Each week I’ve been adding a brief tidbits section to the THCB Reader, our weekly newsletter that summarizes the best of THCB that week (Sign up here!). Then I had the brainwave to add them to the blog. They’re short and usually not too sweet! –Matthew Holt
In this week’s health care tidbits, Shannon Brownlee and her fellow rebels at the Lown Institute decided to have a bit of fun and compare which non-profit hospitals actually made up for the tax-breaks they got by providing more in community benefit. A bunch of hospitals you never heard of topped the list. What was more interesting was the hospitals that topped the inverse list, in that they gave way less in community benefit than they got in tax breaks. That list has a bunch of names on it you will have heard of!
Given how many of that list run sizable hedge funds and then do a little health care services on the side, perhaps it’s time to totally re-think our deference to these hospital system monopolies. And I don’t just mean making it harder for them to merge and raise prices as suggested by Biden’s recent Executive Order.
(This is the sixth in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)
As hospital systems become larger and employ more physicians, healthcare prices will continue to rise and independent doctors will find it harder to remain independent. Hospitals will never fully embrace value-based care as long as it threatens their primary business model, which is to fill beds and generate outpatient revenues. To create a viable, sustainable healthcare system, the market power of hospitals must be eliminated.
Federal antitrust policy is not adequate to handle this task. Even if the Federal Trade Commission had more latitude to deal with mergers among not-for-profit entities, the industry is already so consolidated that the FTC would have to break up health systems involving thousands of hospitals. Such a gargantuan effort would be practically and legally unfeasible.
The government could curtail health systems’ market power without breaking them up. For example, either states or the federal government could adopt “all-payer” models similar to those in Maryland and West Virginia. Under the Maryland model introduced 40 years ago, every insurer, including Medicare, Medicaid, and private health plans, pays uniform hospital rates negotiated between the state and the hospitals.
As hospitals focus on taking care of COVID-19 patients, the American Hospital Association is stepping up its advocacy for hospitals, fighting on their behalf for everything from PPE to reimbursement for uninsured patients. AHA’s Policy Director, Akin Demehin, dives into the top issues facing U.S. hospital administrators as they scramble to adjust their businesses to meet the unprecedented demands of the pandemic.
Besides the obvious concerns related to the direct delivery of care to a surge of very sick patients, hospitals are worried about cash flow, having enough personal protective equipment (PPE) for front-line clinicians, and the challenges of rolling out massive telehealth and remote monitoring programs to care for non-COVID patients at-home.
As the pandemic wears on, and the evolution of hospitals continues, the way these institutions function as part of the U.S. healthcare system will likely be forever changed. We learn what’s important to the AHA — and its 5,000 hospitals and healthcare system members — as they redefine their role in the healthcare system of the future in real-time.
It was a seminal moment in virtual care as Teladoc Health acquired Intouch Health for $600 million, effectively taking its mostly direct-to-consumer telehealth platform directly into more than 2,500 care providers — or, as they say, “from hospital to home.” We caught up with InTouch Health’s CEO, Joe DeVivo, to hear his thoughts on the deal, including what it means for the further advancement of virtual care and for the digital health industry at-large.
Filmed at J.P. Morgan Healthcare Conference in San Francisco, January 2020
Health system pharmacists are frustrated with the lack of time they spend connecting with patients. Why? Jennifer Tryon, Chief Pharmacy Officer for Wake Forest Baptist Health breaks it down for us by talking specifics about the outdated processes and old-school tech that are underpinning many health systems’ medication management programs — and holding back their pharmacists as a result. When she’s sourcing innovative new solutions for her pharmacy at Wake Forest Baptist Health, what are the pressing priorities that are getting her attention (and her budget)? Jennifer’s description of the challenges and opportunities for innovation in the health system pharmacy and medication management space is a MUST watch for anyone looking to learn more about taking their tech into this space.
Filmed at the American Society of Health-System Pharmacists (ASHP) Midyear Clinical Meeting in Las Vegas, December 2019.
From the point at which a medication arrives at a hospital’s receiving dock to the time it’s given to a patient, Omnicell systems are relied on to “store it, package it, barcode it, order it, issue it, and charge it.” Now, CEO Randy Lipps wants to automate ALL OF IT — getting medications from dockside to bedside, without the help of human hands. The Autonomous Pharmacy is not only Omnicell’s bold vision for the future of medication management for hospitals that brings in robotics and software to improve the safety and accuracy of every aspect of the drug delivery process, but as Randy says, it’s an “industry movement” to free the hospital pharmacist from the “basement pharmacy” and allow them to truly practice at the top of their license. Although integrating new tech into healthcare systems is never easy, this CEO says that it’s less the tech — and more the lack of urgency in shifting our mindset as an industry — that’s slowing us down. What exactly needs to change? Bold visions require big plans…
Filmed at the American Society of Health-System Pharmacists (ASHP) Midyear Clinical Meeting in Las Vegas, December 2019.
The impending closure of
Hahnemann University Hospital is a local tragedy. Eliminating a 170-year
old institution is certain to exaggerate the daily travails of the economically
disadvantaged inner-city population that Hahnemann serves as a safety-net
hospital. The closure is also a national tragedy. Hospitals are the
towering, visible monuments of our healthcare system, and closings imply that
something insidious ails that very system—that all is not well.
Hospitals are complex
entities with varied financial drivers, and the solution is never simple.
