Employers rejoiced after a court ruled in their favor, though an appeal appears likely.
Just 15 days before going into effect, the Federal Trade Commission’s ban on noncompete agreements was struck down by a Texas federal judge, handing hospitals a win over physicians in employment contracts.
Employer groups like the American Hospital Association (AHA) and Federation of American Hospitals (FAH) praised the decision, which they argue prevents hospitals and health systems from being at a disadvantage in recruiting and retaining physicians, nurses, and other clinical workers.
U.S. District Judge Ada Brown ruledthat the FTC’s ban is “unreasonably overbroad without a reasonable explanation” and that the federal agency lacks the authority to implement it.
Last month, Brown approved a preliminary injunction against the ban for plaintiffs Ryan LLC and the U.S. Chamber of Commerce while the court considered the FTC’s application of the rule more broadly.
Despite Brown’s decision, the noncompete ban may continue to be litigated, with FTC spokesperson Victoria Graham saying that the agency is “seriously considering” an appeal.
Meanwhile, FAH president and CEO Chip Kahn praised the ruling and reiterated the consequences of a noncompete ban for hospitals.
"We have been clear from the start that this rule would threaten patient access to care by making it more difficult for hospitals to recruit and retain physicians and invest in training and technology," Kahn said in a statement. "In addition, this rule would create an unlevel playing field for tax-paying hospitals, an outcome completely at odds with FTC's mission to promote competition. Especially at a time of workforce shortages and other challenges, this was the right decision."
AHA general counsel and secretary Chad Golder echoed the sentiment that the court made the right decision.
“The rule was a breathtaking assertion of regulatory power by three unelected commissioners, made worse by the fact that the commissioners did not attempt to understand the disruptive impact it would have on hospitals, health systems and the patients they serve,” Golder said in a statement. “We are pleased that Judge Brown vindicated what the AHA predicted when this unlawful regulation was first released—the ‘only saving grace is that this rule will likely be short-lived, with courts almost certain to stop it before it can do damage to hospitals’ ability to care for their patients and communities.’”
On the opposite end, physician groups expressed disappointment in the ruling, claiming noncompete agreements damage patients along with physicians.
"Noncompetes harm family physicians and their patients by jeopardizing long-term patient-physician relationships and creating an uneven playing field for physicians," American Academy of Family Physicians president Steven Furr said in a statement. "The AAFP will continue to support the FTC's mission to eliminate noncompetes in healthcare that prioritize the interests of organizations over those of patients and their physicians."
While the decision to block the ban limits employees’ freedom of movement, it relieves additional pressure that would have fallen on hospitals and health systems during a time when organizations are struggling with workforce challenges.
However, hospitals may find more success in recruiting and retaining physicians by offering contracts without noncompete agreements and getting creative with compensation and benefits.
As the healthcare workforce population changes over time, organizations must adjust their recruitment and retention strategies.
If you’re a leader in healthcare, chances are high that you’re constantly thinking about ways to improve your workforce.
The pandemic may be in the rearview mirror, but its impact on workforce challenges continues to be felt.
“We’re in the greatest healthcare workforce shortage in the history of the world,” Crouse Health CEO Seth Kronenberg said on the HealthLeaders Podcast.
Kronenberg, who is a HealthLeaders Exchange member, will be joined by other senior-level leaders from hospitals, health systems, and medical groups at the Workforce Decision Makers Exchange in Washington D.C., from November 7-8.
Attendees will discuss solutions to the biggest questions surrounding the workforce, including how to develop a sustainable workforce for the future that can meet the demands of younger generations of workers.
For Kronenberg, that involves keeping opportunities in-house so workers don’t feel like they have to go elsewhere to transfer into different disciplines or change their workplace lifestyle.
“Healthcare in general, we all were caught a little flat-footed with, certainly with COVID, all of the opportunities people had to work remote,” he said. “There were many more opportunities in other industries, other than the hospital environment. So now we want to make sure we can meet the demands of the workforce as we go forward.”
Check out this week’s episode to hear more from Kronenberg, who touches on many of the topics that will be discussed at the upcoming Exchange.
