Hospitals look to venture capital as R&D extension

https://www.healthcaredive.com/news/hospitals-look-to-venture-capital-as-rd-extension/549854/

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Academic and nonprofit hospitals are increasingly embracing venture capital as a way to test new technologies, a shift away from the traditional reliance on developing in-house intellectual property.

Since their founding days, providers like Mayo Clinic and Cleveland Clinic have leaned heavily on investing in IP to test new products and services. More recently, players like Tenet, Trinity and Community Health Systems have become comfortable investing in externally-run funds. Now, hospitals of all sizes, types and tax status are giving corporate venture capital funds, where they invest directly in companies, a go.

Hospital fund managers perceive the financial risk in the same light they see other investments, except venture capital can offer hospitals more flexibility. It’s how health systems like Intermountain think of R&D.

Mike Phillips, managing director of Intermountain Ventures, told Healthcare Dive venture funds offer hospitals a chance to “double dip.” If an investment is successful, the outcomes are positive both clinically and financially.

Most don’t take the lead on investments, preferring to take a minority stake. Hospitals see venture as a way to bring in and test out new technologies.

“If they (the startup) can get a champion in the organization that really helps refine it, improve it, augment it, that is much more valuable than the money,” Mary Jo Potter, an investor and consultant in the field, told Healthcare Dive.

Potter cautioned against expecting too much too soon. It typically takes take 10 years to get an exit and even then, returns are most likely to be in the range of twice or triple the investment. Well over half of the health system-linked venture funds are less the five years old, Potter said.

UPMC Enterprises, the venture capital arm of University of Pittsburgh Medical Center, made $243 million when its population health management spinout Evolent Health went public in 2015, according to UPMC Treasurer Tal Heppenstall, and the nonprofit still retains stock.

Heppenstall, who also leads UPMC Enterprises as president, told Healthcare Dive the health system plans on spinning out two companies by the middle of this year. That would bring its count to five as part of its “renewed focus on the translational science space” — finding business applications for medical research.

In February, the fund participated in a $15 million investment in data analytics company Health Catalyst. UPMC will pilot Health Catalyst’s products in-house.

Early entrants

Ascension seeded its first venture fund with $125 million in 1999, making its first investment ($8.4 million in radiation system TomoTherapy) two years later. Eventually, Ascension decided to bring in limited partners to help close the fund.

Ascension Ventures now currently manages $805 million across four funds.

Kaiser Permanente Ventures is an active investor in its own right. The venture arm of the hospital system manages $400 million in assets over four funds, with 28 exits, according to CB Insights.

Early adoption of CVC by health systems like Ascension and Kaiser paved the way for health systems that want to give venture a try, but want to start slow as limited partners. In recent years, deal flow is ramping up at a healthy clip.

Deals involving at least one provider-backed venture fund totaled nearly $1.3 billion in 2018, according to PitchBook, an all-time high — and on track with overall corporate venture capital participation in the healthcare sector, which CB Insights reports having jumped 51% to $10.9 billion last year.

Newly-seeded funds are springing up in health systems across the country. Providence St. Joseph Health, one of the largest health systems in the country and most active in the venture space, announced its second $150 million healthcare venture capital fund in January, managed by its venture arm Providence Ventures. Providence Ventures’ first fund was launched in 2014.

Starting small

Like many smaller health systems establishing themselves as new players in venture capital, Intermountain made its foray into the space as a limited partner in larger funds managed by Heritage Group and Ascension.

Large firms “have a lot of understanding in how to help manage young companies and get them through the business end of growing their company. We can help on the clinical end,” Phillips said. “We definitely rely on the other folks investing … to both learn from and be a good partner to the companies we invest in.”

Intermountain formally launched its first $80 million venture fund this year.

While the health system recognizes the risk, Phillips argued many hospitals have institutional knowledge most investors don’t. That, in theory, allows them to mitigate some of that risk.

Intermountain’s portfolio is comprised partially of the companies the hospital system spun out of R&D. That’s not uncommon for nonprofit and academic health systems that have traditionally focused on developing IP in-house. As of 2017, 90% of Cleveland Clinic Ventures’ portfolio was invested in IP owned by the health system.

IP is the bread and butter investment for most academic and nonprofit health systems, helping to bring in some return while allowing physicians, who often develop those patents themselves, to retain some benefit.

Mayo Clinic, for example, says it has generated $600 million in revenue from licensing its IP since 1986. The health system has recently rolled its venture activity into its R&D arm under the name Mayo Clinic Ventures. Nevro, a device company the system spun out in 2014, has a current market cap of $1.32 billion.

