In 2005, CEOs at major nonprofit health systems made three times as much as orthopedic surgeons. In 2015, they made five times as much. The disparity grew even wider for pediatricians and registered nurses.
The wage gap between senior executives and the physicians and nurses they employ at 22 major nonprofit health systems across the nation widened considerably over a decade, with clinicians on the lagging end.
The inflation-adjusted average compensation for CEOs at these medical centers increased from $1.6 million in 2005 to $3.1 million in 2015, a 93% increase, according to a new studyin Clinical Orthopaedics and Related Research.
Over the same decade, compensation rose by 26% for orthopedic surgeons, 15% for pediatricians, and 3% for registered nurses, the study showed.
"There is a fast-rising wage gap between the top executives of major nonprofit centers and physicians that reflects the substantial, and growing, cost-burden of management and nonclinical worker wages on the U.S. healthcare system," lead author Randall E. Marcus, MD, of University Hospitals Cleveland Medical Center/Case Western Reserve University, said in remarks accompanying the study.
In 2005, hospital CEOs made three times as much as orthopedic surgeons. In 2015, they made five times as much. There were larger increases in the wage gap between CEOs and pediatricians, from 7:1 to 12:1; and CEOs and registered nurses, from 23:1 to 44:1, the study found.
The researchers also looked at the rising numbers and costs of managers and other nonclinical workers. In 2015, there were 10 nonclinical workers for every one physician.
Nationwide, healthcare wages grew from $663 billion in 2005 to $865 billion in 2015. Nonclinicans accounted for 27% of this growth, managers for 7%, and physicians for 18%, the study said.
National healthcare expenditures increased from $2.5 trillion in 2005 to $3.2 trillion in 2015, with wages accounting for more than one-fourth of the growth that took place despite relatively stable use of healthcare services over the decade, the study said.
The study suggested the growing numbers of nonclinicians and their compensation increases "appear to outpace plausible growth in value."
"It appears unlikely to us that the near-doubling of mean compensation to hospital executives is justified by the value added by their work," the study said.
"The value of each nonclinical healthcare worker, including executives, should be of concern to all of us and scrutinized closely by the boards of directors of these nonprofit medical centers."
With the new name, the faith-based health system says it 'will move to being one consumer-centric, connected and identifiable national system of care for every stage of life and health.'
Adventist Health System is changing its name to AdventHealth.
The Altamonte Springs, Florida-based health system said its nearly 50 hospitals and hundreds of care venues in 10 states will adopt the AdventHealth name and logo beginning Jan. 2, 2019.
"We are transforming to be a more consumer-focused healthcare system to better meet the needs of those we care for and the communities we serve," Adventist CEO Terry Shaw said in a media release.
"Becoming AdventHealth allows us to be a fully integrated and distinguishable health system across all aspects of the care continuum, while also speaking to our Christian healing ministry, message of wholeness and our rich Seventh-day Adventist roots," Shaw said.
Adventist will launch a "transition campaign" next month that will include TV and print ads in markets across the country. New signage and optics at hospitals and other care venues will be installed when the name change takes effect Jan. 2. Joint venture facilities will not change names.
Adventist did not say how much the rebranding will cost, but stressed that the health system is not changing owners, business structures, or its faith-based mission.
"We want our hospitals and care sites to be places where people can experience hope as well as healing," Adventist Board Chair Gary Thurber said.
"The AdventHealth name so appropriately expresses that sense of expectation and optimism while also connecting with our promise of wholeness and our rich faith-based heritage,” he said.
S&P Global Ratings lowers the credit rating after noting the significant debt burden ProMedica assumed to finance the acquisition that essentially doubled its size.
ProMedica Healthcare has taken a hit on its credit rating for the $3.3 billion acquisition of HCR ManorCare.
S&P Global Ratings on Tuesday lowered the health system's debt obligations to "BBB" from "A+" with a stable outlook.
ProMedica on July 26 acquired bankrupt HCR ManorCare in a deal that made the 13-hospital, Toledo-based health system the 15th largest in the nation by revenue, with 70,000 employees in 30 states.
The joint venture with real estate investment trust WellTower was hailed as a "first-of-its-kind partnership" that gives not-for-profit ProMedica immediate scale in the fast-growing home health and post-acute care markets.
A WellTower subsidiary acquired HCR ManorCare's real estate and assets, and ProMedica bought 20% of the subsidiary, with which it also entered into long-term lease.
S&P Analyst Anne Cosgrove said "the multi-notch downgrade reflects the significant debt issuance of $1.15 billion and cash usage of $524 million to fund ProMedica's full acquisition of HCR ManorCare's operations but not most of the hard assets, as well as the 20% investment in the real estate joint venture with WellTower."