Are you a CEO or executive leader interested in attending an upcoming event? To inquire about attending the HealthLeaders Exchange event, email us at exchange@healthleadersmedia.com.
The HealthLeaders Exchange is an executive community for sharing ideas, solutions, and insights. Please join the community at the LinkedIn page.
Peter Slavin shares his biggest areas of focus when taking the helm at the Los Angeles-based health system.
Cedars-Sinai is set to have a new leader for the first time in three decades, but for incoming CEO Peter Slavin, the priority remains solving for healthcare’s number one pain point.
When Slavin becomes the next president and CEO of Cedars-Sinai Medical Center and Cedars-Sinai Health System on October 1, he has his sights set on improving the workplace for clinical staff through technology solutions and a people-first approach.
“Clearly the workforce was traumatized during the pandemic and is slowly recovering,” Slavin told HealthLeaders. “How do you make the work environment as positive and joyful as possible? That really is an important focus of mine, as well as the basic economics of the organization.”
Slavin will replace longtime leader Thomas Priselac, who is retiring after 45 years with Cedars-Sinai, including 30 as president and CEO. Most recently, Slavin served as an advisor and board member for multiple healthcare companies, but before that he was president of Massachusetts General Hospital from 2003 to 2021.
During his time in Boston, Slavin “successfully led major growth in the hospital’s clinical care mission, research funding, scientific impact, workforce development and fundraising,” according to the news release announcing his appointment.
He also witnessed firsthand the effect the pandemic had on the physicians, nurses, and other staff, exacerbating workforce challenges that hospitals and health systems continue to contend with.
Pictured: Peter Slavin, next president and CEO, Cedars-Sinai Medical Center and Cedars-Sinai Health System.
Relieving the administrative burden placed on workers is vital, Slavin said, especially with younger generations placing greater value on work-life balance. Addressing that requires a multi-pronged approach that utilizes technology and is attentive to solutions like flexible and virtual work.
“One of the sources of trauma that the healthcare workforce is facing is just the trauma caused by spending too much time in front of computers and not enough time in front of patients,” Slavin said. “Generative AI and other aspects of artificial intelligence, there's incredible opportunity to shift that balance between time in front of computers and patients and make it much more favorable from clinician standpoint.
“But I would emphasize that I don't think technology is the only answer to the issue. I think it's a variety of other things. It's just management paying close attention to the needs, the voices of the workforce and making sure that we're as attentive as ever to how to make the work environment as positive as possible.”
Strengthening the workforce can also help hospitals build back trust with the public, Slavin acknowledged. New research published in JAMA Network Open revealed that trust in physicians and hospitals from 71.5% in April 2020 to 40.1% in January 2024.
“It is disheartening that we've gone from heroes to goats in such a short order,” Slavin said.
A worn-out and overburdened workforce had its hands full with capacity constraints during the pandemic, making the public wary about providers’ effectiveness.
Alleviating staffing shortages isn’t the only way to win back patients though, according to Slavin. As demand for a retail experience continues to build, traditional providers must make the experience of receiving care as user-friendly as possible.
He said: “Using digital technology, using customer service training, I just think it's incumbent on healthcare organizations to make the user experience as positive as possible and as good as it is when people go to restaurants or hotels or other activities in their lives.”
The payer is teaming up with private equity firm Clayton, Dubilier & Rice on the joint venture.
Elevance Health is following its competitors into the primary care arena with its own model.
The insurer and its private equity partner Clayton, Dubilier & Rice introduced Mosaic Health months after announcing plans in April, allowing Elevance to expand its reach with a primary care network in a similar vein as its peers.
The joint venture will combine the capabilities of CD&R’s portfolio companies, apree health and Millennium Physician Group, with the advanced primary care solution of Elevance’s Carelon Health added into the mix once it receives regulatory approval.
Through Mosaic, Elevance will be able to deliver a community-based care model supported by unique digital patient engagement, care coordination, and navigation capabilities, according to the announcement.
