Advocates say the proposal would expand coverage options for small employers. Critics say the proposal could allow employers to shift high-cost employees into ACA plans.
The Trump Administration this week unveiled a proposalthat "expands the usability" of tax-free health reimbursement arrangements (HRAs) for employer-sponsored health insurance.
"Of those smaller employers that provide health benefits, 81% offer only a single option," Labor Secretary Alexander Acosta said in a media release.
"This proposalis about empowering American workers to have more consumer-driven healthcare choices," he said. "Health Reimbursement Arrangements can provide another way for employers to help their employees access quality, affordable health coverage."
The proposed rule is a response to President Donald Trump's executive order "Promoting Healthcare Choice and Competition Across the United States."
The proposed rule removes an existing regulation that prohibits employers from reimbursing employees for individual health insurance coverage.
Critics contend that the proposalcould allow employers to push higher-risk employees away from company-sponsored coverage and into individual coverage offered through the Affordable Care Act's Marketplaces.
The Trump Administration says there are conditions built into the proposal to "mitigate the risk that health-based discrimination that could increase adverse selection in the individual market." Those conditions include a disclosure provision to ensure employees understand the benefit.
The proposed rule would extend to HRAs the same tax breaks that workers receive for medical reimbursements from traditional employer-sponsored coverage, and would not affect the tax treatment of traditional employer-sponsored coverage.
Instead, the proposal would create a new tax-preferred option for employers of any size to use when paying for employee health coverage. The employer would fund the cost of the individual health insurance, but the employee would "own the coverage," which would allow them to keep their plan if they left that job, the Administration said
The proposed regulation also would allow employers offering traditional employer-sponsored coverage to offer an HRA of up to $1,800 per year to reimburse an employee for some medical expenses, including premiums for short-term, limited-duration insurance plans.
The Treasury Department estimates that about 800,000 employers are expected to provide HRAs to pay for individual health insurance coverage to over 10 million employees when the proposal is up and running.
Comments on the proposal will be accepted by Dec. 28, 2018, and the regulation is expected to go into effect on Jan. 1, 2020.
The Health Care Payment Learning & Action Network study shows that the percentage of healthcare payments tied to APMs have increased at a steady pace from 23% over a two-year span.
One-third of all U.S. healthcare payments in 2017 involved alternative payment models, including shared savings, shared risk, bundled payments, and population-based payments, a new report shows.
The Health Care Payment Learning & Action Network study, which calls itself "the largest and most comprehensive measurement effort of its kind," shows that the percentage of healthcare payments tied to APMs have increased at a steady pace from 23% over a two-year span.
LAN divided healthcare dollars into four buckets, and found that:
41% of healthcare dollars in Category 1 (Fee-for-Service – No Link to Quality & Value)
25% of health care dollars in Category 2 (Fee-for-Service – Link to Quality & Value)
34% of health care dollars in Categories 3 (APMs Built on Fee-for-Service Architecture) and 4 (Population-Based Payment)
LAN, is a public-private partnership that was created by the Department of Health and Human Services in 2015 with a mission is to accelerate the transition to APMs.
"The report’s findings reinforce our understanding that there is sustained, positive momentum in the effort to shift healthcare payments from traditional fee-for-service into value-based payments," said Mark McClellan, co-chair of the LAN Guiding Committee.
LAN's Measurement Effort this year reported findings at the payment or subcategory level. Most of the spending tied to Category 3 and 4 APMs falls within the Framework's 3A category, which focuses on shared savings.
Only 12.5% of payments were made in Categories, 3B, 4A, 4B and 4C combined, which McClellan said illustrates additional opportunities to increase payments through episode- and population-based payments that have additional risk.
"While we celebrate the increase in overall APM adoption, we also know further progress on payment reform will be important to ensure healthcare dollars flow through models that have more risk," he said.
This year also marks the first time the LAN reported payment data by line of business, rather than across lines of business only. For Categories 3 and 4, 5he report found that:
Medicare Advantage had 49.5% of healthcare dollars.
FFS Medicare had 38.3% of healthcare dollars.