Hospital executives like to say CVC is a complementary tool to R&D, that it’s another way to tinker — that the money doesn’t matter as much as the ability to improve quality and decrease cost does. That may be true, but at the end of the day it’s an investment, and hospitals have to hope it yields a positive return.

If there’s a chance an investment can lower the cost of care, increase quality and improve clinical care, Phillips said, the bigger risk is not giving it a shot.

 

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.”

 

 

 

 

The Burgeoning Role Of Venture Capital In Health Care

https://www.healthaffairs.org/do/10.1377/hblog20181218.956406/full/?utm_source=Newsletter&utm_medium=email&utm_content=ACA+Contraceptive+Coverage+Mandate+Litigation%3B+Venture+Capital+In+Health+Care%3B+Telehealth+Evidence%3A+A+Rapid+Review&utm_campaign=HAT&

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The US health care system relies heavily on private markets. While private insurers, provider organizations, and drug and device companies are familiar to many, little is known about the increasing presence of venture capital in today’s delivery system. The growth of venture capital and venture capital -backed, early-stage companies (startups) deserves the attention of patients and policy makers because advancements in medicine are no longer exclusively born from providers within the delivery system and increasingly from innovators outside of it.

While venture capital -backed startups in digital health offer opportunities to affect the cost and quality of care, often by challenging prevailing modes of care delivery, they pose potential risks to patient care and raise important questions for policy makers. To date, however, an analytic framework for understanding the role of venture capital in medicine is lacking. 

A Brief History

Venture capital firms provide funding to startups judged to have potential to disrupt existing industries in exchange for ownership and some control over strategy and operations. Venture capital businesses have recently funded hundreds of startups developing technology-enabled digital health products, including wearable devices, mobile health applications, telemedicine, and personalized medicine tools. Between 2010 and 2017, the value of investments in digital health increased by 858 percent, and the number of financing deals in this sector increased by 412 percent; more than $41.5 billion has been invested in digital health this decade (see Exhibit 1). This growth far exceeds the growth of total venture capital funding (166 percent) and total number of venture capital deals (50 percent) (in all fields) in the overall economy, as well as growth in health care spending (34 percent). In 2017 alone, venture capital firms invested more than $11.5 billion in digital health, from patient-facing devices to provider-facing practice management software to payer-facing data analysis services.

Exhibit 1: Venture Capital Funding For Digital Health Versus US Health Care Spending

Sources: Data are from StartUp Health Insights 2017 Year End Report and the National Health Expenditure (NHE) Accounts Team. Notes: Dollars invested (blue bars) have units of billions. The NHE plot is expressed in trillions (T) of dollars. A deal is a distinct agreement reached between venture capital investors and a startup company, typically including parameters such as the amount of money invested and equity involved in a given startup company. 

Three key elements have likely driven this growth. First, the inability of physicians to consistently monitor patients and persistent challenges with patient adherence have created a need for digital technologies to serve as a mechanism for care delivery. Second, the increasing migration of medical care out of the hospital and fragmentation of care among specialties has increased demand for new forms of patient-to-provider and provider-to-provider communication. Third, expansions in insurance coverage and new payment models that encourage cost control have aligned incentives for technologies that aim to substitute higher-cost services with lower-cost, higher-value services.

Strategies For Disruption

The venture capital movement will likely be judged on two factors: whether it improves patient outcomes and experience, and whether it saves money for society. To date, rigorous evidence on the impact of venture capital -backed innovations is scarce. Most deals have occurred in the past few years, and most startup technologies take time to scale and are not implemented with a control group or a design that facilitates easy evaluation. Traditional provider groups may often be too small, hospital operations too rigid, and delivery systems too skeptical for a given digital health innovation to be implemented widely and tested rigorously. Moreover, data on the impact of such technologies on patients and costs may often be held privately akin to trade secrets.

However, some early small-scale randomized controlled studies have suggested potential health benefits (for example, improved glycemic and blood pressure control) of mobile health applications and wearable biosensors. Evidence may grow as startup products are brought closer to market.

Despite the shortage of rigorous public evidence, the strategies of startups to influence use and spending are apparent. Many startups target wellness and prevention among self-insured employers, using smartphones and wearable devices to engage and track patients with the hope of lowering costs through decreasing use. Although this strategy of saving money through helping people become healthier in their daily lives remains largely unproven, hundreds of companies in this space have received substantial amounts of funding. Among the most well-known is Omada Health, which provides proprietary online coaching programs and other digital tools to help prevent diabetes and other chronic diseases. It is considered the nation’s largest federally recognized provider of the Centers for Medicare and Medicaid Services (CMS) Diabetes Prevention Program, having received more than $125 million in venture funding since it was founded in 2011. 