"Mosaic Health will innovate on existing risk-based care delivery models, and I am excited to work closely with its operating companies and Elevance Health to foster collaboration and help Mosaic Health's operating companies better serve our providers and deliver exceptional care and services to more patients and communities," CD&R operating partner Clay Richards, who will serve as Mosaic Health executive chairman, said in the news release.
"Mosaic Health demonstrates CD&R's continued commitment to investing in and growing innovative healthcare companies that increase access to high-quality and affordable healthcare, and we are excited for this new chapter of innovation, expanded access and growth."
The primary care space is littered with retailers and disruptors trying their hand but running into difficulties scaling.
Yet payers like CVS Health continue to double down on primary care expansion due to confidence in their ability to leverage their health plans. Insurers can guide patients to their primary care network and reap more profit by taking a comprehensive, whole-health approach.
Mosaic will allow Elevance to offer its health plans alongside Medicare, Medicaid, and commercial plans, serving nearly one million patients across 19 states through apree and Millennium, according to the news release.
If Carelon’s assets are approved to enter the venture, Elevance will be able to utilize the clinics of its care delivery business to push Mosaic.
Governor Maura Healey's office will facilitate the transition of the hospitals to new ownership to ensure they remain open.
As Steward Health Care continues to navigate bankruptcy, the embattled health system's presence in Massachusetts finally appears at an end.
Governor Maura Healey announced that the state has reached deals in principle for four Steward hospitals and is wrestling away control of another to transfer the facilities to new owners, allowing them to stay open.
If the transactions are completed, Holy Family Hospitals in Haverhill and Methuen will be operated by Lawrence General Hospital, while Morton Hospital and Saint Anne's will go to Lifespan, and Good Samaritan Medical Center will go to Boston Medical Center.
After the state seizes control of Saint Elizabeth's through eminent domain, the hospital will eventually be operated by Boston Medical Center as well.
"Today, we are taking steps to save and keep operating the five remaining Steward Hospitals, protecting access to care in those communities and preserving the jobs of the hard-working women and men who work at those hospitals," Healey said in a statement. "Our team under Secretary Kate Walsh worked day in and day out to secure new, responsible, qualified operators who will protect and improve care for their communities. We're grateful for the close collaboration of the Legislature to develop a fiscally responsible financing plan to support these transitions."
In announcing the decision to seize control of Saint Elizabeth's, Healey accused Steward landlord Macquarie Investment Partners and lender Apollo Global Management of putting their own interests above those of the people of Massachusetts.
"Enough is enough," Healey said.
The state's deals, however, will not affect Carney or Nashoba Valley hospitals, which are on track to close after not receiving qualified bids. In the meantime, the administration said it has committed $30 million to keep the hospitals open through the end of the month and is "focused on supporting workers and connecting them to new jobs while also safely transitioning care."
Steward's problems in Massachusetts may be resolved soon, but the company still has divestures to see through elsewhere.
In May, Steward filed for bankruptcy before putting all 31 of its hospitals up for sale as it faced $9 billion in total liabilities.
Much of the focus has been on the sale of Steward's physician group, Stewardship Health, which was initially being scooped up by UnitedHealth Group's Optum until the deal fell apart. Earlier this month, Stewardship was bought for $245 million by a private equity firm.
Steward has struggled to nail down buyers and lock in deals due to the interests of its landlords and lenders.
This week, the health system filed a lawsuit against Medical Properties Trust for interfering in its sales by working with potential buyers without Steward's consent.
Hundreds of rural facilities across the country are facing serious financial problems, a new report reveals.
A growing number of rural hospitals in the U.S. are hitting a breaking point.
Due to severe financial challenges, more than 700 facilities—over 30% of rural hospitals in the country—are facing closure, including 360 being at immediate risk, according to analysis by the Center for Healthcare Quality and Payment Reform.
More than 100 rural hospitals have already closed in the past decade, while over two dozen facilities have eliminated inpatient services in 2023 and 2024 to qualify for federal grants that are only available for rural emergency hospitals, the report stated.
