Medicare Takes Aim At Boomerang Hospitalizations Of Nursing Home Patients

https://www.npr.org/sections/health-shots/2018/06/13/619259541/medicare-takes-aim-at-boomerang-hospitalizations-of-nursing-home-patients

“Oh my God, we dropped her!” Sandra Snipes said she heard the nursing home aides yell as she fell to the floor.

She landed on her right side where her hip had recently been replaced. She cried out in pain.

A hospital clinician later discovered her hip was dislocated.

That was not the only injury Snipes, then 61, said she suffered in 2011 at Richmond Pines Healthcare & Rehabilitation Center in Hamlet, N.C. Nurses allegedly had been injecting her twice a day with a potent blood thinner despite written instructions to stop.

“She said, ‘I just feel so tired,’ ” her daughter, Laura Clark, said in an interview. “The nurses were saying she’s depressed and wasn’t doing her exercises. I said no, something is wrong.”

Her children also discovered Snipes’ surgical wound had become infected and infested with insects. Just 11 days after she arrived at the nursing home to heal from her hip surgery, she was back in the hospital.

The fall and these other alleged lapses in care led Clark and the family to file a lawsuit against the nursing home. Richmond Pines declined to discuss the case beyond saying it disputed the allegations at the time. The home agreed in 2017 to pay Snipes’ family $1.4 million to settle their lawsuit.

While the confluence of complications in Snipes’ case was extreme, return trips from nursing homes to hospitals are far from unusual.

With hospitals pushing patients out the door earlier, nursing homes are deluged with increasingly frail patients. But many homes, with their sometimes-skeletal medical staffing, often fail to handle post-hospital complications — or create new problems by not heeding or receiving accurate hospital and physician instructions.

Patients, caught in the middle, may suffer. One in 5 Medicare patients sent from the hospital to a nursing home boomerangs back within 30 days, often for potentially preventable conditions such as dehydration, infections and medication errors, federal records show. Such rehospitalizations occur 27 percent more frequently than for the Medicare population at large.

Nursing homes have been unintentionally rewarded by decades of colliding government payment policies, which gave both hospitals and nursing homes financial incentives for the transfers. That has left the most vulnerable patients often ping-ponging between institutions, wreaking havoc with patients’ care.

“There’s this saying in nursing homes, and it’s really unfortunate: ‘When in doubt, ship them out,’ ” said David Grabowski, a professor of health care policy at Harvard Medical School. “It’s a short-run, cost-minimizing strategy, but it ends up costing the system and the individual a lot more.”

In recent years, the government has begun to tackle the problem. In 2013, Medicare began fining hospitals for high readmission rates in an attempt to curtail premature discharges and to encourage hospitals to refer patients to nursing homes with good track records.

Starting this October, the government will address the other side of the equation, giving nursing homes bonuses or assessing penalties based on their Medicare rehospitalization rates. The goal is to accelerate early signs of progress: The rate of potentially avoidable readmissions dropped to 10.8 percent in 2016 from 12.4 percent in 2011, according to Congress’ Medicare Payment Advisory Commission.

“We’re better, but not well,” Grabowski said. “There’s still a high rate of inappropriate readmissions.”

The revolving door is an unintended byproduct of long-standing payment policies. Medicare pays hospitals a set rate to care for a patient depending on the average time it takes to treat a typical patient with a given diagnosis. That means that hospitals effectively profit by earlier discharge and lose money by keeping patients longer, even though an elderly patient may require a few extra days.

But nursing homes have their own incentives to hospitalize patients. For one thing, keeping patients out of hospitals requires frequent examinations and speedy laboratory tests — all of which add costs to nursing homes.

Plus, most nursing home residents are covered by Medicaid, the state-federal program for the poor that is usually the lowest-paying form of insurance. If a nursing home sends a Medicaid resident to the hospital, she usually returns with up to 100 days covered by Medicare, which pays more. On top of all that, in some states, Medicaid pays a “bed-hold” fee when a patient is hospitalized.

None of this is good for the patients. Nursing home residents often return from the hospital more confused or with a new infection, said Dr. David Gifford, a senior vice president of quality and regulatory affairs at the American Health Care Association, a nursing home trade group.