Commercial plans had 28.3% of healthcare dollars.
Medicaid had 25% of healthcare dollars.
The APM Measurement Effort includes FFS Medicare data, in addition to data from 61 health plans and 3 FFS Medicaid States, representing a total of 77% of covered lives in the United States.
McClellan announced the results of the LAN’s measurement effort today at the LAN Summit in Tysons, Virginia.
LAN's goal is to tie 50% of U.S. healthcare payments to APMs by the end of 2018.
Texas v. Azaris the latest in a long line of lawsuits and legislation that Republicans have used to undermine the Affordable Care Act, which has shown itself to be remarkably resilient.
A federal judge in Texas is poised to drop a ruling that could determine the future of the Affordable Care Act.
Or, maybe not.
The Republican plaintiffs from 20 states in Texas v. Azar argued before U.S. District Judge Reed O'Connor in early September that the entire ACA became unconstitutional when Congress zeroed out the individual mandate penalty, effective 2019.
Led by Texas Attorney General Ken Paxton, the Republican plaintiffs are asking for a preliminary injunction. The Department of Justice, which declined to defend portions of the ACA, also urged O'Conner to delay any injunction until after the enrollment period, saying any attempts to impose the injunction during the enrollment period would invite "chaos."
If the injunction goes through, it could end premium subsidies for ACA beneficiaries and cripple enrollment. The Urban Institute has estimated that 17 million people would lose their health insurance coverage if the ACA was overturned.
As potentially catastrophic as this sounds, the healthcare sector doesn't seem to be overly concerned. In fact, business couldn't be better.
A report inAxios shows that many players in the healthcare sector are prospering under the ACA. The website notes that S&P 500 healthcare index of 63 major companies has grown by 186% since the ACA became law in 2010, outstripping the S&P 500 and the Dow Jones.
In addition, health insurance companies are flush. Shares of UnitedHealth Group have gone up more than 700% since 2010, and the stock price of ACA marketplace insurer Centene has gone up 1,100% over the same period, Axios reports.
While hospitals have had a tougher time of it, especially in states that refused to expand Medicaid, they're still seeing reductions in charity care and bad debt owing.
Regardless of how O'Connor rules in Texas v. Azar, ACA payers, providers, and other stakeholders will continue to presume that the law isn't going anywhere, says healthcare economist Gail Wilensky.
"They're assuming it'll be around, or something very similar will be," says Wilensky, a former director of Medicare and Medicaid, and a former chair of the Medicare Payment Advisory Commission.
"I don't think people are regarding any serious likelihood of it going away again," she says.
Even if O'Connor, appointed to the court in 2007 by President George W. Bush, agrees with the severability arguments raised by the Republican governors and attorneys general in 20 states who brought the suit, the matter likely would get shot down on appeal, Wilensky says.
" I would be surprised if it doesn't get reversed someplace else," says Wilensky, now a senior fellow at Project HOPE.
"If it had go all the way to the Supreme Court, the Supreme Court isn't going to tolerate it, but I don't know that it would even get that far," she says.
The case is just one in a long string of legal and legislative actions Republicans are taking at the state and federal level to either undermine or bolster the ACA.
Earlier this year, O'Connor sided with Texas and five other states and threw out an Obama administration tax on states receiving Medicaid funds.
The Republican-controlled Congress has tried more than 50 times to repeal Obamacare, and Senate Majority Leader Mitch McConnell said this week that Republicans may try again in 2019.
While the signature legislation of the Obama era has been dinged and dented, it's also proven to be remarkably resilient.
Wilensky says the ACA is resilient because it solves a problem "for a small but non-trivial group of people," and that Republicans don't have a credible alternative.
"Once a benefit is in place for any measurable amount of time, certainly two or three years would qualify, there's no precedent for removing it," she says.
"And most of the proposals that had come up did not seriously get the job done," Wilensky says.
"They really weren't effective as an alternative and you simply aren't going to take away a benefit, like the extension of insurance to people who are above the poverty line and not offered traditionally employer sponsored insurance without having a credible alternative."
