Cost Doesn’t Equal Quality Part 2:

All over the country there are areas where the more expensive facility has poor scores for patient safety and outcomes. And with facility costs accounting for about 40% of workers’ comp medical expenditures, you can hardly afford to ignore this reality.

Today we look at Sarasota, Florida. More specifically, we are comparing Sarasota Memorial Hospital against Sarasota Doctors’ Hospital.

According to Health Strategy Associate’s Facility Assessment Tool (c) – Sarasota Memorial Hospital scores:

60+% higher on Clinical Outcomes

50+% higher on Person and Community Engagement

75+% higher on Patient Safety

than Sarasota Doctors’.

And Memorial is a whopping 7 points better on Relative Price – which means you are paying much less for a much higher-scoring facility.

When combining all 5 metrics the Facility Assessment Tool considers, Sarasota Memorial Hospital scores 2.94 against just .16 for Sarasota Doctors Hospital.

Oh, and these two facilities are just 6.4 miles away from each other with Sarasota Memorial Hospital closer to the beach!

Take a look at your network and see just what facilities you are utilizing – and what they are costing you.


Cost Doesn’t Equal Quality

In the ever-changing world of healthcare economics, one thing is becoming more of a norm – high hospital costs. Crazy facility fees coupled with hospital/health system consolidation are leading to higher prices for payers.

Facility fees, viewed by some as the latest gimmick to generate additional revenue for hospitals, help hospital costs to account for upwards of 40% of countrywide workers comp medical expenses.

Making matters worse is hospital/health system consolidation.  Consolidation often leads to higher prices – The Federal Trade Commission’s Director of the Bureau of Economics said that some consolidated hospitals have raised prices as much as 50%. Consolidation/M&A took a bit of a pause during COVID but has reemerged and is expected to keep going due to financial pressures and desire to gobble up market share.

Workers’ comp is already vulnerable due to its inability to rival group health’s scale along with unfavorable regulatory dynamics…

As the smallest payer in healthcare, it is critical for WC payers to make sure they are utilizing high quality facilities with reasonable costs.

Consider the following example:

In Jacksonville, Fl:

Two facilities. 21 minutes apart, same side of the city center, but different profiles. The Mayo Clinic – widely regarded as one of the best hospital systems in the world vs. an HCA hospital – Florida Memorial Hospital.

According to Health Strategy Associates’ proprietary Facility Assessment Tool ©, the Mayo Clinic scores the same on Patient Safety, but much higher on Clinical Outcomes, Person Satisfaction, and Efficiency all while being SIGNIFICANTLY less expensive than nearby Florida Memorial Hospital.

*Higher the grade the better*

Using data provided by CMS and state entities and HSA’s proprietary algorithm to best reflect the medical treatment of worker’s comp injuries, the Tool enables adjusters and case managers to ensure patients avoid poor quality facilities and employers pay a fair price for excellent care.

For a demonstration of the Facility Assessment Tool, email JStithATHealthStrategyAssocDOTcom.


Walmart is shutting down its healthcare centers…which means…what?

Three things.

First, healthcare is a very complicated and complex business, nothing like Walmart’s core business 

Walmart’s culture, ethos, business practices, priorities, and people built a multi-gazillion dollar consumer business by TBH, beating the crap out of vendors to deliver really low prices.

That is diabolically different from building a service-oriented, one-at-a-time, people-based interaction around a very complex need – healthcare.

So, yeah, healthcare is about as different from Walmart’s core culture as you cold possible get. 

Walmart’s failure comes after Haven Healthcare, the joint venture of giants Amazon, Berkshire Hathaway and JP Morgan went belly-up early in 2021.

Haven CEO Atul Gawande MD lacked the intimate, deep knowledge of healthcare infrastructure, reimbursement, regulations and management required to be successful. A brilliant writer, insightful analyst, and highly visible public figure, Gawande didn’t have the management chops. He also didn’t give up his other jobs and had no experience as CEO of a start-up.