While the new debt load and lease "significantly pressures" ProMedica's projected debt burden, S&P notes that cash flow could be stronger with the acquisition, "and there are strategic opportunities for ProMedica to diversify revenues and grow outside of the immediate northwest Ohio Market."
However, there remains uncertainty around the post-acute care industry, which S&P notes "has experienced significant operating pressures, particularly about reimbursement and occupancy in recent years."
"The stable outlook reflects our expectation that management will execute on its integration plan of HCR ManorCare into ProMedica effectively such that the organization maintains healthy cash flow that generates adequate coverage levels and unrestricted reserve metrics as projected," S&P said.
The bond rating agency left open the possibility of lowering the rating again over the two-year outlook period "if operating performance and cash flow fail to meet operating targets or materially deviate from expectations provided in management's combined projections."
S&P said a ratings upgrade was unlikely given the significant debt, the "sizeable" operating lease, and the use of cash to finance the deal.
"However, we could do so if ProMedica generates significantly increased operating cash flow and rebuilds overall unrestricted reserves to levels commensurate with a higher rating," S&P said.
"Integration success, achieving the acquisition's key strategic goals, and the ability to operate in the long-term care space will also be important factors in future upward rating potential," S&P said.
In the face of glowing recommendations by independent analysts, the billionaire hedge fund manager has dropped his opposition to the proposal that last week he called 'a $60 billion folly.'
Carl Icahn has dropped his opposition to Cigna's proposed $54 billion purchase of pharmacy benefits manager Express Scripts, after the deal was vetted and recommended by two independent analysts.
"In light of the ISS and Glass Lewis recommendations in favor of the Cigna/Express Scripts transaction and the significant stockholder overlap between the two companies, we have informed the SEC that we no longer intend to solicit proxies to vote against the transaction," Icahn said in a media release.
Icahn's terse reversal, coming one week after he called the proposal "a $60 billion folly" and urged shareholders to reject the deal, should put an end to a very public spat the billionaire hedge fund manager waged with Cigna leadership.
Cigna CEO David M. Cordani issued alengthy statement detailing "the favorable recommendations from both Glass Lewis and ISS as momentum continues to build in support of our merger with Express Scripts."
"Their recommendations underscore the significant shareholder value that this transformative merger will deliver in a highly dynamic market environment," Cordani said.
Icahn, who owns a sliver of Cigna's outstanding stock, had argued that Express Scripts is too big and risky of a bet
However, his critique provided a sharp contrast to the Glass Lewis analysis, which positively gushed over the proposal, and said it "represents an attractive opportunity to create a more diverse and integrated business model in the evolving healthcare services industry which will be better positioned to serve consumers, adapt to competitive and structural challenges, respond to regulatory changes, capitalize on growth opportunities and potentially realize significant incremental cost savings and operational efficiencies."
U.S. News & World Report's rankings, now in their 29th year, compare more than 4,500 hospitals nationwide in 25 specialties, procedures and conditions.
For the third consecutive year, Mayo Clinic sits atop the Honor Roll of the nation's top hospitals, as rankedby U.S. News & World Report.
"We are humbled and honored by our ranking with U.S. News & World Report," said Gianrico Farrugia, MD, the CEO of Mayo Clinic in Florida. Farrugia was named CEO-electof the prestigious Rochester, Minnesota-based health system last week.
"We have continuously refined our system of care for more than 150 years. We are always working to deliver accurate answers as quickly as possible and ensure the best outcomes for our patients," Farrugia said.
Honor Roll designation is awarded to 20 hospitals that U.S. News said demonstrate high-level care in multiple areas. After Mayo, the other prestigious hospitals and medical centers on this year's Honor Roll either stood pat or shuffled a few spots up and down from the rankings of previous years.
Here’s the 2018-19 Best Hospitals Honor Roll. The numbers in parentheses are the 2017-18 rankings.
Mayo Clinic, Rochester, MN (1)
Cleveland Clinic (2)
Johns Hopkins Hospital (3)
Massachusetts General Hospital (4)
University of Michigan Hospitals-Michigan Medicine (6)
In addition, nearly 160 hospitals were nationally ranked in at least one specialty from among the more than 4,500 hospitals that were evaluated.
U.S. News says its methodology for determining the nation's Best Hospitals is "based largely or entirely on objective measures such as risk, adjusted survival and readmission rates, volume, patient experience, patient safety and the quality of nursing."
New this year, the magazine said the rankings include more emphasis on patient experience and outcomes measures. For the first time, the procedures and conditions ratings used ICD-10 to achieve comparability in patient populations and outcomes.