"It's just not going to happen because there are too many issues that have already been adjudicated at a more serious level," Wilensky says. "I don't know why they did this other than that this is 20 attorneys general and they're running for something."
The study finds no association between hospital accreditation and lower mortality, and only slightly better outcomes for 30-day readmissions for 15 common conditions.
Hospitals that earn certification by independent accreditors, such as The Joint Commission, have no better outcomes than hospitals reviewed by a state survey agency, according to a new report in the BMJ.
"Furthermore, we found that accreditation by The Joint Commission, which is the most common form of hospital accreditation, was not associated with better patient outcomes than other lesser known, independent accrediting agencies," the study concluded.
Researchers at Harvard T.H. Chan School of Public Health compared 4,400 hospitals across the United States, of which 3,337 were accredited, including 2,847 by The Joint Commission, and 1,063 hospitals that underwent state-based reviews between 2014 and 2017.
The study reviewed more than 4.2 million Medicare inpatient records for people ages 65 and older who were admitted for 15 common medical and six common surgical conditions, and respondents to the Hospital Consumer Assessment of Healthcare Provider and Systems survey.
"Hospital accreditation by independent organizations is not associated with lower mortality, and is only slightly associated with reduced readmission rates for the 15 common medical conditions selected in this study," the study said.
Among the findings:
Thirty-day readmissions for The Joint Commission-accredited hospitals were 0.4% lower than those at hospitals that were reviewed by state survey agencies, which the researchers called "not statistically significant lower rates."
Mortality rates for the six surgical conditions were "nearly identical," and "no statistically significant differences were seen in 30-day mortality or readmission rates (for both the medical or surgical conditions) between The Joint Commission-accredited hospitals, and hospitals rated by other independent accreditors.
Readmissions for the 15 medical conditions "were significantly lower at accredited hospitals than at state survey hospitals (22.4% v 23.2%, 0.8% (0.4% to 1.3%), but did not differ for the surgical conditions (15.9% v 15.6%, 0.3% (−1.2% to 1.6%), the study found.
Patient experience scores were modestly better at state survey hospitals than at accredited hospitals. Among accredited hospitals, The Joint Commission did not have significantly different patient experience scores compared to other independent organizations.
While not the only hospital accrediting entity in the United States, the study authors note that private, not-for-profit The Joint Commission plays an outsized role, and controls more than 80% of the accreditation market as the accrediting agency of choice for nearly all major hospital systems.
"There was no evidence in this study to indicate that patients choosing a hospital accredited by The Joint Commission confer any healthcare benefits over choosing a hospital accredited by another independent accrediting organization," the study concluded.
The Joint Commission could not immediately be reached Friday morning for comment.
CMS encouraged to toss out proposals in the rule that 'would likely result in significant decrease in MSSP participation.'
Key stakeholders in the Medicare Shared Savings Program warn that the Centers for Medicare & Medicaid Services efforts to improve the program may actually dampen participation.
In a letter this week to CMS Administrator Seema Verma, AHA Executive Vice President Thomas P. Nickels said the hospital lobby "appreciates certain steps CMS is taking to improve the stability and flexibility of the MSSP" by embracing telehealth to expand access.
"However, we are concerned that, as a whole, the proposals in the rule would likely result in significant decrease in MSSP participation," Nickels said.
"While such an outcome may very well be CMS's expectation, it unfortunately disregards many of the lessons we have learned from the current program," he said.
The stakeholders' remarks were submitted ahead of yesterday's midnight deadline for comments on the proposed final rule.
Specifically, Nickels said CMS should not go forward with the proposed differentiation of participation options for high- and low-revenue ACOs. Instead, he said CMS should improve program methodology to reward improved quality and reduced costs.
He also urged CMS to allow new MSSP ACOs three years in upside-only risk, rather than two, with an option to move into downside risk sooner if they choose.
"Evidence demonstrates that per beneficiary savings correlate to experience, especially after ACOs' third year in the MSSP," Nickels said.
"Drastically shortening the length of time in which they can participate in an upside-only model, along with attempting to create arbitrary differentiations between physician- and hospital-led ACOs, does not empower ACOs to maximize their contribution to patient care and is not a pathway for improving the value of the MSSP for beneficiaries," he said.