Many who think they know healthcare – don’t.

Then there’s commitment. Gawande was committed to Haven – and frankly the three founding companies were as well – like the chicken is committed to breakfast.

If you want to take on something as daunting as reforming healthcare, you’d best be committed to the task like the the pig is committed to breakfast.

Second, reimbursement.

Despite a partnership with giant UnitedHealthcare, Walmart Health was unable to attract enough customers paying enough for care at its 51 centers. This MAY have been due – at least in part – to the venture’s focus on Medicare Advantage members…

This from UHG’s announcement back in 2021:

(the partnership will launch in) 2023 with 15 Walmart Health locations in Florida and Georgia and expand into new geographies over time, ultimately serving hundreds of thousands of Medicare beneficiaries in value-based arrangements through multiple Medicare Advantage [MA] plans. [italics added]

MA has been having a rough time of late which may have factored into a non-produdctive partnership…As the payor, UHG would want WH to agree to low reimbursement rates…as the provider, WH wanted high reimbursement…

Third, providers.

Primary care providers are expensive, rare, and thus have a lot of bargaining power. Oh, and you can’t have a business without them.

Which – to return to the lede, runs directly counter to Walmart’s…everything.

What does this mean for you?

Fixing healthcare requires understanding healthcare.




Hospital goings on…

Couple things you need to track…

First, hospital mergers and acquisitions soared in the first three months of 2024.  From Fierce Healthcare…

Among the quarter’s 20 deals, four were “mega mergers” in which the smaller party had annual revenues exceeding $1 billion, per the report. This pushed total transacted revenue “near historically high levels” at $12 billion…

Kaufman Hall’s report is here.

Some of the big for-profit chains sold off lower-performing facilities; a few big not-for-profit system mergers were announced.

Unsurprisingly financials drove a lot of these deals; a lot of hospitals are on shaky financial ground while most of the big for-profits are making bank. Some not-for-profits’ numbers are improving although the sector as a whole is still struggling.

Meanwhile, giant for-profit HCA reported a big jump in earnings.

From Reuters:

HCA posted quarterly revenue of $17.34 billion, beating estimates of $16.78 billion and reported an adjusted profit of $5.36 per share for the reported quarter. Analysts on average had expected a profit of $5.01 per share, according to LSEG data.

What does this mean for you?

Facility costs are going up because not-for-profits (in general) are struggling, while for-profits (in general) are jacking up revenues. 


For those I caught with my April Fool’s post…I hope you took it in the spirit in which it was intended…

Okay, back to reality (oh no….)

Hospital closures and cutbacks

Another hospital in a non-Medicaid expansion state is closing its ER and shuttering its inpatient care facility. The facility was acquired by a competitor a mile away a few years back…if this goes like most acquisitions folks around Anniston Alabama will likely have poorer outcomes and pay higher prices…

Ignore the corporate happy speak from the owners…this is the same stuff every exec that buys a rival hospital says.

Oh, and here’s research showing the link between Medicaid expansion and hospital closures.

Consolidators are doing just fine…the CEO of CHS just “earned” $8.3 million in pay and perks.

Obamacare…aka the ACA.

Remember way back when folks got all worked up about the ACA, how it was going to kill off old folks, destroy the “best healthcare system in the world”, cost millions of jobs and bankrupt thousands of small employers…and lots of people hated it?

News flash – Americans like it.  A lot.

That’s because:

  • Pre-existing conditions are covered.
  • Kids can be covered under the parent(s)’ insurance till they are 26.
  • 45 million Americans get insurance thru Obamacare and/or benefit from its provisions.
  • Provisions ensure adequate benefits for mental health, emergency care, maternity and child care and seven other key healthcare needs.
  • People who actually had Obamacare plans realized it saved lives.

Oh, and since people with health insurance are healthier than those without, if they’re hurt on the job, they recover faster and employers don’t have to pay to treat co-morbidities. 

We’re going to dive deep into the ACA in a coming week…stay tuned for more facts.