“And they never quite get back to normal,” he said.

‘She Looked Like A Wet Washcloth’

Communication lapses between physicians and nursing homes is one recurring cause of rehospitalizations. Elaine Essa had been taking thyroid medication ever since that gland was removed when she was a teenager. Essa, 82, was living at a nursing home in Lancaster, Calif., in 2013 when a bout of pneumonia sent her to the hospital.

When she returned to the nursing home — now named Wellsprings Post-Acute Care Center — her doctor omitted a crucial instruction from her admission order: to resume the thyroid medication, according to a lawsuit filed by her family. The nursing home telephoned Essa’s doctor to order the medication, but he never called them back, the suit said.

Without the medication, Essa’s appetite diminished, her weight increased and her energy vanished — all indications of a thyroid imbalance, said the family’s attorney, Ben Yeroushalmi, discussing the lawsuit. Her doctors from Garrison Family Medical Group never visited her, sending instead their nurse practitioner. He, like the nursing home employees, did not grasp the cause of her decline, although her thyroid condition was prominently noted in her medical records, the lawsuit said.

Three months after her return from the hospital, “she looked like a wet washcloth. She had no color in her face,” said Donna Jo Duncan, a daughter, in a deposition. Duncan said she demanded the home’s nurses check her mother’s blood pressure. When they did, a supervisor ran over and said, “Call an ambulance right away,” Duncan said in the deposition.

At the hospital, a physician said tests showed “zero” thyroid hormone levels, Deborah Ann Favorite, a daughter, recalled in an interview. She testified in her deposition that the doctor told her, “I can’t believe that this woman is still alive.”

Essa died the next month. The nursing home and the medical practice settled the case for confidential amounts. Cynthia Schein, an attorney for the home, declined to discuss the case beyond saying it was “settled to everyone’s satisfaction.” The suit is still ongoing against one other doctor, who did not respond to requests for comment.

Dangers In Discouraging Hospitalization

Out of the nation’s 15,630 nursing homes, one-fifth send 25 percent or more of their patients back to the hospital, according to a Kaiser Health News analysis of data on Medicare’s Nursing Home Compare website. On the other end of the spectrum, the fifth of homes with the lowest readmission rates return fewer than 17 percent of residents to the hospital.

Many health policy experts say that spread shows how much improvement is possible. But patient advocates fear the campaign against hospitalizing nursing home patients may backfire, especially when Medicare begins linking readmission rates to its payments.

“We’re always worried the bad nursing homes are going to get the message ‘Don’t send anyone to the hospital,’ ” said Tony Chicotel, a staff attorney at California Advocates for Nursing Home Reform, a nonprofit based in San Francisco.

Richmond Pines, where Sandra Snipes stayed, has a higher than average rehospitalization rate of 25 percent, according to federal records. But the family’s lawyer, Kyle Nutt, said the lawsuit claimed the nurses initially resisted sending Snipes back, insisting she was “just drowsy.”

After Snipes was rehospitalized, her blood thinner was discontinued, her hip was reset, and she was discharged to a different nursing home, according to the family’s lawsuit. But her hospital trips were not over: When she showed signs of recurrent infection, the second home sent her to yet another hospital, the lawsuit alleged.

Ultimately, the lawsuit claimed that doctors removed her prosthetic hip and more than a liter of infected blood clots and tissues. Nutt said if Richmond Pines’ nurses had “caught the over-administration of the blood thinner right off the bat, we don’t think any of this would have happened.”

Snipes returned home but was never able to walk again, according to the lawsuit. Her husband, William, cared for her until she died in 2015, her daughter, Clark, said.

“She didn’t want to go back into the nursing home,” Clark said. “She was terrified.”

 

 

 

REITs Adopt Novel Approaches to Stay Relevant in Skilled Nursing

https://skillednursingnews.com/2018/06/reits-adopt-novel-approaches-stay-relevant-skilled-nursing/

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The shifting skilled nursing landscape has forced the major real estate investment trusts (REITs) to change their game plans — and led some industry-watchers to question whether their time is coming to a close.