American Medical Association Executive Vice President James L. Madara, MD, in a 10-page letter to Verma this week, provided a detailed list of recommendations on the proposed rule.
Among AMA's more than two dozen recommendations, CMS was urged to:
Extend ACO agreement periods to five years, as this will improve stability and predictability for ACO participants.
Retain the Track 1 model, potentially with modifications to encourage greater savings, instead of forcing all ACOs into two-sided risk models.
Raise proposed sharing rates for new ACOs because the proposed rates are too low.
Exclude ACO payment incentives under the Merit-based Incentive Payment System (MIPS) from ACO expenditures for purposes of comparing benchmark to actual spending and calculating each ACO’s savings and losses.
Incentives 'untenable' for new ACOs
The AHA and AMA recommendations were consistent with the findings of a recent poll by the National Association of ACOs, which found that 60% of ACOs would have been unlikely to have entered MSSP under the revised policies proposed by CMS.
Clif Gaus, president and CEO of NAACOS, said ACOs are ready to work with CMS to improve MSSP "without inadvertently forcing ACOs and providers to remove themselves from the bipartisan goal of lower-cost, higher-quality care."
"NAACOS believes that ACOs should take on risk," Gaus said in a media release. "But the speed of CMS's proposed path to risk and the agency's proposal to significantly cut financial incentives will make participation in this voluntary program untenable for new ACOs."
Specifically, NAACOS urged CMS to:
Reverse a proposal to reduce the shared savings rate from 50% to 25% for ACOs in shared savings only or low risk models. NAACOS said shared savings rates should be 50% for Basic Levels A and B, 55% for Basic Levels C and D, and 60% for Basic Level E.
Allow ACOs entering the program to remain in a shared savings-only model for four years with an additional fifth year available for those that demonstrate superior performance.
Make no distinction between high- and low-revenue ACOs. The proposed 25% threshold of ACO participant revenue as a percent of total ACO spending for the assigned population appears arbitrary and creates division where none should exist.
Finalize the proposal to enact extended, five-year agreement periods to provide more program stability and predictability.
Finalize proposals to more gradually introduce risk and to permanently include the current Track 1+ Model in the MSSP (renamed Basic Level E), creating a smoother glide path to risk.
Allow risk adjustment to change by +/-5% over an agreement period, rather than the proposed +/-3%, to reflect risk changes so ACOs are fairly judged on performance without being unfairly expected to manage a population's increasing disease burden.
Gaus said one survey respondents noted that the proposal put forward CMS make sense when looked at in isolation, but that the proposed revisions in their entirety create barriers to entry or continuation for most ACOs.
The $16 million settlement stems from a series of attacks in 2014 and 2015 that potentially exposed the electronic health information of nearly 80 million people.
Anthem Inc. will pay the federal government $16 million to settle the largest health data breach in U.S. history, the Department of Health and Human Services announced.
The settlement stems from a series of cyberattacks on the Blue Cross Blue Shield carrier that occurred between December 2014 and January 2015 that exposed the electronic health information of 79 million people, HHS's Office for Civil Rights said.
The $16 million settlement is the largest ever under the Health Insurance Portability and Accountability Act.
"The largest health data breach in U.S. history fully merits the largest HIPAA settlement in history," OCR Director Roger Severino said in a media release.
"Unfortunately, Anthem failed to implement appropriate measures for detecting hackers who had gained access to their system to harvest passwords and steal people's private information," Severino said.
Anthem issued a statement saying that it cooperated with the OCR investigation, and "takes the security of its data and the personal information of consumers very seriously."
"Importantly, the agreement reached with OCR specifically states that this is not 'an admission, concession, evidence' that Anthem acted improperly," Anthem said.
Indianapolis-based Anthem discovered the breach in January, 2015 and notified HHS in March 2015. The health insurer discovered that hackers had accessed their IT system via an undetected continuous and targeted cyberattack designed to steal personal health data.