Another segment of startups focus on a separate driver of health care costs—the prices of medical services. These firms are increasingly partnering with employers to steer patients toward lower-cost providers for expensive treatments such as joint replacements. Their path to success—creating savings through price transparency—is also largely unproven, although lowering prices through enhancing competition is a reasonable approach. 

Still other digital health startups focus on improving access to primary care via telehealth, virtual visits, and related mechanisms of accessing care. Some use biometric data (genetics or biosensor data) to facilitate early detection of medical problems. While evidence is sparse, these efforts may lead to increased use and spending. Moreover, there is no guarantee that the startup technologies will be priced below existing substitutes. To the extent that these technologies improve outcomes but at a greater total cost, policy makers and adopters of such innovations may face difficult decisions over access and tradeoffs. 

Points Of Caution 

Given differences among health care and other industries, the success of the digital health boom is far from promised. Medical evidence suggests that changes in practice typically lag behind technological advancements. For evidence-based guidelines, randomized controlled trials remain the gold standard despite their considerable expense and length, which place them out of reach for many startup technologies. In addition to showing efficacy, interventions must convincingly demonstrate that they “do no harm.” 

This culture directly conflicts with the “fail fast, fail hard” reality of venture capital, in which a return on investment is typically sought within several years. Furthermore, the complex clinical workflows of traditional medical practices offer little room for disruption without potentially putting provider satisfaction or patient safety at risk (at least in the short term). In a profession in which institutions move slowly and health is at stake, technological innovations face a higher threshold for acceptance relative to other industries.

Other barriers to adoption include: the difficulty of building successful business models centered on lowering spending in a largely revenue-maximizing system in which providers often lack the incentives to eliminate waste; HIPAA-related privacy rules and restrictions that hinder data sharing across digital platforms; incompatibility between newer cloud-based technologies that startups build and old legacy technologies used by traditional providers; and the lack of billing codes and ways of recognizing provider effort in digital health, which complicates budget or price negotiations. It is perhaps no surprise that 98 percent of digital health startups ultimately fail

Outlook For The Future 

In the first three quarters of 2018, venture capital involvement in health care has further accelerated. The third quarter saw an estimated $4.5 billion in digital health funding—the most of any quarter on record. As this industry grows, policy makers have an important role to play. 

Regulatory guidance is needed to shape the scope and direction of new technologies, with patient safety and societal costs in mind. Venture capital firms and startups often point to a lack of regulatory guidance on what must undergo formal approval. The current Food and Drug Administration (FDA) Digital Health Innovation Plan is a positive step toward defining the path to market for low-risk digital devices and specifying what digital health tools fall outside the FDA’s scope.

Second, a reimbursement framework for digital technologies is needed. Thoughtful debate about their prices and new billing codes should be had in an open forum. Outcomes-based pricing and other value-based approaches that go beyond the fee-for-service standard should be considered.

Most importantly, policy makers and government agencies such as the FDA, CMS, and the National Institutes of Health should study the effects of startups in health care and facilitate research on these products to inform payers and the public of their benefits and drawbacks. In the current climate, little funding has been allocated toward such research. This leaves providers and patients relying almost exclusively on industry-funded studies, at times conducted by the same startup that is selling the product or service. Publicly funded, independent studies of the impact of venture capital-backed products and services on clinical and economic outcomes are needed to establish an evidence base that patients and providers can broadly trust.

 

 

 

Health care startup aims to eliminate hospital and doctor bills

https://www.axios.com/startup-ooda-health-aims-to-eliminate-hospital-doctor-bills-e1fc6bdc-6755-4627-b954-59fc35326d3e.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

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New payment startup Ooda Health has raised $40.5 million on the premise that its technology will make sure patients never get another bill from a hospital or doctor.

Why it matters: Ooda Health not only has big-name venture capitalists on board (Oak HC/FT and DFJ led the funding round), but also has large health insurers and providers as investors. However, while the company attempts to cut administrative waste, it won’t address the health care system’s underlying pricing and spending habits.

The details: Anthem, Blue Cross Blue Shield of Arizona, Blue Shield of California, Blue Cross Blue Shield of Massachusetts, Dignity Health and Hill Physicians are the initial industry investors.

