May
31

More hospitals are going to close

More than a quarter of rural hospitals in Texas, Kansas, Mississippi, Alabama, Georgia, South Carolina and Tennessee are at immediate risk of closing. 

Notably these are all states that have refused to expand Medicaid and therefore have a lot of people without health insurance.

The problem is exacerbated by the end of the Public Health Emergency which means more people without health insurance will be seeking care at hospitals at imminent risk of closing. 

Check out your state’s situation here

What does this mean for you?

If you live in the rural south, stay healthy, don’t have an accident, and don’t get pregnant.


May
26

US healthcare quality is poor because…

Consumers don’t care.

Yesterday we dove into the disconnect between patient satisfaction (my nurse was sooo nice and my room…wow!) and quality of care (how likely was I to die).

Today, we focus on how this affects our healthcare. Or, as the researchers put it;

In an era of management by satisfaction survey, how does hospital competition shape the kind of medical services offered to patients? 

Leaving out the coefficients, standardized deviations, null estimates and other researchers’ esoterica, we find:

Local competition among hospitals leads to higher patient satisfaction, but lower medical quality. 

Yep, because we consumers value quiet rooms and nice nurses more than surviving an operation, health care facilities seem to focus more on quietness and niceness than on, you know, patients actually surviving.

And that’s because hospitals are competing desperately for private-pay patients, the ones insured by employers that pay three times more than Medicare. As the authors put it;

as a business strategy, investing in hospitality and hotel amenities offers a much higher return than medical quality. 

this research speaks to broad concerns about the unintended consequences of marketization…Hospitals have traditionally been conceived as an essential service to a community, but are becoming more like products in a consumer marketplace.

Those working in hospitals are increasingly expected to focus on the pursuit of customer satisfaction.

The day-to-day institutional question is shifting from “will this improve patient health?” to “will this raise satisfaction scores?” 

What does this mean for you?

Depends… life > comfort?


May
25

Patient satisfaction ≠ Quality of care

Health care quality is a huge issue in the US; despite claims that we have the best healthcare in the world, reality is far different.

Why?  I’d argue its because healthcare consumer behavior drives our for-profit system.

What makes patients happy is completely unrelated to the actual quality of medical care they receive – or how likely they are to die.

Research article is here.

the horizontal axis indicates hospital performance by deciles for each category…note patient satisfaction doesn’t vary by hospital mortality and varies just a little by medical quality, but varies a LOT by nurse communication.

The effect of nurse communication on patient satisfaction is four times larger than the effect of the hospital’s mortality rate. Yup, as long as the nurse smiles, is responsive and nice, we’re satisfied. Never mind if we’re a lot more likely to die.

Another oft-measured factor, the quietness of the rooms, has a 40% larger effect on patient satisfaction than medical quality.

This is because hospitals provide two separate and distinct kinds of services  – the technical delivery of medical care and “room and board-related” services. Patients are much better at observing and rating the “hospitality” part of their hospital stay than the medical care they get.

To quote the authors;

Hospitality is the fast track to customer satisfaction in medicine. 

What does this mean for you?

Customer satisfaction is the fast track to profits… not to good medical care.


May
23

Work comp drugs – Three things

Workers’ comp news…

After a long and litigious delay, myMatrixx has been awarded the contract to manage pharmacy benefits for the Coal and Energy programs run by the Federal Department of Labor’s Office of Workers’ Compensation Programs (OWCP). Details of the case – which involved a protest by rival PBM Optum – are here.

That’s the good news (the Feds should have had a PBM managing these programs years ago).

Now, the bad news.

The press continues to dive into the audit of the other OWCP program – the one that provides workers’ comp to all Federal employees (FECA). [audit report is free for download here]

The latest is from Leslie Small of AIS Health. [available at no cost via free trial subscription].

From Ms. Small’s piece:

  • “OWCP has been doing a poor job of both controlling the FECA programs spending on prescription drugs and implementing its own policies to ensure that prescriptions are being appropriately dispensed, said the OIG report.”
  • OWCP published a bulletin in 2011 that forbid reimbursement for fast-acting fentanyl prescriptions unless claimants had been diagnosed with a certain type of cancer…during the audit period…98.7% of the fast-acting fentanyl scripts that OWCP [and taxpayers] paid for “went to claimants without evidence of one of hte eligible cancer diagnoses” 
  • Even more troubling – if that’s possible – OWCP did not institute controls to mitigate opioid usage until the end of 2016, years after many commercial insurers, third-rate administrators, and large employees had done so…”

Here’s hoping this much-needed attention results in even-more-needed improvements.(my opinion only)

Drug costs in California are getting well deserved attention again; CWCI’s research identified 9 drugs – 3 each opioids, dermatologicals and antidepressants – that account for a significant percentage of total drug spend. CWCI members can get the full report at no cost; it’s $18 for others.

Briefly, branded anti-depressants, tapentadol/Nucynta, and the three anti-depressants make up a small percentage of scripts but a big percentage of dollars.