But there’s still a role REITs can play in the long-term care space, an industry that might actually be more attractive than the far larger and flashier world of private-pay senior living.

“The spread between the debt and cap rates on nursing homes lend themselves to a triple-net lease scenario, and I think that’s why it’s here to stay,” Jeremy Stroiman, CEO of the Chicago-based Evans Senior Investments, told Skilled Nursing News*.

Committed bedfellows

This year has so far seen one of the most significant commitments by a REIT to the skilled nursing space: Welltower, Inc.’s (NYSE: WELL) move to buy the SNF-heavy Quality Care Properties (NYSE: QCP) in a joint venture with non-profit hospital operator ProMedica.

The move raised eyebrows, as the REIT would be taking on a portfolio dominated by troubled operator HCR ManorCare — which filed for bankruptcy protection in March after nearly a year of missed rent payments and other turmoil with former landlord QCP. Under the terms of the Welltower deal, ProMedica also agreed to purchase ManorCare’s operations.

At the time, Welltower CEO Tom DeRosa blamed private equity for the industry’s woes; ManorCare had been owned since 2007 by the Carlyle Group, a Washington, D.C.-based alternative asset management firm.

“Anybody who knows the ManorCare real estate knows it’s really good-quality real estate in really good markets,” DeRosa told SNN in April. “It was just capital-starved, because the skilled nursing industry had been taken private by private equity firms, and what does a private equity firm do? They over-lever businesses in order to [take] cash out of them. The REITs got left holding the bag here when reimbursements changed.”

The counterpoint, of course, is that publicly traded REITs also played some role in the difficulties facing individual skilled nursing operators: In a world of changing reimbursements, staffing pressures, and regulatory scrutiny, the skilled nursing model has become increasingly difficult to reconcile with annual rent escalators and quarterly scrutiny from shareholders.

That’s why Stroiman sees an opportunity for smaller, private REITs that have a more intimate knowledge of the particular challenges and benefits of investing in the skilled nursing space — without the immediate pressure of needing to deliver returns to investors clamoring for information every three months.

For instance, private REITs would be more receptive to an operator that promised an 18-month turnaround period in exchange for lower up-front rents, Stroiman said.

“The operator says: I have $600,000 of upside within 18 months. I’ll pay you an additional rate [after 18 months], but out of the gates, will you give me a break so I can find the upside?’” he said. “And the privately-owned REITs say: ‘That’s a no-brainer.’”

That spirit of experimentation can also extend to different kinds of partnerships between REITs and facilities, according to Cambridge Realty Capital Companies chairman and CEO Jeffrey Davis.

In his senior housing and health care finance practice, Davis has increasingly seen operators buy back a portion of their real estate from REITs, which still maintain a presence going forward. One recent 10-facility deal saw an operator secure a $26 million acquisition loan to regain a stake in their facilities from a major national REIT, Davis said.

“All of a sudden, the REIT goes from having $40 million invested in those 10 buildings to having only $10 million invested in those buildings,” he said. “I think there’s different ways that the REITs can trim those [portfolios], and that, I think, is a way they can go about trimming their assets.”

Still a place for the smart ones

These new strategies don’t mean there isn’t a place for the major skilled nursing REITs that have an intimate knowledge of the business. Stroiman pointed to Sabra Health Care REIT (Nasdaq: SBRA) and CareTrust REIT (Nasdaq: CTRE) as examples of publicly traded REITs with a strong grounding in the industry, in part due to the skilled nursing experience of CEOs Rick Matros and Greg Stapley, respectively.

“They understand the operations behind the nursing homes, and they structure deals like that all the time because they can, because they understand it,” Stroiman said.

In addition, the favorable ratio of cap rates to lending rates means REITs might be more interested in SNFs than senior housing properties, where the upside isn’t as clear — despite the fact that the assisted and independent living industries come with significantly less regulatory scrutiny and the additional stability of private-pay residents.

“The difference between current debt rates and cap rates, it works,” Stroiman said. “It works so much better than senior housing.”

But Davis also emphasized the growing importance of the regional investor and operator in a landscape torn by local-level reimbursement issues and regulatory changes — especially in a narrow-margin environment where residents and investors want “Four Seasons service for the cost of a Holiday Inn.”