  • Ooda Health would not disclose their investments. Seth Cohen, Ooda Health’s co-founder and president, said the company got its start after Blue Shield of California CEO Paul Markovich recommended a meeting with Dignity Health CEO Lloyd Dean.

How it works: Health insurance companies pay Ooda Health an administrative fee and a risk-sharing payment. Ooda Health then connects with hospitals and doctors and pays them instantly based on what is in the electronic health record instead of a traditional medical claim. Any outstanding payment issues would be handled through the insurance company, rather than directly by providers.

  • Cohen made this analogy: If you’re at a restaurant and you use your credit card for the meal, the restaurant gets paid immediately. The credit card company, not the restaurant, then follows up with you about how to pay off what you owe.
  • Health insurers would avoid late fees and penalties for missing payment deadlines, patients who are encountering higher deductibles and out-of-pocket costs wouldn’t have to pay providers directly, hospitals wouldn’t have to chase outstanding balances, and providers would get paid quickly.
  • “It is a bad model for providers to collect from patients,” Cohen said, noting that collection agencies are cut out in this scenario.

Yes, but: Out-of-network hospitals and doctors would still charge exorbitant fees on their own, and administrative work wouldn’t be completely eradicated. This also makes the electronic health record a de facto tool for billing instead of solely a repository for patient medical information.

 

The Last Company You Would Expect Is Reinventing Health Benefits

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Frustrated with insurers, some large companies — including a certain cable behemoth — are shedding long-held practices and adopting a do-it-yourself approach.

It’s hard to think of a company that seems less likely to transform health care.

It isn’t headquartered in Silicon Valley, with all the venture-backed start-ups. It’s not among the corporate giants — Amazon, Berkshire Hathaway and JPMorgan Chase — that recently announced, with much fanfare, a plan to overhaul the medical-industrial complex for their employees.

And it is among the most hated companies in the United States, according to many surveys on customer satisfaction.

It’s Comcast. The nation’s largest cable company — the $169 billion Philadelphia-based behemoth that also controls Universal Parks & Resorts, “Sunday Night Football” and MSNBC — is among a handful of employers declaring progress in reaching a much-desired goal. In the last five years, the company says, its health care costs have stayed nearly flat. They are increasing by about 1 percent a year, well under the 3 percent average of other large employers and below general inflation.

“They’re the most interesting and creative employer when it comes to health care benefits,” said Dr. Bob Kocher, a partner at Venrock, a venture capital firm whose portfolio companies have done business with Comcast. (The cable company declined over several months to provide executives for an interview on this topic.)

Comcast, which spends roughly $1.3 billion a year on health care for its 225,000 employees and families, has steered away from some of the traditional methods other companies impose to contain medical expenses. It rejected the popular corporate tack of getting employees to shoulder more of the rising costs — high-deductible plans, a mechanism that is notorious for discouraging people from seeking medical help.

Most employers now require their workers to pay a deductible before their insurance kicks in, with individuals on the hook for $1,500, on average, in upfront payouts, according to the Kaiser Family Foundation. Instead, Comcast lowered its deductible to $250 for most of its workers.

“We believe that no one should be required to be an expert in health care,” Shawn Leavitt, the executive overseeing benefits at Comcast, said in a 2015 interview with a consultant. “Our model is based on providing employees support and assistance in making the right decisions for themselves and their families. Employees should not feel alone, confused and overwhelmed when it comes to understanding and selecting their benefits.”

Cable TV subscribers who have felt confused and overwhelmed when dealing with Comcast customer service may be surprised to learn how nimbly the company has upgraded services for its employees. While Comcast continues to work with insurers, it has largely shunned them as a source of innovation. Instead, it has assembled its own portfolio of companies that it contracts with, and invests in some of them through a venture capital arm, Comcast Ventures.

Turning to health start-ups for new benefits

One such company is Accolade, in which Comcast is an investor, and which provides independent guides called navigators to help employees use their health benefits. Another, called Grand Rounds, offers second opinions and help in finding a doctor. Comcast was also among the first major employers to offer workers access to a doctor via cellphone through Doctor on Demand, a telehealth company.

“We see the start-up community as where the real disruption is taking place,” said Brian Marcotte, the chief executive of the National Business Group on Health, which represents large employers. “We weren’t seeing enough innovation.” The group now vets some of these companies for employers, including Comcast.

Comcast “is the tip of the spear,” Mr. Marcotte said.

