Aria Health CEO and President Kathleen Kinslow says finances are not the driving factor, rather, the deal is about "how can we be effective with population health and moving from volume to value."
Jefferson Health as entered negotiations for the acquisition of Aria Health System in a deal that could be finalized by mid-2016, the two Philadelphia-area health systems have announced. A non-binding letter of intent was signed last week and now the two non-profit systems will begin a 90-day due process period.
Kathleen Kinslow
This past May, Abington Health and Jefferson Health System merged into a single system that became the second-largest in the Philadelphia area. The new system now includes five hospitals, 19,000 employees, 13 outpatient and urgent care centers, and physician practices across Philadelphia, Montgomery and Bucks Counties in PA, and Camden County, NJ.
The Aria acquisition would add three acute care hospitals totaling 485 beds, nearly 4,000 employees and a medical staff of more than 1,000, along with a network of outpatient centers and physician offices in Northeast Philadelphia and Lower Bucks County.
Aria Health CEO and President Kathleen Kinslow says the deal would be a membership substitution that would not involve an exchange of cash, although the new system would take on Aria's assets and debts. "The only cost is going to be the legal and consultant fees," she says. "We have very little debt. Our debt-to-cap is only about 16%. We have a very strong balance sheet and little debt."
Kinslow says Aria began its strategic review two years ago to determine if it needed a partner. "At the end of that process it was determined that because of changes in the Affordable Care Act and movement across the country in the consolidations we were seeing that it would be optimal for our organization, to be able to live our mission, that we should seek a partner as well."
Finances were a factor, but not the driving factor in determined whether or not to seek a partner, she says.
"We had a troublesome year in fiscal 2013 and 2014. Most of that was based on revenue cycle management," Kinslow says. "We did a financial turnaround plan and we were able to improve the efficiencies of operation as we entered a revenue cycle process. We opened a new emergency room so we have been able to reverse that trend. We saw an increase in market share of about 8% and our volume year-over-year has been up 5%, which has certainly improved the financials."
The decision to find a partner, Kinslow says, "was more about how can we be effective with population health and moving from volume to value, the infrastructure changes you need, the IT systems. Being able to partner with a great academic medical center like Jefferson will give us those opportunities to serve our population."
Kinslow says Jefferson also has a strong sense of mission and "shares a similar culture to ours and we thought we could meld very well with them." As the two systems head into the 90-day due diligence period, Kinslow says she believes they're on the same page. "I have every confidence that as we go forward there will be no surprises," she says.
Regulatory snags are not expected. "Our research suggests we are in a good position," she says. "We don't have much overlap on the zip code analysis, so I feel very hopeful that we should not have problems."
To ensure some measure of local control, Kinslow says the structure will allow for a local board that would continue to manage and monitor quality in the organization and work with the physicians to ensure that clinical programs are moving forward.
"What makes this relationship very different from the traditional academic medical center and community hospital, is that Jefferson has been very willing giving two community health systems, Abingdon and Aria, authority on the governing boards, not just for the clinical enterprise, but at the university as well. You don't often see that and it's something that was very appealing to us. It allows us to continue to serve our community, yet have that strong academic base that will allow patients to have the best of both worlds."
FL, GA Systems Form Regional Alliance
Jacksonville, FL-based Baptist Health, Flagler Hospital and Southeast Georgia Health System have formed a regional alliance called Coastal Community Health that is designed to share best practices, improve outcomes and achieving efficiencies of scale.
"This is a very important affiliation and an opportunity to position ourselves to thrive in the future as a highly integrated network of community-based, locally governed health systems," Baptist Health CEO and President Hugh Greene said in prepared remarks. "Together, we believe we can expand access to healthcare services in our regions and further our mission to improve the health and well-being of the communities we serve. That community focus is our common core."
Hugh Greene
The three health systems serve separate, but contiguous markets spanning from Brunswick, GA, to Jacksonville, to St. Augustine, FL. and will continue to operate independently as locally governed, community-focused health systems. Greene will serve as initial CEO of Coastal Community Health. Joe Gordy and Michael Scherneck will serve as executive vice presidents of Coastal. All three will maintain their roles as CEOs of their respective health systems.
The Coastal board of directors has 12 members, three each from Flagler Hospital and Southeast Georgia Health System and six from Baptist Health.
Collaborative workgroups from each of the three health systems are looking at various initiatives to improve population health, including: enhanced child health services, telehealth, disaster planning, and care coordination.
Weill Cornell Medicine Changes Name
Weill Cornell Medical College has changed its name. Effective immediately the New York-based college is now called Weill Cornell Medicine.
In a media release explaining the name change, the college said "the brand succinctly unites Weill Cornell Medicine's three essential principles—to care, discover and teach—and underscores how patient wellbeing motivates the entirety of its ambitions."
