King of Prussia, PA-based hospital company Universal Health Services Inc. said that 2008 is off to a good start and that it is now expecting a better finish as well. The company said net income was up 24.6%, to $61.7 million, in the first quarter, up from $49.5 million in the same period last year. Earnings per share were up 30% because there are fewer shares outstanding this year. Earnings at Universal Health also rose to $1.20 per share in this year's first quarter, from 92 cents a year ago.
A bill that aims to make it harder to file frivolous malpractice lawsuits has sailed through the Tennnessee Senate and is headed toward the governor's desk for approval. The bill requires attorneys to have a qualified medical expert sign off on the merits of their case within 90 days of filing suit, and requires that doctors receive 60 days' notice before a lawsuit is filed. Various forms of legislation have been working its way through the state legislature for several years, and the final version won praise from doctors and malpractice attorneys alike.
Senate Majority Leader Harry Reid is trying to fast-track legislation that would block Medicaid rules likely to cut federal healthcare spending on the poor and force states to absorb billions of dollars in costs. Reid's "Rule 14" maneuver effectively bypasses the Senate Finance Committee and places the measure on the Senate calendar, meaning it can be brought to the Senate floor for consideration at any time.
A federal judge has ordered Philippines-based Health Visions Corp. to pay back $100 million it swindled from the U.S. military's health insurance program. Federal prosecutors say Health Visions bilked the military's Tricare program out of $99.9 million between 1998 and 2004. The program insures 9.2 million servicemen and dependents worldwide.
A growing number of privately insured U.S. patients are being referred for imaging scans, and much of the increase is due to physicians referring patients to their own facilities or machines, according to a study by researchers at Georgetown University. Researchers reviewed data collected between 2000 and 2004 by a large private insurer in California and compared that analysis to a report by the Medicare Payment Advisory Commission. The bulk of the increase was from patients with private insurance that provided the physician with a fee for service reimbursement.
SACRAMENTO— Under pressure by legislators and consumer groups, California’s HMO oversight agency is launching a review of all retroactive cancellations of individual health policies over the past four years and will order insurers to restore coverage, including payments of medical claims, for members wrongfully dropped.
The state Department of Managed Health Care ordered the immediate reinstatement of health insurance for 26 people last Thursday, and this week began a review of all rescissions going back to 2004. The investigation by an independent arbiter could potentially cost HMOs millions of dollars in penalties and medical claims payments for dropping members after they get sick and seek care.
“We are employing our full regulatory and enforcement authority to open the door to insurance once again for thousands of Californians,” says Cindy Ehnes, director of the DMHC.
Jerry Flanagan, healthcare policy director for Santa Monica-based Consumer Watchdog, praises the DMHC action but says all rescinded policies should be reinstated immediately to ease the hardships of those faced with big medical bills. The only ground for retroactive cancellations is proof of “willful misrepresentation” of a known health condition on a member application, which is rare, he says.
"Retroactively canceling patients is illegal as a matter of law if insurance companies fail to review an applicant's insurability before issuing coverage," Flanagan says. "All illegally cancelled patients must be swiftly reinstated in full, without dragging the process through months or years of review.”
Ehnes says a blanket reinstatement of all rescinded policyholders would exceed her authority under the Knox-Keene Act governing HMOs and opens the door to lengthy court battles. She says affected consumers will regain health coverage and get their medical bills paid sooner through a fair and impartial review of their individual circumstances.
The state’s action came a week after Ehnes was called before a legislative oversight committee and grilled on the agency’s slow progress in finding a solution to the ongoing rescission issue. It also came a day after Rocky Delgadillo, city attorney of Los Angeles, filed a lawsuit against WellPoint, Inc. and subsidiaries Anthem Blue Cross and Anthem BC Life on grounds the insurers illegally revoked policies of more than 6,000 members statewide.
Delgadillo’s Superior Court suit claims 500,000 Anthem members in the state are being “duped” into thinking they have individual coverage that in reality becomes worthless once they become sick. The suit seeks $2,500 per violation or $5,000 if the victim is a senior or disabled. Total fines and restitution against WellPoint/Anthem could exceed $1 billion. In February, Delgadillo filed a similar suit against Health Net, Inc., accusing the insurer of saving $35 million by illegally rescinding policies of at least 1,600 members.