The corporation, of course, is controlling costs and offering these unusual benefits out of self-interest. And these services are sometimes handed out at the expense of improving wages. In a tight labor market, Comcast also needs to remain competitive for not only highly skilled employees, but also lower-wage workers whose direct contact with customers has generated so much dissatisfaction over the years. “We do these things because it’s great for business,” Mr. Leavitt said.

But much of what sets Comcast apart is its willingness to directly tackle its medical costs rather than relying on others — insurers, consultants or associations. It’s a luxury only the largest companies can afford, and roughly a fifth of big companies continue to see annual cost increases of more than 10 percent, according to Mercer, a benefits consultant.

While fate may play a role — a single expensive medical claim can drive up a company’s costs in any given year — employers, like Comcast, that use a variety of strategies tend to have the lowest annual increases. “You attack this thing from different angles,” said Beth Umland, Mercer’s director of research for health and benefits. “The intensity of effort pays off.”

Some companies are shaking up hospitals and doctors

Other employers are focusing more attention on unsatisfying hospitals and doctors. Walmart has been at the forefront of efforts to direct employees to specific providers to get medical care, even if it means paying their travel to places like the Mayo Clinic.

The retailer said it had found, for example, that employees were being told they needed back surgery even when they would not benefit from the procedure. “Walmart isn’t going to stand for this,” said Marcus Osborne, a benefits executive, at a health business conference. “We aren’t going to sit around to try to build another coalition or bureaucracy.”

The majority of working-age Americans — some 155 million — get their health insurance through an employer, and most companies cover their own medical costs. The companies rely on insurers to handle the paperwork and to contract with hospitals and doctors. Insurers may also suggest programs like disease management or wellness to help companies control costs.

But employers, including that Amazon-Berkshire-JPMorgan alliance, are increasingly unhappy with the nation’s health care systems. Companies are paying more than they ever have. And their employees, saddled with escalating out-of-pocket costs and a confusing maze, aren’t well served, either. “The results haven’t been there,” said Jim Winkler, a senior executive at Aon, a benefits consultant. “There’s frustration.”

At Comcast, some workers probably miss out on the new ventures altogether and others don’t have much choice but to go along. The company’s relationship with labor is often strained, and it has largely managed to fend off efforts by groups like the Communications Workers of America to organize its employees. Robert Speer, an official with a local of the International Brotherhood of Electrical Workers in New Jersey that represents about 180 workers, noted the company’s use of independent contractors to do much of its work, none of whom are eligible for benefits and can be paid by the job rather than hourly. “You are making no money,” he said.

And, like many other workers, many employees are being pinched by the rising cost of premiums, Mr. Speer said.

Comcast workers with company coverage are told to go to Accolade first. Its phone number appears on the back of their insurance cards and on the benefits website. “The key to Accolade’s success is being the one place to go,” said Tom Spann, a co-founder of the company.

Geoff Girardin, 27, used Accolade when he worked at Comcast a few years ago and he and his wife were expecting. “Our introduction to Accolade was our introduction to our first kid,” Mr. Girardin said. He credits Accolade for telling him his wife was eligible for a free breast pump and helping find a pediatrician when the family moved. “It was a huge, huge help to have somebody who knew the ins and outs” of the system, he said.

For employees like Jerry Kosturko, 63, who survived colon cancer, Accolade was helpful in steering him through complicated medical decisions. When he needed an M.R.I., his navigator recommended a free-standing imaging center to save money. “They will tell me what things will cost ahead of time,” Mr. Kosturko said.

A nurse at Accolade helped him manage symptoms after he had surgery for bladder cancer in 2014. He developed terrible spasms because, he said, he wasn’t warned to avoid caffeine. The Accolade nurse thought to ask him and quickly urged him to call his doctor for medicine to ease his symptoms.

Mr. Kosturko also turned to Grand Rounds when his doctor thought he might need to stay overnight in the hospital to be tested for sleep apnea. The second opinion convinced him he did not.

In complicated cases, Grand Rounds can serve as a check on the network assembled by the insurer. It pointed to the case of Ana Reyes, 39, who does not work for Comcast and had contacted Grand Rounds after treatment for cervical cancer. When she continued to have symptoms, she says, she was told to wait to see if they persisted.

“This is my life at stake,” she recalled in an interview. “I need to know what I’m doing is the best plan.” Grand Rounds asked a specialist at Duke University School of Medicine, Dr. Andrew Berchuck, to review her case.