“It’s very difficult to run your business with all these different people’s oversight,” Davis said. “And I think the REITs have found that out, and let’s face it — this kind of environment really puts national players at a huge disadvantage, because you just can’t be as efficient as a national player as a regional [operator] or someone who focuses on one or two states. You just can’t.”

 

Nursing home study raises questions on Medicare managed care networks

https://www.reuters.com/article/us-column-miller-medicare/nursing-home-study-raises-questions-on-medicare-managed-care-networks-idUSKBN1F71NS

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Managed care is the hot trend in Medicare, with the number of seniors enrolled in Medicare Advantage plans projected to soar over the coming decade.

These plans offer simplicity by combining all the different parts of Medicare into a single buying decision – and they can save you money.

But before you sign up, ask this question: What happens if I get really sick?

Most Medicare Advantage plans are HMOs or PPOs. When you join, Medicare provides a fixed payment to the plan to cover Part A (hospitalization) and Part B (outpatient services). Advantage is growing quickly, fueled by its value proposition of savings and simplicity – the plans bundle together prescription drug coverage and the out-of-pocket protection of Medigap plans.

But like any type of managed care coverage, there is a trade-off: you must use in-network healthcare providers. For example, one recent study found shortcomings in the quality of providers in some Medicare Advantage provider networks – one out of every five plans did not include a regional academic medical center – institutions that usually offer the highest-quality care and specialists (reut.rs/2DGIvhy).

Now, a new study raises questions about the quality of skilled nursing facilities (SNFs) that are included in Medicare Advantage provider networks.

Researchers at Brown University’s School of Public Health examined Medicare beneficiaries entering skilled nursing facilities (SNFs) from 2012 to 2014. The yardsticks for quality were Nursing Home Compare – Medicare’s own database of nursing home quality ratings – and rates of hospital readmission for those admitted to SNFs. Their key finding: Medicare Advantage enrollees appear more likely to enter lower-quality skilled nursing facilities than people enrolled in traditional fee-for-service Medicare.

Medicare Advantage plans also are subject to a quality rating system, but the researchers found that enrollees in both lower- and higher-quality plans were admitted to SNFs with significantly lower quality ratings.

The SNF quality gaps could impact a large group of people, considering the large – and growing – Medicare population. David Meyers, one of the Brown University study authors, calculates that about 315,000 patients from lower-rated Advantage plans need to use an SNF annually. “If those people had used fee-for-service Medicare, up to 13,000 more of them might have gone to a higher-quality nursing home,” he said.

UNCLEAR HEALTH OUTCOMES

The study does not conclude that healthcare outcomes are necessarily worse for Medicare Advantage enrollees – that was outside the scope of the research. Some researchers have correlated NHC star ratings with patient outcomes, but the jury really is out on this question – partly because of the shortcomings of NHC itself. Much of the data that determines ratings is self-reported by nursing homes, and reviews of this system have found numerous cases of facilities attempting to “game” the system to inflate their ratings.

A large trade group representing the private companies that sponsor Advantage plans – America’s Health Insurance Plans (AHIP) – argues that actual outcomes are better. The group points to another study that found MA enrollees had shorter lengths of stay and were less likely to be readmitted to a hospital and more likely to return home within 90 days of admission than FFS beneficiaries.

But the Brown researchers found that patients from lower-rated Advantage plans tended to go to SNFs with higher readmission rates than fee-for-service patients.

And a review by the Kaiser Family Foundation in 2014 of a large body of research comparing the quality of care provided by Advantage plans and traditional Medicare concluded that the available research is unsatisfying, and that better evidence is needed.

Even if current research is inconclusive, this much is clear: we need much greater transparency to help consumers understand at the point when they are shopping for Medicare Advantage plans using the online Medicare plan finder  (bit.ly/2DKlL0o). “It’s not very clear what SNFs are part of any given Advantage plan,” said Meyers.

Going beyond information in the plan finder also presents challenges, said Tricia Neuman, senior vice president and director of the program on Medicare policy at Kaiser. “You would need to get the provider directory from every Advantage plan she is considering – and those are not available in a uniform format,” she said.

