counter to claims some in the health care industry have made in favor of mergers. By harnessing economies of scale and scope, they’ve argued, larger organizations can offer better care at lower costs.

In one recent example, two Texas health systems — Baylor Scott & White, and Memorial Hermann Health System — sought to merge, forming a 68-hospital system. The systems have since abandoned the plan, but not before Jim Hinton, Baylor Scott & White’s chief executive, told The Wall Street Journal that “the end, the more important end, is to improve care.”

Yet Martin Gaynor, a Carnegie Mellon University economist who been an author of several reviews exploring the consequences of hospital consolidation, said that “evidence from three decades of hospital mergers does not support the claim that consolidation improves quality.” This is especially true when government constrains prices, as is the case for Medicare in the United States and Britain’s National Health Service.

“When prices are set by the government, hospitals don’t compete on price; they compete on quality,” Mr. Gaynor said. But this doesn’t happen in markets that are highly consolidated.

In 2006, the National Health Service introduced a policy that increased competition among hospitals. When recommending hospital care, it required general practitioners to provide patients with five options, as well as quality data for each. Because hospital payments are fixed by the government — whichever hospital a patient chooses gets the payment for care provided to that patient — hospitals ended up competing on quality.

Mr. Gaynor was an author of a study showing that consequences of this policy included shorter hospital stays and lower mortality. According to the study, for every decrease of 10 percentage points in hospital market concentration, 30-day mortality for heart attacks fell nearly 3 percent.

Another study found that hospital competition in the N.H.S. decreased heart attack mortality, and several studies of Medicare also found that hospital competition results in lower rates of mortality from heart attacks and pneumonia.

Another piece of evidence in the competition-quality connection comes from other types of health care providers, including doctors. Recently, investigators from the Federal Trade Commission examined what happens when cardiologists team up into larger groups. The study, published in Health Services Research, focused on the health care outcomes of about two million Medicare beneficiaries who had been treated for hypertension, for a cardiac ailment or for a heart attack from 2005 to 2012.

The study found that when cardiology markets are more concentrated, these kinds of patients are more likely to have heart attacks, visit the emergency department, be readmitted to the hospital or die. These effects of market concentration are large.

To illustrate, consider a cardiology market with five practices in which one becomes more dominant — going from just below a 40 percent market share to a 60 percent market share (with the rest of the market split equally across the other four practices). The study found that the chance of having a heart attack would go up 5 to 7 percent as the largest cardiology practice became more dominant. The chance of visiting the emergency department, being readmitted to the hospital or dying would go up similarly.

The study also found that greater market concentration led to higher spending. And a different study of family doctors in England found that quality and patient satisfaction increased with competition.

For many goods and services, Americans are comfortable with the idea that competition leads to lower prices and better quality. But we often think of health care as different — that it somehow shouldn’t be “market based.”

What the research shows, though, is that there are lots of ways markets can function, with more or less government involvement. Even when the government is highly involved, as is the case with the British National Health Service or American Medicare, competition is a valuable tool that can drive health care toward greater value.