“Grand Rounds was able to get all my medical records, which is over 1,000 pages,” Ms. Reyes said. Dr. Berchuck reviewed and wrote his opinion in one week, recommending a hysterectomy because she was likely to have some residual cancer. “The same day, my treating physician, she called me to schedule a hysterectomy,” Ms. Reyes said.

Insurers are usually none too pleased with the employers’ use of alternatives: They’re reluctant to share information with an outside company and poised to undercut a potential competitor by offering a cheaper price. They may even refuse to work with some of the companies.

The largest employers push back. Fidelity Investments insists on cooperation between insurers and outsiders, said Jennifer Hanson, an executive at Fidelity Investments. “Those who don’t will be fired,” she said at a health business conference.

For Comcast, the next frontier is the financial well-being of its employees, many of whom live paycheck to paycheck and may not be able to afford even a small co-payment toward a doctor’s visit. Employees who run into financial trouble have no independent source of information, Mr. Spann said.

After talking to hundreds of companies, Comcast Ventures could not find a financial services start-up that would help employees without trying to sell them a product or earning their money on commissions. So Comcast recruited Mr. Spann to serve as chief executive of a new company, Brightside, that it created and invested in.

Employees who are less worried about their finances may be less likely to miss work or suffer from health problems, Mr. Leavitt said. Ultimately, he said, “there is a productivity play for Comcast.”

 

 

Ambulance trips can leave you with surprising — and very expensive — bills

https://www.washingtonpost.com/national/health-science/ambulance-trips-can-leave-you-with-surprising–and-very-expensive–bills/2017/11/17/6be9280e-c313-11e7-84bc-5e285c7f4512_story.html?tid=ss_tw-bottom&utm_term=.78d3dfa36d97

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One patient got a $3,660 bill for a four-mile ride. Another was charged $8,460 for a trip from a hospital that could not handle his case to another that could. Still another found herself marooned at an out-of-network hospital, where she’d been taken by ambulance without her consent.

These patients all took ambulances in emergencies and got slammed with unexpected bills. Public outrage has erupted over surprise medical bills — generally out-of-network charges that a patient did not expect or could not control — prompting 21 states to pass laws over the years protecting consumers in some situations. But these laws largely ignore ground ambulance rides, which can leave patients stuck with hundreds or even thousands of dollars in bills and with few options for recourse, finds a Kaiser Health News review of 350 consumer complaints in 32 states.

Patients usually choose to go to the doctor, but they are vulnerable when they call 911 or get into an ambulance. The dispatcher picks the ambulance crew, which may be the local fire department or a private company hired by the municipality. The crew, in turn, often picks the hospital. Moreover, many ambulances are not summoned by patients, but by police or a bystander.

Betsy Imholz, special projects director at the Consumers Union, which has collected more than 700 patient stories about surprise medical bills, said at least a quarter concern ambulances.

“It’s a huge problem,” she said.

Forty years ago, most ambulances were free for patients, provided by volunteers or town fire departments using taxpayer money, said Jay Fitch, president of Fitch & Associates, an emergency services consulting firm. Today, ambulances are increasingly run by private companies and venture capital firms. Ambulance operators now often charge by the mile and sometimes for each “service,” such as providing oxygen. If the ambulance is staffed by paramedics rather than emergency medical technicians, that will result in a higher charge — even if the patient didn’t need paramedic-level services. Charges range from zero to thousands of dollars.

The core of the problem is that ambulance companies and private insurers often can’t agree on a fair price, so the ambulance service doesn’t join the insurer’s network. That leaves patients stuck with out-of-network charges that are not negotiated, Imholz said.

This happens to patients frequently, according to a recent study of more than half a million ambulance trips taken by patients with private insurance in 2014. The study, by two staffers at the Federal Trade Commission, found that 26 percent of these trips were billed on an out-of-network basis.

That figure is “quite jarring,” said Loren Adler, co-author of a recent report on surprise billing.

The KHN review of complaints revealed two common scenarios leaving patients in debt: First, patients get into an ambulance after a 911 call. Second, an ambulance transfers them between hospitals. In both scenarios, patients later learn the fee is much higher because the ambulance was out-of-network, and after the insurer pays what it deems fair, they get a surprise bill for the balance, also known as a “balance bill.”

The Better Business Bureau has received nearly 1,200 consumer complaints about ambulances in the past three years; half were related to billing, and 46 mentioned out-of-network charges, spokeswoman Katherine Hutt said.