The authors posited that the primary factor putting so many rural hospitals at risk of closure is low reimbursement from payers. While these hospitals are also losing money on uninsured and Medicaid patients, the biggest losses come from patients with private insurance. With about half of the services at the average rural hospital delivered to patients with private insurance, lack of adequate reimbursement from private payers is putting facilities in an unsustainable position.
Rural hospitals also serve a smaller number of patients as compared to large hospitals, which results in less revenue for rural facilities. To combat this problem, the report argued that both private and public payers should be required to increase payments to prevent closures, which the authors said would cost $5 billion per year, or an increase of 1% in total national healthcare spending.
Another way to support rural hospitals is to create standby capacity payments from private and public payers to support the fixed costs of essential services, according to the report.
Even making telehealth flexibilities permanent instead of allowing them to expire on December 31 would go a long way to supporting rural health, Grande Ronde Hospital CEO and HealthLeaders Exchange member Jeremy Davis recently told HealthLeaders.
Davis testified in front of the Senate Finance Committee on rural healthcare in May and advocated for Congress to take action to keep hospitals from closing their doors.
“One of the things that I said in my testimony is, as a rural hospital administrator, we're looking for a help up, we’re not looking for a handout,” he said. “We want to be good stewards of the resources. We recognize funding is complex but trust us, enable us. There's a lot of really good people that are working in rural that are used to doing some great things with limited resources.”
Are you a CEO or executive leader interested in attending an upcoming event? To inquire about attending the HealthLeaders Exchange event, email us at exchange@healthleadersmedia.com.
The HealthLeaders Exchange is an executive community for sharing ideas, solutions, and insights. Please join the community at the LinkedIn page.
A study revealed what top leaders would do differently if they had the chance to do it over again.
If you’re a CEO, chances are high that you wish you could go back in time and change a decision you made or an action you took. Hindsight is 20/20 after all.
First-time CEOs and those taking the helm at a new organization may not be able to avoid regrets altogether, but they can minimize them by learning from their peers’ experiences.
So, what would fellow CEOs do differently after reflecting on their first year on the job? Russell Reynolds Associates tried to find out the answer by interviewing 35 CEOs who had been in their role for 12 to 18 months, along with collecting data from 178 CEOs. The findings were laid out in a Harvard Business Reviewarticle.
Make changes faster
The most common regret among respondents was not moving fast enough to change and build their teams, chosen by 66% of CEOs.
This answer was selected more by second- and third-time CEOs than by first-time CEOs, but it was the latter group that made their first change quicker on average—2.6 months versus four months.
Of course, making changes for the sake of change isn’t an effective approach. CEOs should find a balance between sitting back and being too aggressive.
Phil Wright, CEO at Memorial Regional Hospital South, recently shared with HealthLeaders his tips to success for incoming CEOs, which included resisting sudden change.
“Get in, get acclimated to the organization, get to know people, understand why certain things were done or not done, and then start gathering information to put yourself in a position to make decisions,” Wright said.
Once CEOs feel they’ve got the lay of the land, that’s the time to start leaving your mark.
Adapt leadership style
The second-most common regret among surveyed CEOs was not altering their leadership style, chosen by nearly half of respondents (48%).
One of the difficulties many first-time CEOs encounter is recognizing that their new role demands a different approach. Of respondents who said their top regret was leadership style, 25% revealed they took too long to mentally accept the position and leave behind the thinking they had from their previous role.
For example, CEOs shouldn’t be managing others, but leading them, recently retired Banner Health CEO Peter Fine toldHealthLeaders.
Whether that manifests in how you motivate people or how you delegate, it’s crucial CEOs understand that the job requires a different mentality, even to other C-suite positions.
Engage with the board
Another aspect of being a CEO that newly appointed leaders can struggle with is having a positive relationship with their board.
One-quarter of respondents (25%) said their biggest regret was not working better with the board during their transition, while over 63% reported having some sort of conflict with their board in their first year in the role.
Going from one boss to multiple can be an eye-opening transition, but by emphasizing transparency and alignment, CEOs can improve board interactions and avoid missteps along the way.