And the moment is too rich for politicians who see Hahnemann’s failure as the
culmination of their dystopian predictions. Bernie Sanders, most
prominently, stood on the hospital’s doorstep and pitched his deceptively
simple solution—Medicare for All. Medicare for All, Sanders said, would
ensure that every patient carries the same coverage, hospitals are paid a predictable
rate, and voila, no hospitals need to close. Private insurance would
disappear, and no one would be without coverage.
Even physicians have jumped on the Medicare for All bandwagon. Some
doctors insist that once profit is removed as a motive for hospital bottom
lines, and government bodies decide which hospitals can buy a surgical robot,
build a new wing or offer proton beam treatment cancer treatment centers, then
all hospitals will do better.
But these arguments miss
a fundamental point: why pitch government insurance for all, like Medicare and
Medicaid (a federal and state insurance plan to cover low income adult and
children) as a remedy, when it is precisely government-run insurance that is
killing Hahnemann and other hospitals in distress?
In the 20th century, hospitals completed their
transformation from the hospice-like institutions of the Middle Ages, into
large, gleaming centers of advanced medical expertise and technology that save
and improve lives every day. But an unintended consequence of hospitals’
dazzling capabilities is a staggering cost burden that’s proving toxic to the
Today, hospital care accounts for approximately 33% of the US’ $3.5 trillion annual health care expenditures, according to CMS. The drivers of hospital costs are complex and hard to tackle, including (but not limited to) market consolidation that enables price hikes, heavy administrative burdens, expensive technology and patient usage patterns.
In The Innovator’s Prescription, Clayton Christensen et al. explained another important driver of high hospital care costs: conflation under one roof of business models designed to address very different needs—such as the need for diagnosis of unique, complex conditions and experimental treatments, versus that for highly standardized services (for instance, some surgical procedures). This common phenomenon makes optimization of either business model very difficult, and thus drives up overhead costs.
One solution to this seemingly intractable
problem is to make home and community the default locations for care, where in
many circumstances it can be provided less expensively, more conveniently, and
more effectively than in a hospital. Fortunately, business model innovation
toward this end is gaining traction.
Every year at this time, you hear warnings that flu season has arrived. New data from the CDC indicates the season is far from over. So, you are urged by health authorities to get a flu shot. What you may not realize is how the flu can affect the hospitals you and your loved ones rely on for care.
In January, the large urban hospital where I am an intern faced the worst flu outbreak it has ever seen. Nearly 100 staff members tested positive for the flu. Residents assigned to back-up coverage were called to work daily to supplement the dwindling ranks of the sick. Every hospital visitor was required to wear a mask upon entry. At one point, every patient in the medical ICU had the flu and the whole unit had to be quarantined. Because of this, the hospital was put on diversion – no new patients could be admitted.
Why was this flu outbreak so bad? Doctors are still trying to understand all the causes, but one likely reason is that hospital staff with symptoms came to work and became a reservoir for the virus. A majority of visitors and patients don’t get their flu shots, making matters even worse.
Once administrators caught on to the mess this year’s flu was creating, they took some new and aggressive measures. In addition to the free vaccines provided to employees every year, they performed daily symptom check-ins, encouraged sick days, and held an influenza town hall. After discussion with the State Department of Health, medical residents were provided free Tamiflu and urged to take it as prophylaxis. Only 40% picked it up. Residency directors asked symptomatic house staff to stay home. A positive flu swab meant a mandated five days off work. One month later, we are still required to check in daily and confirm that we are symptom-free via a text messaging system or a checklist circulated to each hospital floor. These responses were effective, and the wave of flu appears to have passed. We must now plan ahead to prevent the next outbreak.
But ACOs could pave the way for more significant cost-cutting based on competition.
By KEN TERRY
The Medicare Shared Savings Program (MSSP), it was revealed recently, achieved a net savings of $314 million in 2017. Although laudable, this victory represents a rounding error on what Medicare spent in 2017 and is far less than the growth in Medicare spending for that year. It also follows two years of net losses for the MSSP, so it’s clearly way too soon for anyone to claim that the program is a success.
The same is true of accountable care organizations (ACOs). About a third of the 472 ACOs in the MSSP received a total of $780 million in shared savings from the Centers for Medicare and Medicaid Services (CMS) in 2017 out of the program’s gross savings of nearly $1.1 billion. The other MSSP ACOs received nothing, either because they didn’t save money or because their savings were insufficient to qualify them for bonuses. It is not known how many of the 838 ACOs that contracted with CMS and/or commercial insurers in 2016 cut health spending or by how much. What is known is that organizations that take financial risk have a greater incentive to cut costs than those that don’t. Less than one in five MSSP participants are doing so today, but half of all ACOs have at least one contract that includes downside risk.
As ACOS gain more experience and expand into financial risk, it is possible they will have a bigger impact. In fact, the ACOs that received MSSP bonuses in 2017 tended to be those that had participated in the program longer—an indication that experience does make a difference.
However, ACOs on their own will never be the silver bullet that finally kills out-of-control health spending. To begin with, 58 percent of ACOs are led by or include hospitals, which have no real incentive to cut payers’ costs. Even if some hospitals receive a share of savings from the MSSP and/or private insurers, that’s still a drop in the bucket compared to the amount of revenue they can generate by filling beds instead of emptying them. So it’s not surprising that physician-led ACOs are usually more profitable than those helmed by hospitals.