”Then, you’d have to go compare the different nursing home providers online for their quality ratings.”  No one – including AHIP – is even tracking data on how many SNFs are offered by the typical Advantage plan.

Meyers doubts that even a good research tool would help. “Most people don’t think about a nursing facility until they need one  – and it’s really difficult to make decisions about this at a time of crisis,” he said.

Gaining a better understanding of quality in Medicare Advantage plans is going to be urgent as the aging of the nation accelerates. Overall Medicare enrollment will jump nearly 30 percent by 2027 according to projections by the Congressional Budget Office. And Advantage plan enrollment will increase from 19 million to 31 million, which would represent 44 percent of eligible Medicare beneficiaries.

And the need for greater consumer vigilance in choosing SNFs will increase as the Trump administration moves aggressively to deregulate the industry.

 

DOJ recovers $2.4B in healthcare fraud cases: 4 things to know

https://www.beckershospitalreview.com/legal-regulatory-issues/doj-recovers-2-4b-in-healthcare-fraud-cases-4-things-to-know.html

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The Department of Justice obtained $2.4 billion in fraud and false claims settlements and judgments in fiscal year 2017, marking the eighth consecutive year recoveries in the healthcare sector exceeded $2 billion.

Here are four things to know about the DOJ’s false claims and fraud recoveries.

1. The DOJ recovered more than $900 million from the drug and medical device industry in fiscal year 2017. That total includes Shire Pharmaceuticals’ $350 million settlement. The settlement resolved allegations Shire, a multinational pharmaceutical company with its U.S. headquarters in Lexington, Mass., and one of its subsidiaries paid kickbacks and used other unlawful means to induce physicians and clinics to use or overuse Dermagraft, a bioengineered human skin substitute approved by the Food and Drug Administration for the treatment of diabetic foot ulcers. The settlement was the largest False Claims Act recovery by the federal government in a kickback case involving a medical device.

2. The DOJ also reported substantial recoveries from healthcare providers, including Cleveland, Tenn.-based Life Care Centers of America, which agreed to pay $145 million to settle allegations it caused skilled nursing facilities to submit fraudulent claims to Medicare for unnecessary rehabilitation services.

3. In another substantial settlement this year, Westborough, Mass.-based eClinicalWorks, an EHR vendor, and some of its executives and employees agreed to pay $155 million to resolve false claims allegations. The government alleged eClinicalWorks falsely obtained certification for its EHR software by withholding information from its certifying entity. Due to eClinicalWorks’ alleged misrepresentations, healthcare organizations using the company’s software submitted false claims for federal incentive payments, according to the DOJ.

4. In 2017, the DOJ continued to pursue physicians and healthcare executives involved in fraud cases to hold them personally responsible. For example, in 2015, Fort Myers, Fla.-based 21st Century Oncology paid $19.75 million to settle allegations it violated the False Claims Act by billing for medically unnecessary laboratory urine tests and paid bonuses to physicians based on the number of tests they referred to its laboratory. This year, the DOJ secured separate settlements with various urologists who allegedly referred unnecessary tests to one of 21st Century Oncology’s labs.

Infection Lapses Rampant In Nursing Homes But Punishment Is Rare

Infection Lapses Rampant In Nursing Homes But Punishment Is Rare

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A Kaiser Health News analysis of federal inspection records shows that nursing home inspectors labeled mistakes in infection control as serious for only 161 of the 12,056 homes they have cited since 2014.

Basic steps to prevent infections — such as washing hands, isolating contagious patients and keeping ill nurses and aides from coming to work — are routinely ignored in the nation’s nursing homes, endangering residents and spreading hazardous germs.

A Kaiser Health News analysis of four years of federal inspection records shows 74 percent of nursing homes have been cited for lapses in infection control — more than for any other type of health violation. In California, health inspectors have cited all but 133 of the state’s 1,251 homes.

Although repeat citations are common, disciplinary action such as fines is rare: Nationwide, only one of 75 homes found deficient in those four years has received a high-level citation that can result in a financial penalty, the analysis found.