The health system's board voted to oust Airica Steed for performance issues while she was on medical leave.
MetroHealth System appears in to be in line for another legal battle after kicking a second CEO out the door in less than two years.
The Cleveland-based hospital operator cited performance deficiencies in their firing of Airica Steed, but the CEO claims she was “unlawfully terminated” while on approved FMLA leave and suggested the decision was retaliation for her raising concerns over discrimination and ethical issues at the company.
Steed took over at the system in 2022, becoming the first woman, Black person, and nurse to lead the nonprofit. Her appointment came after MetroHealth fired previous CEO and president Akram Boutros for allegedly paying himself $1.9 million in authorized bonuses.
Boutros denied the allegations and filed a lawsuit against the system but withdrew the suit due to undergoing treatment for a serious illness. His attorney stated he would refile the case as soon as his health improved.
Now, MetroHealth is clearing the deck again by letting go of Steed.
“It has become clear that the Board and Dr. Steed fundamentally disagree about the priorities and performance standards needed from our CEO for MetroHealth to fulfill its mission,” E. Harry Walker, MD, chair of the board of trustees, said in the news release. “We believe Dr. Steed’s performance is not meeting the needs of MetroHealth. As a result, we have lost confidence in her ability to lead the organization going forward and believe it would not be in the best interest of the System for her to continue in her position. Therefore, we are exercising our right to terminate her at-will contract.
“We thank Dr. Steed for her service and wish her well in her future endeavors. We had high expectations when she arrived in 2022 and are sorry those expectations have not been met.”
Steed’s attorney, F. Allen Boseman, Jr., issued a statement that the CEO was shocked by the termination.
“Dr. Steed, who is the first female and African American CEO of MetroHealth, is extremely disappointed in the actions of MetroHealth’s Board of Trustees and is stunned that the Board has taken action that directly conflicts with prior representations made publicly as well as to Dr. Steed privately,” Boseman said.
MetroHealth announced on July 26 that Steed was going on medical leave and named Christine Alexander-Rager as acting president and CEO. “We look forward to [Steed’s] return,” the system said in the news release.
Despite MetroHealth’s board citing performance issues in their decision to fire Steed, Boseman said the CEO was given a positive 2023 performance review. Steed earned a $381,156 bonus due to meeting goals, in addition to her base salary of $900,000.
Signal Cleveland, meanwhile, reported that tension between MetroHealth and Steed was bubbling for months, stemming from her frequent travel away from the system and the expenses those trips accumulated.
Rather than performance or her expenses, Boseman suggested that the system’s decision was in response to Steed engaging in protected activity.
For now, MetroHealth will be led by Alexander-Rager, who has been with the system for almost 30 years, most recently serving as interim executive vice president, chief physician executive and clinical officer. She previously served as MetroHealth’s chair of family medicine for 14 years.
“With Dr. Steed’s departure, we are confident we have senior leaders who can step in and guarantee that MetroHealth will continue to be a beacon of excellence for our patients and our community,” MetroHealth said.
The health system is hoping to have finally found a new owner for its four hospitals in CHA Partners.
Prospect Medical Holdings’ winding history with Crozer Health may be coming to an end.
After acquiring Crozer-Keystone Health System for $300 million in 2016, struggling to keep it financially viable, and falling short on a sale in 2022, Prospect has now signed a letter of intent with real estate and development company CHA Partners to divest the four-hospital system.
As part of the deal, Crozer, which switched to for-profit when it was bought by Prospect, will revert to nonprofit status under CHA.
In the announcement, CHA said it will work closely with consulting firm Healthcare Preferred Partners over the next several months to complete the transaction, which will require a definitive agreement and regulatory review.
Since being founded in 2008, CHA has acquired five hospitals in New Jersey, including “successfully transitioning one of its hospitals back to a not-for-profit status and integrating it into a large regional healthcare network,” the news release said. CHA also owns and operates ambulatory surgery centers, medical office buildings, and skilled nursing/assisted living facilities.