After filing their breach report, Anthem discovered the hackers had breached their system through spear phishing emails sent to an Anthem subsidiary that came after at least one employee responded to the malicious email and opened the door to further attacks.
OCR determined that between December 2, 2014 and January 27, 2015, the hackers stole electronic health information from about 79 million people, including names, social security numbers, medical identification numbers, addresses, dates of birth, email addresses, and employment information.
OCR said Anthem also failed to conduct an enterprise-wide risk analysis, had insufficient procedures to review information system activity, failed to identify and respond to suspected or known security incidents, and failed to implement adequate minimum access controls to prevent the cyberattacks that began as early as Feb. 18, 2014.
"We know that large healthcare entities are attractive targets for hackers, which is why they are expected to have strong password policies and to monitor and respond to security incidents in a timely fashion or risk enforcement by OCR," Severino said.
Anthem said that when it learned of the breach, its first priority was to ensure that its systems were secure, "which we did by engaging a world-class security organization and the FBI."
"Additionally, we provided initial notice within 4 business days, and credit protections within 11 business days. We are not aware of any fraud or identity theft that has occurred as a result of this incident, Anthem said.
Anthem already agreed to pay a record-setting $115 million to settle a class-action lawsuit filed over a 2015 breach.
In addition to the $16 million settlement, Anthem agreed to undertake corrective actions to comply with HIPAA Rules.
Before this week's settlement, the largest HIPAA-related settlement came in 2016, when Chicago-based Advocate Health Care Network paid $5.55 million after multiple potential violations that jeopardized the health records of more than 4 million patients.
Private payers, including Blue Cross Blue Shield of Tennessee, were bilked out of about $174 million in the compounding pharmacy scam, which inflated prices for invalidly prescribed pain creams and other drugs.
Four Florida men were charged in a multistate telemedicine scheme that billed at least $931 million in fraudulent claims to private insurance companies, the Department of Justice said Monday.
According to a 32-count indictment filed in U.S. District Court in Greeneville, Tennessee, the four defendants, owners of seven compounding pharmacies in Florida and Texas, set up an elaborate telemedicine scheme that solicited insurance and prescription drug information from consumers across the country.
Physicians unwittingly approved the prescriptions for pain creams and other drugs without knowing that the defendants were jacking up the prices of the invalidly prescribed drugs, which were billed to private payers.
Tens of thousands of patients and more than 100 physicians in East Tennessee bore the brunt of the scam, which ran from mid-2015 through April 2018. Private payers in the region, including Blue Cross Blue Shield of Tennessee, were bilked out of about $174 million, prosecutors said.
BCBS Tennessee issued a statement on Tuesday noting that it was "only one of hundreds of insurers impacted by this case."
"We remain committed to partnering with our customers, providers and law enforcement to fight fraud, waste, and abuse in the healthcare system," BCBST said.
All totaled, the indictment alleges that the defendants submitted not less than $931 million in fraudulent claims for payment. It's not clear how much was paid out.
The four Florida defendants were identified as Andrew Assad, 33, of Palm Harbor, Peter Bolos, 41, of Lutz, and Michael Palso, 44, of Odessa, and Larry Everett Smith, 48, of Pinellas Park.
The companies were identified as: Germaine Pharmacy in Tampa; Synergy Pharmacy Services, in Palm Harbor; Precision Pharmacy Management, Tanith Enterprises, ULD Wholesale Group, and Alpha-Omega Pharmacy, all in Clearwater; and Zoetic Pharmacy in Houston, Texas.
The four defendants were each charged with conspiracy to commit healthcare fraud, mail fraud, and introducing misbranded drugs into interstate commerce.
If convicted, the four men face prison terms of up to 20 years for each mail fraud charge, up to 10 years for conspiracy, and up to three years in prison for introducing misbranded drugs into interstate commerce.
The indictment also seeks forfeiture of approximately $154 million.
The indictments come on the heels of the related Sept. 26 guilty plea by Scott Roix, 52, the CEO of HealthRight LLC, a telemedicine company in Pennsylvania and Florida, for his role in the scheme. Roix and HealthRight also pleaded guilty to wire fraud charges in a separate scheme that fraudulently telemarketed dietary supplements, skin creams, and testosterone.