The health system wants the food it serves to align with its missions to care for and educate patients with heart disease, diabetes, and obesity-related chronic illnesses.
In the coming months, the University of Pennsylvania Health System will take the healthy foods initiative a step further and phase out the sale of sugary drinks on its campuses, noting the direct link between the sweet beverages and the increased risk of obesity and Type 2 diabetes.
The list of banned added-sugar beverages takes effect over the next several months and will include regular soda, fruit-flavored drinks, sports drinks, and sweetened milk, tea and coffee drinks. Diet and unsweetened beverages, 100% fruit juice, milk and flavored-waters will still be available, Penn Health said.
"As a health system, we aspire to create a model environment for the health and wellness of our patients, their families, and our employees, an effort which extends to the food and drinks we serve in our cafeterias, snack bars, coffee stands, and vending machines," Penn Medicine CEO Ralph Muller said in a media release.
"Our work to prevent and care for patients with chronic conditions impacted by their diets includes educating them on healthy food and beverage choices—lessons which we believe should be mirrored by what we serve in our facilities," he said.
Penn Health said patients, visitors and staff will still be able to bring their own sugary drinks on campus, and third-party vendors within hospitals—such as Starbucks—will continue to serve sweetened drinks, such as the sugar-infused Gingerbread Frappuccinos, which can contain up to 70 grams of sugar.
Outgoing CEO John Noseworthy, MD, will retire at the end of the year, after nine years leading the prestigious Rochester, Minnesota-based health system.
The Mayo Clinic has named Gianrico Farrugia, MD, as CEO and president.
Farrugia is the CEO of Mayo Clinic Florida, and he will succeed outgoing CEO John Noseworthy, MD, who retires at the end of this year after nine years leading the prestigious Rochester, Minnesota-based health system.
"I am humbled and proud to follow and build upon this success with the best staff in the world," Farrugia said in amedia release.
"While sea change continues to sweep through healthcare, I look forward to harnessing innovation, a hallmark of Mayo Clinic, to transform health care for the benefit of patients everywhere," he said.
Farrugia has been CEO of Mayo Clinic Florida, based in Jacksonville, since 2015, where he leads a staff of more than 6,400 people.
"Dr. Farrugia is a visionary and servant leader who brings with him a wealth of experience and knowledge ─ both as an innovator and an executive," Noseworthy said. "In partnership with our staff across Mayo Clinic, and with a deep commitment to our values and mission, he will affirm Mayo Clinic’s position as the global health care leader for generations to come."
Noseworthy is credited with leaving Mayo with a strong reputation as an elite, well-endowed health system. During his tenure as CEO, Noseworthy oversaw Mayo's transition from a holding company to a single operating company across all of its sites.
"We are deeply grateful for Dr. Noseworthy's outstanding patient-centered leadership and inspiration he provided over the past nine years,” Mayo Board of Trustees Chair Samuel Di Piazza said. "Mayo Clinic has had a tremendous track record under his leadership amidst unprecedented change in health care and is well-positioned for continued success as we make this transition."
A native of Malta, Farrugia has spent 30 years as a Mayo physician. He is jointly appointed in the Division of Gastroenterology and Hepatology, Department of Internal Medicine, and the Department of Physiology and Biomedical Engineering.
He is a member of the Mayo Clinic Board of Trustees and Mayo Clinic Board of Governors. He also is a professor of medicine and physiology, and a faculty member in biomedical engineering at Mayo Clinic Graduate School of Biomedical Sciences.
Researchers say behavioral 'nudges' could play a critical role in reducing the opioid epidemic.
Physicians are apt to reduce the number and dosage of opioids they prescribe after learning that a patient had died from an overdose, according to a study funded by the National Institute on Aging.
Researchers found that physicians in the San Diego area who were told of a patient's overdose death reduced the number of opioids prescribed by 9.7% in the following three months.
"This finding could be very useful in the effort to reduce inappropriate prescribing of opioids without severely restricting availability of legally prescribed opioids for patients who should be getting them," NIA Director Richard J. Hodes, MD, said in commentsaccompanying the study.
"It shows that physicians respond to information about adverse outcomes. Behavioral 'nudges' like these letters could be a tool to help curb the opioid epidemic," he said.
Over 12-months straddling 2015 and 2016, the county reported 222 deaths involving Schedule II, III or IV drugs as the primary or contributing cause. Of these, 170 deaths were listed in the Controlled Substance Utilization Review and Evaluation Systemdatabase.
The 861 prescribing clinicians reviewed by the researchers were divided into an intervention (388) and a control (438) group. The intervention group received a letter from the county medical examiner. The control group did not.