“We believe this is a positive step for our physicians, employees and the communities we serve, and will help secure Crozer Health’s future as a critical healthcare provider in Delaware County,” the announcement said.
Prospect previously tried to sell Crozer to ChristianaCare Health System in 2022 before talks fell apart. The two sides said at the time that “the economic landscape has significantly changed, impacting the ability of the sale to move forward."
Later that year, Prospect said it would close Delaware County Memorial Hospital and reopen it as a behavioral health hospital, which prompted a lawsuit from the Foundation for Delaware County and the state attorney general.
This past October, all sides agreed to suspend litigation for 270 days as Prospect searched for another buyer for Crozer that would allow it to operate as a nonprofit.
Prospect is also attempting to divest hospitals in other markets and encountering several roadblocks.
The health system is dealing with a lawsuit brought on by Yale New Haven Health after the two sides agreed to a $435 million sale of three Connecticut hospitals owned by Prospect. Yale alleged that Prospect breached their contract pattern by subjecting the hospitals to “irresponsible financial practices, severe neglect and general mismanagement.”
Meanwhile, Prospect was given 40 conditions to meet by Rhode Island Attorney General Peter Neronha to complete the sale of two safety net hospitals to The Centurion Foundation. The requirements include Prospect paying unpaid bills owed by the two hospitals’ operator, CharterCARE Health Partners, totaling $24 million.
The company also announced plans to slash $2 billion in costs to relieve pressure on its bottom line.
CVS Health is making major moves to turn around the floundering performance of its insurance arm.
The retail giant said CEO Karen Lynch will take over “day-to-day management” of Aetna, with the insurer’s president, Brian Kane, leaving the company. Lynch, who was president of Aetna from 2015 to 2021 before becoming CVS Health’s CEO, will oversee the insurer’s operations along with CFO Tom Cowhey.
The announcement accompanied CVS’ second quarter earnings report, which revealed a downturn that caused the organization to reduce its earnings expectations for the third time this year. Now, CVS anticipates an adjusted earnings per share of $6.40 to $6.65, down from at least $7.
The reduction is the result of the company experiencing nearly a 9% drop in net income year-over-year to $1.77 billion, compared to $1.9 billion in the same period last year. Much of that is attributed to the woes of Aetna, which suffered a 39% decrease in operating income to $938 million for the quarter.
“The financial performance of this business was not meeting my expectations, and I decided to make a change,” Lynch told investors in an earnings call.
“Relative to the priorities there, I will be establishing a very strong management process, driving execution of improved financial and operational performance, and those will be my key priorities.”
In the news release reporting its earnings, CVS said Aetna’s struggles are being spurred by “increased utilization and the unfavorable impact of the previously disclosed decline in the Company's Medicare Advantage star ratings for the 2024 payment year within the Medicare product line, higher acuity in Medicaid primarily attributable to the resumption of redeterminations, as well as a change in estimate related to the individual exchange business risk adjustment accrual for the 2023 plan year recorded in the second quarter of 2024.”
Insurers are finding Medicare Advantage (MA) not as profitable as before with the new rate cuts and adjustments to star ratings, which determine how much payers will earn in bonus payments.
Aetna has also expanded its MA supplemental benefits and is seeing higher utilization of dental and pharmacy services, Cowhey told investors.
To combat the rising expenses, CVS also announced its plan to achieve $2 billion in cost savings, “driven by further streamlining and optimizing our operations and processes, continuing to rationalize our business portfolio, and accelerating the use of artificial intelligence and automation across the enterprise as we consolidate and integrate,” Lynch said.
Primary care is one area where CVS continues to invest in. The company recently said it will open 25 Oak Street Health clinics alongside their stores in 14 states by the end of this year, during a time when other retailers are backing off from the space.
For the second quarter, Oak Street’s revenue grew 32% year-over-year, “reflecting strong membership and growth,” Lynch said.
CVS is hoping the integration of Oak Street clinics with Aetna, as well as the introduction of co-branded Aetna and Oak Street plans in the 2025 annual enrollment period, will continue to benefit both its primary care and insurance business going forward.