The previously announced sales are part of CHS's ongoing divestiture strategy to consolidate operations and reduce debt.
Debt-laden Community Health Systems will sell its two-hospital Mary Black Health System to Spartanburg Regional Healthcare System in South Carolina in a deal that is expected to be finalized by year's end, the two companiesannounced.
Financial terms were not disclosed.
The 207-bed Mary Black Health System – Spartanburg, and 125-bed Mary Black Health System – Gaffney, were among the previously announced divestitures discussed by CHS earlier this year.
The sale includes all physician clinics and outpatient services attached to the two hospitals, which will become part ofSpartanburg Regional Healthcare System when the deal is finalized.
CHS has sold or announced the pending sale of 12 hospitals so far in 2018. The Franklin, Tennessee-based for-profit hospital chain has been struggling since its ill-advised $7.6 billion acquisition of Health Management Associates in 2013.
In 2017, CHS sold 30 hospitals that CHS executives said were low performing. However, a report this month by Axios challenges that assertion.
The four-hospital, nonprofit Spartanburg Regional, one of the largest health systems in South Carolina, includes three hospitals and serves an 11-county region.
When the sale is complete, CHS will run four hospitals in South Carolina.
On October 1, CHS completed the sale of 238-bed AllianceHealth Deaconess hospital in Oklahoma City to INTEGRIS Health. CHS Now runs seven hospitals in Oklahoma.
Aetna will pay New Jersey $365,000 to settle two separate patient confidentiality breaches, and Humana will pay Texas $700,000 for an inadequate network in Houston, Austin, and San Antonio.
Aetna and Humana this week will each paid hundreds of thousands of dollars to resolve disputes with state regulators in New Jersey and Texas.
Aetna agreed to pay New Jersey $365,211 to settle two separate cases where the health insurer improperly disclosed health information in 2017, potentially affecting about 850 New Jersey residents.
Meanwhile, in an unrelated case, the Texas Department of Insurance fined Humana $700,000 for inadequate network coverage in three counties.
New Jersey Settlement
The two settlements with New Jersey resolve two health information breaches that occurred in the summer of 2017.
The first instance was part of a multistate investigation of a health information breach that potentially affected about 12,000 Aetna customers, including 647 New Jersey residents.
Investigators said Aetna relied on a third-party mailing service that used oversized, transparent glassine address window that unintentionally disclosed the customers' HIV/AIDS status and other health issues.
In January, Aetna reached a $17 million settlement in a class-action suit brought by the affected customers.
Under the settlement with New Jersey, Aetna will improve safeguards to protect health information and ensure confidentiality. The company will also hire an independent consultant to monitor compliance.
"Companies entrusted with individuals' protected health information have a duty to avoid improper disclosures," New Jersey Attorney General Gurbir Grewal said in a media release.
"Aetna fell short here, potentially subjecting thousands of individuals to the stigma and discrimination that, unfortunately, still may accompany disclosure of their HIV/AIDS status," he said.
Aetna's second breach occurred in September 2017 and involved a mailing sent to 1,600 people concerning a study of patients with AFib. The envelopes for the mailing included the name and logo for the study – IMPACT AFib – which could have been interpreted as indicating that the addressee had AFib. Approximately 186 New Jersey residents were included in the AFib mailing.
New Jersey and the other investigating states alleged that Aetna not only violated the federal Health Insurance Portability and Accountability Act (HIPAA), but also state laws pertaining to the protected health information of individuals in general, and of persons with AIDS or HIV infection in particular.
State investigators also alleged that the two data breaches contravened Aetna's representations to enrollees—made clear on the company website—that Aetna would safeguard their private health information through "extensive operational and technical protections" and its "commitment to information privacy and compliance with legislation such as HIPAA and state privacy laws."
Texas Fines Humana
The Texas Department of Insurance fined Humana $700,000 for an inadequate number of in-network anesthesiologists in the Houston, Austin, and San Antonio service areas.