The letter identified the patient by name, address and age, and outlined the annual number and types of prescription drug deaths seen by the medical examiner. It also showed how to access California's prescription drug monitoring program and reviewed safe prescribing strategies.
The researchers said the notifications may not work for larger populations, but could work on the county level.
John Haaga, director of NIA's Division of Behavioral and Social Research, said the findings " illustrates one small and relatively inexpensive method of reducing the number of opioid prescriptions written, thus reducing the number of drugs available for misuse."
The Competitive Generic Therapy designation looks to encourage the development of alternatives for drugs with inadequate generic competition.
The Food and Drug Administration on Wednesday approved a potassium chloride oral solution as the first generic drug to receive a streamlined Competitive Generic Therapy designation.
The new approval process expedites the development and review of generic alternatives for products that lack competition, FDA said in a media release.
"Today's approval marks the successful implementation of a new program designed to encourage generic drug development for products with inadequate generic competition," said FDA Commissioner Scott Gottlieb, MD.
"The quick implementation of this new pathway is part of our broader effort to foster generic competition and help address the high cost of drugs," Gottlieb said. "So are our efforts to narrow the time it takes for generic drugs to reach the market by reducing the number of review cycles that generic applications typically undergo."
Gottlieb said the new generic drug was approved in its first review cycle.
"This approval demonstrates that the competitive generic therapy pathway is efficient and open for business," he said. "This pathway is a key step in making safe and effective generic drugs available to patients quickly and ensuring there’s adequate competition so patients have affordable access to the treatments they need."
Potassium chloride is an oral treatment for low potassium blood levels in patients who are on diuretics.
The FDA Reauthorization Act of 2017 can designate drugs as a Competitive Generic Therapy if there is not more than one approved drug in the active section of the Orange Book.
CGT-designated drugs are eligible for an expedited review and receive a 180-day exclusive marketing period if they are the first approved applicant for that CGT designation.
The FDA granted approval of the potassium chloride oral solution USP to Apotex Inc.
Association for Accessible Medicines President and CEO Chip Davis credited the FDA "for recognizing the critical role generics play in helping to control overall drug costs."
"Generic manufacturers have responded to the Administration's efforts to increase competition through the new CGT pathway and remain committed to working to ensure that safe, effective and more affordable FDA-approved generics are accessible to patients and providers," Davis said. "This pathway, created through FDARA, is a better long-term sustainable solution than considering bringing in drugs from foreign markets."
PhRMA said it "applauds the FDA's use of its new authority to designate and approve a competitive generic therapy where there is inadequate competition and no remaining patents or exclusivity."
Premier, Inc. Senior Vice President Blair Childs said that the FDA's actions on Wednesday "enhance access to affordable treatments for patients with low potassium blood levels."
"On a larger scale, FDA's use of this new expedited process will create competitive friction for single-source generic drugs to foster market forces, which can help drive down prices," Childs said.
The off-label marketing for antipsychotic drugs allegedly occurred while AstraZeneca was already under a 2010 federal corporate integrity agreement for Medicaid fraud.
AstraZeneca will pay the Texas $110 million to settle allegations that the drug maker illegally marketed two antipsychotic drugs to Medicaid providers in the state, Attorney General Ken Paxton announced.
According to Texas prosecutors, AstraZeneca ran the misleading marketing schemes at a time when the company was already under a 2010 federal corporate integrity agreement resulting from prior allegations of Medicaid fraud.
The federal agreement banned AstraZeneca from promoting its antipsychotic medication Seroquel and cholesterol-lowering statin drug Crestor for uses not approved by the Food & Drug Administration, but Texas alleged the company continued to do so anyway.
Paxton said the drugs were promoted primarily to treat children and adolescents and that AstraZeneca made hundreds of thousands of dollars in illegal payments to two former state hospital doctors to unduly influence the use of Seroquel in the state hospital system.
"The allegations that led to this settlement are especially disturbing because the well-being of children and the integrity of the state hospital system were jeopardized," Paxton said.
Paxton noted that AstraZeneca was accused of a similar nationwide marketing fraud scheme involving Crestor, that included a "plan of deception" targeting Texas Medicaid to expand statin use beyond what the science supported, while downplaying the risk of diabetes in some patients.
AstraZeneca Responds
AstraZeneca issued a statement Wednesday morning confirming the settlement, but adding that it "makes no concessions or admissions of fault."
"While AstraZeneca denies the allegations, it is in the best interests of the company to resolve these matters and to move forward with our business of discovering and developing important, life-changing medicines – while avoiding the delay, uncertainty, and expense of protracted litigation," the drug maker said.