“The facilities are getting the message that they don’t have to do anything,” said Michael Connors of California Advocates for Nursing Home Reform, a nonprofit in San Francisco. “They’re giving them low-level warnings year after year after year and the facilities have learned to ignore them.”

Infections, many avoidable, cause a quarter of the medical injuries Medicare beneficiaries experience in nursing homes, according to a federal report. They are among the most frequent reasons residents are sent back to the hospital. By one government estimate, health care-associated infections may result in as many as 380,000 deaths each year.

The spread of methicillin-resistant Staphylococcus aureus (MRSA) and other antibiotic-resistant germs has become a major public health issue. While Medicare has begun penalizing hospitals for high rates of certain infections, there has been no similar crackdown on nursing homes.

As average hospital stays have shortened from 7.3 days in 1980 to 4.5 days in 2012, patients who a generation ago would have fully recuperated in hospitals now frequently conclude their recoveries in nursing homes. Weaker and thus more susceptible to infections, some need ventilators to help them breathe and have surgical wounds that are still healing, two conditions in which infections are more likely.

“You’ve got this influx of vulnerable patients but the staffing models are still geared more to the traditional long-stay resident,” said Dr. Nimalie Stone, the CDC’s medical epidemiologist for long-term care. “The kind of care is so much more complicated that facilities need to consider higher staffing.”

The Centers for Medicare & Medicaid Services (CMS), which oversees inspections, has recognized that many nursing homes need to do more to combat contagious bugs. CMS last year required long-term care facilities to put in place better systems to prevent infections, detect outbreaks early on and limit unnecessary use of antibiotics through a stewardship program.

But the agency does not believe it has skimped on penalties. CMS said in a statement that most infection-control violations have not justified fines because they did not put residents in certain danger. For instance, if an inspector observed a nurse not washing his or her hands while caring for a resident, the agency said that would warrant a lower-level citation “unless there was an actual negative resident outcome, or there was likelihood of a serious resident outcome.”

 

Health-Care Transactions Update: Deals Significantly Up in Third Quarter

https://www.bna.com/healthcare-transactions-update-n73014471384/?utm_campaign=LEGAL_NWSLTR_Health%20Care%20Update_102717&utm_medium=email&utm_source=Eloqua&elqTrackId=25bb35a21f7f4ee09f31a5e908020cf8&elq=3924f09b80454e158ead21b0e1788481&elqaid=9961&elqat=1&elqCampaignId=7532

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Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

July, August, and September have been the most active deal months in 2017 so far, with over 299 recorded deals. That can be contrasted with the same quarter in 2016, during which only 167 deals were recorded, making it the slowest quarter that year.

The three most active sectors in summer 2017 were long-term care, health-care information technology, and physician practices, as strategic and financial buyers continued to actively shop for assets. The much-discussed market uncertainty—stemming from the political environment, regulatory uncertainty, and other factors—doesn’t seem to be hindering transaction activity.

Long-Term Care Has Been Most Active

Long-term care, including home health, continues to outpace the industry, with 215 transactions year to date. The sector remains attractive for many investors looking to position their portfolios for future growth, predominantly due to demand fundamentals such as an aging U.S. population and shifting preferences of seniors.

It is estimated that 10,000 U.S. residents turn 65 each day, adding to an already sizable population demographic that historically utilizes the vast majority of health-care spending. In particular, as the U.S. health-care system increasingly places emphasis on efficient outcomes and lowering cost of care, long-term care will offer a critical value proposition as an effective means of reducing the number of acute-care hospital visits and maintaining the overall health of seniors.

Of note in the third quarter was BlueMountain’s $700 million purchase of skilled nursing and assisted living assets from Kindred Healthcare. Continued interest and heightened activity are expected in this sector.

Physicians Have More Buyer Options for Transactions

Historically, large independent physician networks looking to partner with either a strategic or financial sponsor were limited in their options—mainly larger physician groups and local health systems. The landscape has quickly evolved as more organizations are seeing the value in controlling large patient populations.