Ehnes says the DMHC has completed a full investigation into the policy practices of the state’s five major HMOs that offer coverage in the individual market and will release more details in the coming weeks.
Supporters of a new hospital in Poinciana, FL, are complaining about the emergency medical response currently available to the community of about 70,000 residents. More than 225 people gathered at the Poinciana Community Center to complain to attorneys representing the proposed hospital about delayed responses from nearby hospitals. Osceola Regional Medical Center in Kissimmee received Florida approval for the Poinciana hospital in 2007, but officials with St. Cloud Regional Medical Center filed an appeal that could delay—or stop—construction in Poinciana.
Camden, SC-based Kershaw County Medical Center has bought two tracts of land in the town for future outpatient healthcare services. The hospital paid $1.09 million for the properties, which are adjacent to the medical center. There are no immediate plans for the land, said Kershaw representatives.
Change is an indisputable fact of today’s healthcare environment. As a result, physicians must reconsider their long-term business strategies and be open to new attitudes, new relationships, and new roles. In particular, physicians must look for ways to come together to build integrated entities that allow for greater opportunities to solidify their positions relative to third-party reimbursement, centralized purchasing, and other synergies that can only be availed from a position of strength. That position of strength requires greater numbers of providers consolidated into legal structures as partners than traditionally has been the case within small medical groups.
Primary care physicians (PCP) and specialists alike need to consider opportunities to collaborate with other like-minded providers more today than ever before. Hospitals have been toying with this situation for years. In the mid-1990s, hospitals built employed physician networks only to disengage from many of them by the end of the decade. Now, as the first decade of the 21st century is well past midpoint, physicians (and again, hospitals) are looking to build upon their individual strengths by assimilating larger group entities. They will likely continue to do so for some time in the future.
But forming these integrated models is not easy as virtually every prospective “partner” holds differing points of view. For example, consider these potential conflicts:
Differing cultures in terms of the way the individual groups are managed, governed, and operated
Loss of individual group identity and ownership, deferring to the larger assembled entity
Removal of individual incentives, transferring these to more group-oriented incentives
Operational differences, creating inefficiencies and loss of economies of scale
Potentially significant working capital required to start up the new entity, including the cost of purchasing new equipment and technology
Differing perspectives as to the role of a for-profit investor versus the emphasis on patient care and needs
Although collaboration offers physicians a greater opportunity to make a living and look toward the future optimistically, physicians in the United States have long been independent, mostly operating as small organizations. Therefore, it is extremely difficult to reconcile such a colossal change in mindset and operative structure.
Nonetheless, physicians must band together with other like-minded entities—hospitals, for-profit investors, and other physicians—to respond to the pressures that confront them, both today and in the foreseeable future. For instance, without some degree of strength in numbers, the physician entity has little bargaining power for reasonable reimbursement in an era in which third-party payment is falling steadily. In addition, many payers, including the government, are currently offering or considering pay-for-performance incentives that reimburse higher amounts to providers with demonstrated clinical performance standards.
However, a sophisticated IT infrastructure, including an electronic health record (EHR), must serve as the foundation for reporting performance results to be able to generate additional reimbursement. Small entities (e.g., small practices) can seldom justify the cost of an EHR and other technology unless they are a part of a much larger entity. Despite the stresses involved in joining forces, mentioned earlier, physician groups must grow in order to respond to payers.
Many physician groups have done this by merging their practices. Others have formed integrated models that more closely resemble joint ventures than truly formed legal entities sharing a single provider number. Alternatively, hospitals may employ physicians and thus become the negotiator for services and reimbursement with the payers. Hospitals and physicians are also coming together to form aligned entities through joint ventures and some equity-model jointly owned entities. They also sometimes join forces by combining expertise through management services organizations.
Selecting a partner
Physicians who are considering the possibility of collaborating with other providers should consider the following eight overarching tenets when selecting a partner:
Financial performance and return on investment (ROI): Although economics are not the most important matters to physicians—and we clearly believe this is the case—financial concerns are a reality that must be considered and no apologies are necessary for targeting a certain ROI.
Patient care and quality: Developing the highest standards of quality and professionalism in their services certainly is at the top of the list for virtually all physicians and hospitals.