Of course, in the vast majority of cases the dermos are just BS drugs that should never be allowed…

What does this mean for you?

Don’t sleep on pharmacy...sure costs are down, but it still has a major influence on recovery, RTW, and claim closure.


Apr
18

Private Equity healthcare investment in 2022

Private Equity healthcare investment declined sharply last year as the average deal’s value and the number of transactions both fell off.

Firms invested over $45 billion in 167 US healthcare deals last year – a pretty massive decrease from 2021’s 216 deals for $107.5 billion.

While 2022 started off quite strong, deal volume halved in the second half of 2022 due to interest rate hikes, tighter credit, economic concerns and Putin’s War.

Those are the headlines from Bain & Company’s Global Healthcare Private Equity and M&A report 2023 (download for free here.)

note – I have worked with Bain entities in the past, respect the firm and the Bain people I’ve worked with. I am not currently working with Bain.

key highlights…

  • Provider sector deals accounted for about half of all transactions and dollars invested…but slowed dramatically to 7 transactions in Q4 2022
  • IPOs pretty much disappeared in 2022 (initial public offerings, when a private company goes public)
  • Value-based care and primary care were a big focus of strategic buyers…
    • Optum bought several provider groups
    • Amazon acquired One Medical
    • Humana and Welsh Carson did a joint venture, investing in a value-based primary care company.

There’s a lot on value-based care…although there’s precious little evidence that it is a panacea, investors are still betting billions …From the report:

For more than a decade, value-based care (VBC) has been positioned as healthcare’s “next big thing.” And while progress has been uneven 

The number of accountable care organizations (ACOs) plateaued at around 1,000 in recent years, while 15 of the 53 entities participating in CMS’s direct contracting program in 2021 experienced net savings losses. 

Value-based care stakeholders are doubling down on their commitment as healthcare spending outpaces GDP growth and CMS leans further into VBC models. 

What does this mean for you?

Expect PE investors to remain quite cautious until interest rates stabilize, the debt ceiling is raised (or much, much better – eliminated) and inflation trends level out.

Warning – if House Republicans don’t raise or eliminate the debt ceiling there will be hell to pay. 

Register for Bain’s webinar on the report here.


Apr
10

 

WCRI is out with its latest inventory of state regulations re prescription drug management. This is a must-have for claims execs, managed care leaders, medical directors and risk managers…pricing, utilization review, opioid management, formularies and PBM regs are all covered.

Revenue Cycle Management – aka hoovering mounds of cash from workers’ comp payers – is the focus of a “white paper” targeting hospital and health system execs. If you want to know the hooverers’ playbook, sign up and be prepared to be amazed.

A closely-related item…

From the wonderful folks at Kaiser Family Foundation comes the shocking news that facility fees are driving ER costs to the moon. As most of you (hopefully) know, regulations allow any service delivered at a facility to uncharge a facility fee. It is not hyperbole to note hospitals are wildly abusing this, taking on facility fees to services provided at

      • remote clinics
      • physician offices
      • even telemedicine visits

oh, btw, many hospitals are STILL not complying with Federal requirements to post prices…

Finally, from HBR comes this excellent advisory on how not to anger/frustrate/alienate customers…something many worker’s comp entities seem surprisingly good at. (We are NOT looking at you, LWCC…your work on patient engagement is really good stuff)

All too common is the industry’s maniacal prioritization of efficiency over everything else. From HBR:

when focusing on efficiency, many companies overlook the emotional aspect of the customer experience — how customers feel when interacting with the business.

The piece focuses on consumers – which every injured worker is.

What does this mean for you?

Tired of being hospitals’ piggy bank?… then understand facility cost drivers and techniques.

Injured worker engagement is critical to helping them return to functionality.


Mar
9

Why your facility costs are increasing.

Revenue Cycle Management.

RCM is the acronym for a focused, ever-evolving, highly sophisticated approach hospitals, ambulatory care facilities and healthcare systems use to suck as many dollars as possible from employers, taxpayers and insurers.

There are scores of RCM companies out there, some with programs specific to workers comp…

and this is a growth industry...

Reality is in many states workers’ comp is – by far – the most lucrative payer. Florida is the worst example of gaming by facilities to Hoover dollars out of employers and taxpayers pockets; Wisconsin is also hugely problematic as is Alabama and a bunch of other states.

And it is going to get worse.

With Medicaid enrollment scheduled to drop dramatically, CMS reducing COVID payments to hospitals, and many hospitals and health systems facing record deficits, hospitals’ scramble to find revenue is going to accelerate.

Meanwhile…bill review companies are woefully behind the Cognizants and Convergents, despite BR companies’ protestations otherwise.

Rather than seek expertise and capabilities and better performance by subcontracting to much-more-sophisticated and capable third parties, BR companies try to do it in-house…mostly so they can keep all those fees for themselves.

Meanwhile facility costs increase, and the ones getting screwed don’t seem to care. Expect Florida and Texas to be most problematic as those states did not expand Medicaid. 1.6 million Texans and 1.4 million Floridians will lose their Medicaid coverage, further hammering hospitals’ financials.