Private equity buyers and insurance giants are increasingly interested in physician groups and are willing to purchase partial or complete interests at a premium. In the third quarter, Ares Capital invested $1.45 billion in DuPage Medical Group, a multi-specialty practice in Illinois previously owned by the private equity group Summit Partners.

Financial sponsors see an opportunity to leverage size and scale through acquisition and de novo growth, to increase patient populations and capture added revenues in a changing reimbursement environment. In April, Optum, a subsidiary of UnitedHealth Group, purchased American Health Network, a 300-physician practice in Indiana for $184 million. The insurer’s strategy is to control the delivery and cost of health care in all settings outside of the hospital.

Strategic buyers such as hospitals continue to actively recruit independent physicians, but are increasingly disadvantaged when forced to compete with the deep pockets of private equity investors and large insurers. Further compounding the problem for hospitals are the fair market value requirements that, by regulation, limit physician compensation options.

The single specialty provider space has experienced some of the highest activity in all of health-care services. With over 100 single specialty practices completing or announcing a transaction so far in 2017, independent physician groups are viewing an active mergers and acquisitions marketplace as an opportunity to secure future growth and viability.

A growing shift away from a hospital setting has increased the negotiating power of private practitioners and many are turning to private equity partners as a way to further increase their geographic footprint through aggressive growth strategies.

More and more groups are expected to pursue partnership and sale options as physicians continue to witness these large transaction values.

Size Is Attractive for Hospital Buyers

Bigger isn’t always better, but when it comes to hospital transactions, there is a market for sizable assets. In this quarter, Ascension Health, the country’s largest health system, emerged as the buyer of the struggling Presence Health in the Chicago area.

Despite Presence’s poor operations, it was able to align with a financially strong provider because it offered immediate scale in the Chicago market. With this transaction, Ascension, through its Amita Health joint venture with Adventist, vaulted up the market-share list from number four (8.1 percent) to number one (18.8 percent), according to Presence Health’s 2016 official statement. Acquiring and maintaining strong market share will continue to be a significant driver of financial success, thus the opportunity to immediately acquire scale through an acquisition will always be attractive.

Health-Care IT Remains Active

For many years, experts have thought that technology would be the key to driving value (high quality at a low cost). The activity in this space demonstrates the truth of that belief as there have been 133 transactions year to date. Notably, large private equity players have been active.

Clayton, Dubilier & Rice Inc., a private equity firm, acquired Carestream Dental in the third quarter, purchasing the dental imaging and practice management company with an eye toward growth, and expecting to leverage the technological expertise to grow the business.

Final Thoughts

While the summer months remained active, we believe the market will stay strong through the end of the year. Activity spawns more activity, and sellers are undoubtedly attracted to the high valuation multiples offered by buyers with tremendous access to capital and few investment options more attractive than health care.

California’s Health Care Workforce

http://www.chcf.org/publications/2017/08/california-workforce

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California’s health care industry employed more than 1.4 million people in 2015. Five Almanac guides provide data on wages, education, and workplaces for selected health professions.

California’s health care industry employed more than 1.4 million people in 2015. Among these workers, nearly 55% were employed in ambulatory settings, about 25% in hospitals, and 20% in nursing or residential care facilities. An aging population, population growth, and federal health reform will likely contribute to increased demand.

This series of Quick Reference Guides from the CHCF California Health Care Almanac examines specific segments of the state’s health care workforce, focusing on pharmacists and pharmacy technicians, physician assistants, health diagnostic and treatment therapists, clinical laboratory scientists and technicians, and imaging professionals.

Among the trends:

  • California’s supply of pharmacists grew 17% between 2012 and 2015, while the supply of pharmacy technicians increased by 8%. About half of the state’s pharmacists were trained in California.
  • The number of physician assistants (PAs) in California grew 37% between 2012 and 2015. The Northern and Sierra region had more licensed PAs per capita than the rest of the state.
  • The supply of occupational and physical therapists increased between 2012 and 2015, while the supply of speech-language pathologists decreased slightly.
  • Between 2012 and 2015, California’s supply of clinical laboratory scientists remained stable while the number of medical/clinical lab technicians rose 11%.

The complete guides, as well as the 2014 editions, are available as Document Downloads.