While the federal government sets reimbursement rates for patients on Medicare, it does not regulate ambulance fees for patients with private insurance. Those patients are left with a highly fragmented system in which the cost of a similar ambulance trip can vary widely from town to town. There are about 14,000 ambulance services across the country, run by governments, volunteers, hospitals and private companies, according to the American Ambulance Association. (The Washington area reflects that mix.)

For a glimpse into the unpredictable system, consider the case of Roman Barshay. The 46-year-old software engineer, who lives in Brooklyn, was visiting friends in the Boston suburb of Chestnut Hill last November when he took a nasty fall.

Barshay felt a sharp pain in his chest and back, and he had trouble walking. An ambulance crew responded to a 911 call at his friends’ house and drove him four miles to Brigham and Women’s Hospital, taking his blood pressure as he lay down in the back. Doctors there determined he had sprained tendons and ligaments and a bruised foot, and released him after about four hours, he said.

After Barshay returned to Brooklyn, he got a bill for $3,660, or $915 for each mile of the ambulance ride. His insurance had covered nearly half, leaving him to pay the remaining $1,890.50.

“I thought it was a mistake,” Barshay said.

But Fallon Ambulance Service, the private company that brought him to the hospital, was out-of-network for his UnitedHealthcare insurance plan.

“The cost is outrageous,” said Barshay, who reluctantly paid the bill after Fallon sent it to a collection agency. If he had known what the ride would cost, he said, he would at least have been able to refuse the ride and “crawl to the hospital myself.”

In a statement, UnitedHealthcare said: “Out-of-network ambulance companies should not be using emergencies as an opportunity to bill patients excessive amounts when they are at their most vulnerable.”

“You feel horribly to send a patient a bill like that,” said Peter Racicot, senior vice president of Fallon, a family-owned company based outside Boston.

But ambulance firms are “severely underfunded” by Medicare and Medicaid, Racicot said, so Fallon must balance the books by charging higher rates for patients with private insurance.

Racicot said his company has not contracted with Barshay’s insurer because they couldn’t agree on a fair rate. When insurers and ambulance companies can’t agree, he said, “unfortunately, the subscribers wind up in the middle.”

It’s also unrealistic to expect EMTs and paramedics at the scene of an emergency to determine whether their company takes a patient’s insurance, Racicot added.

Ambulance services must charge enough to subsidize the cost of keeping their crews ready around the clock, said Fitch, the ambulance consultant. In a third of the cases where an ambulance crew answers a call, he added, they end up not transporting anyone and the company typically isn’t reimbursed for the trip.

In part, Barshay had bad luck. If his injury had happened just a mile away — inside Boston’s city limits — he could have ridden a city ambulance, which would have charged $1,490, according to Boston EMS, a sum that his insurer probably would have covered in full.

Very few states have laws limiting ambulance charges, and most state laws that protect patients from surprise billing do not apply to ground ambulance rides, according to Brian Werfel, a consultant to the American Ambulance Association. And none of the surprise-billing protections apply to people with self-funded employer-sponsored health insurance plans, which are regulated only by federal law. That’s a huge exception: 61 percent of privately insured employees are covered by self-funded employer-sponsored plans.

Some towns that hire private companies to respond to 911 calls may regulate fees or prohibit balance billing, Werfel said, but each locality is different.

Insurers try to protect patients from balance billing by negotiating rates with ambulance companies, said Cathryn Donaldson, a spokeswoman for America’s Health Insurance Plans. But “some ambulance companies have been resistant to join plan networks” that offer Medicare-based rates, she said.

Medicare rates vary widely by geographic area. On average, ambulance services make a small profit on Medicare payments, according to a report by the Government Accountability Office. If a patient uses a basic life support ambulance in an emergency in an urban area, for instance, Medicare payments range from $324 to $453, plus $7.29 per mile. Medicaid rates tend to be significantly lower.

There’s evidence of waste and fraud in the ambulance industry, Donaldson added, citing a study from the Office of Inspector General at the Department of Health and Human Services. The report concluded that in 2012 Medicare paid more than $50 million in improper ambulance bills, including for supposedly emergency-level transport that ended at a nursing home, not a hospital. One in 5 ambulance services had “questionable billing” practices, said the report, which noted that Medicare spent $5.8 billion on ambulance transport that year.

Most complaints reviewed by Kaiser Health News did not appear to involve fraudulent charges. Instead, patients got caught in a system in which ambulance services can legally charge thousands of dollars for a single trip — even when the trip starts at an in-network hospital.

That’s what happened to Devin Hall, a 67-year-old retired postal inspector in Northern California. While he faces Stage 3 prostate cancer, Hall is also fighting a $7,109.70 bill from American Medical Response, the nation’s largest ambulance provider.