Relative acuity level of challenges: This will vary with the situation or even location of the physicians. In some areas, reimbursement is still reasonably good, and thus the relative acuity level of the problem is not as great. In other areas, partnering is an absolute must to build the strength-in-numbers fortress.
Reimbursement experience: One of the reasons partnering is a good strategy is because one or more of those partners usually have strength in negotiating and overall managed care experience.
Ownership and governance status and structure: When an affiliation is considered—whether it is a legally structured entity or more of a loosely formed affiliation—ownership and governance is a significant part of the success or failure of that entity.
Geographic and/or market penetration: When a prospective partner has significant geographic coverage and/or market penetration, it automatically strengthens the partnership; hence, the “strength in numbers” adage fits all the more.
IT sophistication and integration: In this day and age, a successful partnership relies heavily on IT. In fact, many partnerships are largely driven by the need for greater IT sophistication, especially between hospitals and physicians and among physicians forming larger groups. Moreover, one or more of the prospective partners may be much further along in IT development, enhancing the overall potential for success.
Legal and regulatory conformity: Regardless of the partnering structure, anytime healthcare is involved, the U.S. government is involved and its system of ever-growing regulations must be considered. Thus, not only must a potential partnership be structured in a completely legal manner, but also the individual partners must have an attitude of conformity and compliance in every area. The partnership may be even more effective if the partners take a somewhat conservative attitude toward regulatory compliance.
Our system is clearly stressed at this time and more innovative solutions are necessary. At the core of these solutions comes an attitude of partnering. The result is indeed the strength-in-numbers opportunities that are availed to both hospitals and physicians and to virtually all other professionals/investors in our healthcare industry.
Max Reiboldt, CPA, is managing partner and CEO of The Coker Group, a healthcare consulting firm based out of Alpharetta, GA, that authored the HealthLeaders Media book, Physician Entrepreneurs: Strength in Numbers.
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In what appears to be a push to transparency, the Centers for Medicare and Medicaid Services wants to add 43 more indicators to the list of quality measures that hospitals are required to report on if they are to receive the full update to their fiscal year 2009 payment rates. Last week I wrote about how CMS’ new list of proposed “never events” will affect hospital reimbursement for 2009, but these 43 new quality measures promise to have an equally big effect.
Earlier this year I had a chance to speak with hospitals that are leading the transparency movement. They’ve embraced their data and made them a part of their hospital experience -- offering the information online for consumers to examine before they even walk in the door. The majority of them told me that when they started sharing data, the CMS core measures were the first to be posted. The data were there, they had to be collected, and they were valid, so why not share them with consumers?
Maybe that’s what CMS is hoping for. By increasing the number of indicators, and therefore the effort to collect and report data, does CMS think that hospitals will just say, “Oh, what the heck, let’s be transparent?” After all, the information will be available on CMS' site, and as those transparency leaders told me, once it’s there, consumers will have questions. Those who are interested in helping consumers understand these data will have to post it on their own site—along with explanations of why they are relevant to the consumer and what the hospital is doing to maintain a good score or improve a poor score.
Norton Healthcare is one organization that has taken the lead in transparency. Its data reporting story started as an internal improvement process, in which it used CMS indicators to improve quality at its four hospitals. But its leaders believed that true transparency was the best strategy for the organization and before long, consumers were able to access the organization’s CMS measures and other publicly reported scores on Norton’s Web site.
When I interviewed him a few months ago, Norton’s Vice President of Medical Affairs Steve Hester told me why it is so important for hospitals to not only report data to CMS, but take the lead and explain the information on their own Web sites. “I think education is the key piece—as it is with so many things in our society. I can present lots of data, but unless I educate the user, it is of little value,” he says.
There are many organizations out there that have resisted transparency for one reason or another. They may question whether consumers will be able to understand the data, or have interest in it. Others—in many cases the nation’s smallest hospitals—have avoided it because it’s simply too much for their already small administrative staffs to handle. But if this CMS proposal goes through later this year, every hospital will have to start paying more attention to its data if it wants to get paid.
CMS must believe that consumers are paying attention and with its new proposed quality measures, its forcing hospitals’ hands when it comes to transparency. How will your organization respond to these proposed reporting requirements? Who will take on the burden of collecting and organizing these data? Will you take the extra step to post them for consumers to view? I’m interested to hear how you think CMS’ proposal will change the way data is viewed at your hospital.