Texas regulators said that customers of Humana, the fourth-largest insurer in the state, faced higher medical bills because they couldn't get in-network anesthesia services at more than 20 hospitals and surgical centers in three of the state's largest metro areas.
Texas insurance regulators contacted Humana in August after learning several of its network contracts for anesthesiology services had been canceled. Humana agreed to immediate corrective actions and to reprocess consumers' bills.
"Protecting consumers from balance bills was a priority in this case, and we've done that," Insurance Commissioner Kent Sullivan said. "Humana has agreed to process these as in-network claims. Not one Humana consumer will pay extra because of this network issue."
Sullivan said Humana submitted reports to TDI that included providers no longer in its networks and did not adequately or timely disclose the issue to the state or consumers.
"Texas has strict network adequacy standards, and we’re going to hold insurers accountable for meeting them," Sullivan said.
Encroachment into the provider space is happening because traditional providers are failing to meet consumer demands on price, access, choice, and convenience.
Theall-but-completed merger of CVS Health and Aetna is a response to the accelerating shift toward consumer-oriented healthcare delivery, says Gurpreet Singh, Health Services Leader at PwC.
Nontraditional companies from the retail and tech sectors will continue to enter the nearly $3 trillion healthcare sector to provide services that were once the exclusive domain of traditional care givers, Singh says. Traditional providers who don't adapt to this shift risk extinction, he warns.
"This is happening because there is an unmet need for the consumer," he says. "The consumer demands choice, access, convenience, and a cost-efficient price for services that, typically for a hospital, are higher-margin businesses," Singh tells HealthLeaders.
Retail newcomers using urgent care centers and in-store clinics are taking lucrative walk-in traffic from hospitals and leaving them with the highest-cost, most-complicated procedures.
"Are they going to be in the business of focusing just on the tertiary, quaternary care?" Singh says. "Or are they going to be in the business of providing experience and convenience and virtualized care to patients?"
Singh says hospitals can offset the squeeze from nontraditional competitors by choosing to focus on a particular strength, be it clinical expertise, integrated care, wellness, or customer service.
A product leader, for example, could be an academic medical center with a strong reputation for particular specialties, such as cardiovascular or oncology care. Singh says these product leaders can't simply rely upon their reputation for specific service lines.
"They're the ones that risk losing a lot of the front-door, higher-margin procedures," Singh says. "They're the ones that typically only have single-digit growth and potentially double-digit costs, where they're kind of upside-down."
These hospitals should also focus on virtual care for chronic conditions. "That allows you to treat more patients than just the patients that come to you as a destination medical center," he says.
The move to wellness
Retail newcomers are also well-positioned to embrace wellness, Singh says.
"We believe that, especially with a move towards value-based care, where outcomes are really rewarded, that wellness is going to be an important aspect for growth for many healthcare institutions," he says.
"Many of the retail clinics, because they have access to a large population, potentially have the opportunity and the benefit of focusing more on wellness and population health," he says. "They can provide the right behavior modification, the right advice that will make me healthier and as a result, reduce the cost of care longer term."
Winners & Losers
The hospitals that will fail in this competition with retail newcomers are those that can't distinguish themselves for their care, cost, customer service, or willingness to take on outcomes-based payment models, Singh says.
"Many community hospitals that don't have the scale suffer aren't profitable, and that's where, we're seeing hospital closings, mainly in smaller communities because they don't have the right economic profile," he says.
Community hospitals that don't have the resources or reputation to be products leaders could instead focus on being experience leaders, Singh says.
"They could operate more like a technology company, or a consumer products company where the experience that I get as a consumer is very convenient," he says.
"I can check on the availability of the physician, and I can book my appointment online. I can go into the clinic or the hospital and do my copay right away. I can get sort of referrals and care management right away," he says.
"When you think about consumers, I call it the at-home-health CEO, the person that is between the ages of 35 and 55, who's probably caring for themselves, for a child and a parent. They're making choices for three different generations, so convenience becomes important."
"Those hospitals that can move aggressively towards that convenience and provide services for that at-home-health CEO will be the winners," Singh says. "The ones that can't will be the losers."