On Dec. 27, 2016, Hall went to a local hospital with rectal bleeding. Because the hospital didn’t have the right specialist to treat his symptoms, it arranged for an ambulance ride to another hospital about 20 miles away. Even though the hospital was in his network, the ambulance was not.

Hall was stunned to see that AMR billed $8,460 for the trip. His federal health plan, the Special Agents Mutual Benefit Association, paid $1,350.30 and held Hall responsible for $727.08, records show. (According to his plan’s explanation of benefits, it paid that amount because AMR’s charges exceeded the plan’s Medicare-based fee schedule, which is based on Medicare rates.) But AMR turned his case over to a debt collector, Credence Resource Management, which sent an Aug. 25 notice seeking the full balance of $7,109.70.

“These charges are exorbitant — I just don’t think what AMR is doing is right,” said Hall, noting that he had intentionally sought treatment at an in-network hospital.

He has spent months on the phone calling the hospital, his insurer and AMR trying to resolve the matter. Given his prognosis, he worries about leaving his wife with a legal fight and a lien on their Brentwood, Calif., house for a debt they shouldn’t owe.

After being contacted by Kaiser Health News, AMR said it pulled Hall’s case from collections while it reviews the billing. After further review, company spokesman Jason Sorrick said the charges were warranted because it was a “critical care transport, which requires a specialized nurse and equipment on board.”

Sorrick faulted Hall’s health plan for underpaying, and said Hall could receive a discount if he qualifies for AMR’s “compassionate care program” based on his financial and medical situation.

“In this case, it appears the patient’s insurance company simply made up a price they wanted to pay,” Sorrick said.

In July, a California law went into effect that protects consumers from surprise medical bills from out-of-network providers, including some ambulance transport between hospitals. But Hall’s case occurred before that, and the state law doesn’t apply to him because of his federal insurance plan.

The consumer complaints reviewed by Kaiser Health News reveal a wide variety of ways that patients are left fighting big bills:

• An older patient in California said debt collectors called incessantly, including on Sunday mornings and at night, demanding an extra $500 on top of the $1,000 that his insurance had paid for an ambulance trip.

• Two ambulance services responded to a New Jersey man’s 911 call when he felt burning in his chest. One of them charged him $2,100 for treating him on the scene for less than 30 minutes — even though he never rode in that company’s ambulance.

• A woman who rolled over in her Jeep in Texas was charged a $26,400 “trauma activation fee” — a fee triggered when the ambulance service called ahead to the emergency department to assemble a trauma team. The woman, who did not require trauma care, fought the hospital to get the fee waived.

In other cases, patients face financial hardship when ambulances take them to out-of-network hospitals. Patients don’t always have a choice in where to seek care; that’s up to the ambulance crew and depends on the protocols written by the medical director of each ambulance service, said Werfel, the ambulance association consultant.

Sarah Wilson, a 36-year-old microbiologist, had a seizure at her grandmother’s house in rural Ohio on March 18, 2016, the day after having hip surgery at Akron City Hospital. When her husband called 911, the private ambulance crew that responded refused to take her back to Akron City Hospital, instead driving her to an out-of-network hospital that was 22 miles closer. Wilson refused care because the hospital was out-of-network, she said.

Wilson wanted to leave. But “I was literally trapped in my stretcher,” without the crutches she needed to walk, she said. Her husband, who had followed by car, wasn’t allowed to see her right away. She ended up leaving against medical advice at 4 a.m. She landed in collections for a $202 hospital bill for a medical examination, a debt that damaged her credit score, she said.

Ken Joseph, chief paramedic of Emergency Medical Transport, the private ambulance company that transported Wilson, said company protocol is to take patients to the “closest appropriate facility.” Serving a large area with just two ambulances, the company has to get each ambulance back to its station quickly so it can be ready for the next call, he said.

Patients such as Wilson are often left to battle these bills alone, because there are no federal protections for patients with private insurance.

Rep. Lloyd Doggett (D-Texas), who has been pushing for federal legislation protecting patients from surprise hospital bills, said in a statement that he supports doing the same for ambulance bills.

Meanwhile, patients do have the right to refuse an ambulance ride, as long as they are older than 18 and mentally capable.

“You could just take an Uber,” said Adler, co-author of the surprise-billing report. But if you need an ambulance, there’s little recourse to avoid unexpected bills, he said, “other than yelling at the insurance company after the fact, or yelling at the ambulance company.”

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