Change Healthcare cyber attack

It isn’t over. Owner United Healthcare recently stated patient data had been stolen by hackers.

This is a much bigger story – with much wider implications – than many think.

What does this mean for you?

More stuff affects you and your business than you may think. 


Rural hospitals – and healthcare – are in deep trouble.

With the unwinding of Medicaid post-COVID emergency, rural healthcare is falling deeper into financial trouble.

Consulting form Chartis just published their review of rural healthcare…among the findings

The unwinding issue is exacerbating problems in states that failed to expand Medicaid…the vast majority of which are those with the most hospitals in financial distress.  Simply put – they have to deliver way more healthcare to people without health insurance.


Across the 10 remaining non-expansion states (Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming), the percentage of facilities with a negative operating margin increased year-over-year from 51% to 55%. These states are home to more than 600 rural hospitals…Several of these states are among the most severely affected by hospital closures and a loss of access to care.

The percentage of America’s rural hospitals operating in the red jumped from 43% to 50% in the last 12 months.

418 rural hospitals are “vulnerable to closure” according to a new, expanded
statistical analysis.

Healthcare deserts are a huge problem for rural America, especially in areas with lots of extractive industries (mining, energy, agriculture. Workers in those industries are much more likely to suffer severe occupational injuries, injuries that benefit greatly from care delivered in the “golden hour”.

What does this mean for you?

Not expanding Medicaid is killing rural healthcare.


Facility costs and quality – are you operating in the dark?

Probably yes.

Facilities account for between a third and half of work comp medical spend – and that share is increasing as health systems and hospitals consolidate.

Reality is there’s major variation between hospitals  – some are stupid expensive, others quite reasonable; some have crappy quality, others excellent quality.


Here’s a good one for our colleagues in Louisiana…two hospitals less than 15 miles apart, with VERY different costs and similar quality ratings.

Note costs are for MSK conditions…pretty relevant to workers’ comp.

So, you can send your injured workers to a VERY expensive facility  – Tulane – that does a handful of complex surgeries OR…

To a MUCH less expensive facility – Ochsner – that does 14 times more surgeries (practice makes perfect…)

Let’s add a CMS quality metric...for our friends in the Sunshine State, you can send injured workers here…

solid quality, and very reasonable pricing…

or…here (just a few miles away)

to a facility with a bottom-of-the rating by CMS and costs more than double its higher-quality neighbor.

These data are available from a few states and CMS (takes some digging); HSA also has developed a national tool enabling instant facility comparison across multiple quality, patient safety, and cost metrics – drop a comment below if you want info.

What does this mean for you?

Do you want to spend $98,000 at a  facility that does few procedures, or a quarter of that at a facility that does hundreds?




Hospitals are…

a) in desperate financial shape, on the verge of bankruptcy…

b) doing quite well thank you, enjoying very healthy profits…

c) both.

The answer is…C.

For-profits – HCA, Tenet et al are doing great, while (most/many) not-for-profits are really struggling, with some on the verge of/going into bankruptcy.


Very briefly, for-profits (there’s lots of nuance here, but generally);

  • don’t take Medicaid patients,
  • have very strong orthopedic and cardiac surgery practices which are very profitable;
  • do their best to avoid/transfer/not care for the uninsured.


  • include inner-city and rural facilities that must take Medicaid and
  • serve as primary care providers for the indigent and uninsured and
  • deliver lots of babies and provide general med/surgical services which are marginally profitable

What does this mean for you?

Hospitals of all types are looking to maximize revenue, especially from very profitable payer types.

Is that you?




MedRisk acquires Medata

MedRisk and Medata just announced the former has acquired the latter.

Pretty interesting move…note I’ve worked with Medata in the past and worked with Medrisk for decades – and still do.

The official release is below – here’s my take.