400,000 Wisconsinites could lose coverage…

Why I continue to berate the industry for failing to protect its own best interests is a puzzle even to me…employers aren’t exercised enough to demand better, neither are insurers, and TPAs are no better.

And don’t get me started on brokers and “consultants”…

What does this mean for you?

Do your job.


Jan
23

Hospital profit margins – a bipolar mess

For profit hospitals have very solid operating margins.

Some Not for profits are really struggling…others are doing just fine thank you.

credit FierceHealthcare.

That’s the headline – the question is…why? and what does this mean?

First, a little more explanation…

From the Kaiser Family Foundation’s report

So far this year [2022], operating margins among the three largest for-profit health systems in the country have met or exceeded pre-pandemic levels. HCA and Tenet in particular have had high operating margins.

the largest for-profit systems have had operating margins that exceed pre-pandemic levels. [emphasis added]

Also, most hospitals and systems saw declines in investment income; as this falls outside their core business, we are focusing on operating income which excludes investment and other categories.

Why?

It appears that the more profitable hospitals/healthcare systems:

  • saw surgical and other profitable service line volumes return to or exceed pre-pandemic levels
  • better controlled staffing costs; contract staffing costs (traveling nurses and other clinicians) were a major factor for several not-for-profit hospitals
  • benefitted from non-healthcare operations (insurance for UPMC) and financial gains from mergers (e.g. Intermountain Health)
  • increased prices for commercially-insured patients (this is an assumption although there’s this…)

The merger thing continues to be a major influence, with $45 billion in transactions in 2022 across 53 deals… again the results aren’t consistent as some systems really benefited while others did not.

Meanwhile, the American Hospital Association continues to call for higher reimbursement and other federal intervention to help hospitals financials.

For my workers’ comp readers…

Look at the costs of providing care at an HCA hospital vs some of the not-for-profit hospitals in your service areas. You will very likely find HCA’s costs are several times higher than not-for-profits’. 

Oh, and they are waaaay higher in Florida

More on this here.

What does this mean for you?

Don’t use HCA or Tenet facilities. 


Oct
10

Private health insurance – can it be fixed?

I’ve been thinking long and hard about why our health insurance and healthcare systems are such a clustermess. Hugely costly, lamentable outcomes, a morass of bureaucracy, red tape and stupid rules enriching a few and impoverishing many.

So, I think I have a solution – and it involves workers’ comp.

First, the problem.

Today I’m reprising a post from a couple years back – if anything it is more accurate today than it was way back then.

If you had “government” health insurance for the last decade, your costs would be 20 – 25% lower today.

That’s because private insurers have not controlled spending nearly as well as Medicare and Medicaid have.  This from KFN via Axios.

Doesn’t matter what your economic or political ideology is – that’s a fact.

You and your insurance company pay your doctors and hospital more than twice what Medicare does. Yes, the Feds can exert pricing power – but why can’t United Healthcare, or Aetna, or Blue Cross?

Those healthcare giants should be able to negotiate better deals with providers; they have massive buying power and millions of members to leverage. They should be able to use that power to give you lower insurance costs – but they can’t.

Those private insurers are (theoretically) more nimble, smarter, better run, and more efficient than the government. And they have hundreds of billions of healthcare dollars to leverage.

Yet they’ve failed to outperform a bunch of bureaucrats.

I won’t dive into the “whys” today, because that would take away from the over-arching truth – government has been much more effective than private insurers.

What does this mean for you?

Cutting your health insurance costs by a quarter = more dollars you could have spent on other stuff.

note – happy to hear other thoughts; please use citations to back up any assertions.


Sep
22

The hospital shakeout

Is well underway.  Likely impacts include:

  • more hospitals shutting down their inpatient operations
  • a decline (!!) in hospital employment
  • even more aggressive land-grab efforts by rival health systems seeking highly profitable commercially insured patients (that’s you, dear reader)
  • doubling down on “revenue maximization” (that’s you, work comp payor)

(Kudos to the estimable Merrill Goozner for his cogent discussion of the issue)

What’s happening…

  • hospital admissions dropped precipitously last year – despite the major impact of COVID admissions. As I noted a while back, COVID patients aren’t very profitable; they rarely get surgeries or other procedures which generate big dollars for hospitals…
  • meanwhile expenses are climbing – driven mostly by labor costs (up $86 billion this year)
  • more than half of all hospitals are going to lose money…before COVID, the money-losing facilities amounted to only a third of the total.

Why this is happening…

  • states that didn’t expand Medicaid are getting hammered as the other safety net payment programs mostly stopped helping hospitals make up revenue shortfalls.
  • care has largely shifted to outpatient facilities which are way less costly – and generate way less revenue per admit – than inpatient stays
  • it’s really hard to find staff – many are way past burnout, driven by overwork and abusive patients.

What does this mean for you?

Facility costs will go up.

Quality likely won’t.