Data – Medata has a wealth of data on all types of medical services; MedRisk has data on millions of (physical medicine) episodes of care. Together, there are several potential benefits:

  • More information is good, helping identify best practices and providers with – and without – good outcomes. This will help improve patient outcomes.
  • Medata has data on post-PT costs, medical care, provider usage and other very useful information. This will help MedRisk better understand care delivered after a therapy episode and identify opportunities to improve return to work, transitional duty practices, and issues that may arise post therapy.
  • Network development – Medata has a wealth of information spanning decades on  physical therapy, occupational therapy, and chiropractic services’ prices, reimbursement, utilization and trends. These data will further help improve MedRisk’s network and enable it to provide better information re provider performance in- vs out-of-network.
  • These benefits will be felt soonest by mutual customers, but over time will improve results for each company’s unique customer base.


MedRisk is the largest manager of physical medicine in work comp and does a LOT of bill review in that space. Now that it owns a BR company, BR costs should decrease, improving margins albeit it on the margin.

With bill information coming into Medata, MedRisk will be better able to identify out-of-network therapy and where possible and appropriate either enroll the therapist if credentialing approves or divert the  patient to an in-network therapist. This will improve patient outcomes, increase payers’ network penetration and likely reduce cost of care.

Here’s the press release…

MedRisk acquires Medata to further improve the claims experience for customers, patients, and providers


King of Prussia, Pa. (January 9, 2024) — MedRisk, the leader in managed physical rehabilitation in workers’ compensation, has announced its acquisition of Medata, one of the leading providers of cost management and clinical solutions in the United States.

With this acquisition, customers of both companies will have access to expanded care management and cost containment offerings in workers’ compensation.

“We are excited to add Medata to our team,” said Sri Sridharan, MedRisk CEO. “This will further enable us to deliver superior claims outcomes and experience for our customers, for the patients we serve every day, and for our provider partners. In addition, we will now be able to leverage our inventory of data from both organizations so we can deliver unique insights and additional innovative solutions.”

Based in Irvine, California, Medata provides the most comprehensive cost containment and document management solutions in the workers’ compensation and auto liability industries.

“We are thrilled to become part of MedRisk,” said Medata President Tom Herndon. “Our companies recognize customers want greater alignment among their service partners, and this change strengthens our foundation and will drive investment into product innovation. Together, we will leverage our collective resources to continue delivering exceptional products and services to our customers.”

“For 30 years MedRisk has focused on creating a better experience for patients, our customers, and the entire industry,” said Mike Ryan, MedRisk Executive Chairman. “The addition of Medata is a natural and exciting step forward for us to further accomplish that mission.”

About MedRisk

Based in King of Prussia, Pennsylvania, MedRisk is the nation’s largest managed care organization dedicated to the physical rehabilitation of workers’ compensation patients. For more information, please visit or call 800-225-9675.

About Medata

Based in Irvine, California, Medata provides the most comprehensive cost containment and document management software and solutions for the insurance industry. The company serves insurance carriers, self-insured companies, third-party administrators, state funds, and public entities in the workers’ compensation and auto liability industries. For more information, please visit or call 800-854-7591.

# # #

Media Contact:  Helen King Patterson, King Knight Communications, 813-690-4787,


Provider consolidation = Higher workers’ comp costs, longer disability

Healthcare provider vertical integration increases work comp medical costs, increases disability duration, and does not deliver better outcomes.

And, provider consolidation continues to increase.

The lede is the one-line summary of WCRI’s latest – and quite useful – research.

Olesya Fomenko and Bogdan Savich collaborated on a very well done study of vertical integration of providers’ impact on work comp, and their research bodes ill indeed.

Summarizing the experts’ findings, vertically integrated providers had: 

Some detail…courtesy WCRI

And if you think that’s bad…here’s the impact on disability duration…

These conclusions generally align with what we’re seeing from other payer types…consolidation leads to higher prices and negative to neutral impact on outcomes.

That isn’t stopping consolidation  – far from it.

What does this mean for you?

Find out how consolidated provider markets are where your business is. And watch for more consolidation, as that will predict higher costs.