Laurie H. Glimcher, MD, dean of Weill Cornell Medicine, said in a media release that the "name now fully encapsulates the strength and totality of our mission—keeping the patient at the center of everything we do."
When weighted for enrollment, more than 70% of MA-PD enrollees are in contracts with four or more stars, a nearly 11 percentage point in increase from 2015, CMS said. But six health plans that have received fewer than three stars for the past three years face termination by Medicare.
Nearly half of the nation's 369 Medicare Advantage plans with prescription drug benefits (MA-PD) have earned four stars or higher in the Centers for Medicare & Medicaid Services five-star scoring scheme, up nine percentage points from 2015, CMS's reported Thursday.
When weighted for enrollment, more than 70% of MA-PD enrollees are in contracts with four or more stars, a nearly 11 percentage point in increase from 2015, CMS said.
As has been the case in past years, non-profit plans continued to outperform for-profit plans in the 2016 Star Rankings for MA-PDs. Approximately 70% of non-profit plans received four or more stars, compared with only 39% of for-profit MA-PDs. Similarly, 63% of non-profit PDPs received four or more stars, compared with only 24% of for-profit PDPs.
CMS said the length of time that a particular plan had with Medicare Advantage was another key indicator of success. For example, more than 60% of the 202 MA-PD plans that earned four or more stars have been involved with the program for more than 10 years. None of the 44 MA-PD plans with five years or less experience in Medicare Advantage earned five stars, while 43% of earned three or fewer stars.
The 12 highest-performing (five-star) MA-PD plans:
Low Performers
It was not all good news. Six health plans that have received fewer than three stars for the past three years face termination by Medicare. These so called "death row" plans include:
The annual release of the Star Ratings, in place for nearly a decade, prompts an avalanche of self-congratulatory press releases from plans that have earned four or more stars. There is more at stake than bragging rights, however, because CMS has also attached financial incentives to the ratings for plans earning four or more stars.
The Star Ratings measure scores of quality and performance measures in the various Medicare Advantage plans that take into consideration outcomes, intermediate outcomes, patient experience, access, and process.
For the 2016 Star Ratings, CMS said outcomes and intermediate outcomes continue to be weighted three times as much as process measures, and patient experience and access measures are weighted 1.5 times as much as process measures.
CMS said it assigns a weight of 1 to all new measures. The Part C and D quality improvement measures receive a weight of 5 to further reward contracts for the strides they made to improve the care provided to Medicare enrollees. CMS said it will continue to lower the overall Star Rating for contracts with serious compliance issues, defined as the imposition of enrollment or marketing sanctions.
Physiologic stress is being needlessly inflicted on patients because, despite their education and expertise, some doctors are reluctant to shed traditions. But any hospital, regardless of size or budget, can do better to promote healing.
Being an inpatient is already stressful enough, for obvious reasons.
Yet, many hospitals make the experience worse— and potentially dangerous—by needlessly subjecting patients to longstanding, but outmoded protocols that can result in food and sleep deprivation.
"My patients were telling me that this was an issue," Makary told me. "Any doctor will tell you that patients routinely talk about sleep interruptions, difficulty sleeping, and asking when they can eat."
Although feeding patients and allowing them to rest seem obvious, Makary says these basic needs can be overlooked in hospital patient safety programs that focus on reducing adverse events. In addition, sleep and food deprivation can be hard to spot because they are dynamic and can vary greatly from patient to patient.
"Traditional medicine has never really measured physiologic stress," Makary says. "Nobody has measured the complication rate in a normal body versus the complication rate in a fatigued, starved body. Is that complication rated doubled? Quadrupled? No one knows."
The variability between patients and the fact that food and sleep deprivation can't be well measured, has kept the issue "off the radar," Makary says. "It's off the radar because physicians like things that are actionable—things that we can fix."
Despite their education and expertise, some doctors are reluctant to shed traditions, no matter how outdated.
Refuting Dogma
"Doctors have been frustrated by the strong traditions in medicine that govern patient care that are even stronger than the science," Makary says. "For example, we have a tradition in surgery that patients should not eat anything eight hours before an operation. That is dogma. It's a tradition, and it's considered a standard of care. If we really ask where that number came from, it was haphazardly chosen in the wisdom of the doctors of that era, who thought it was a safe period which would allow someone to empty their stomach and reduce the risk of aspiration."
The timeframe was debunked by science more than a decade ago, Makary says, and the rule of thumb now is that patients shouldn't eat within six hours or drink within two hours of an operation. "We are learning that if we actually feed the patients high-carbohydrate drinks two hours before the operation they feel better going in and they're less-starved coming out," he says.
Makary says hospitals must examine their protocols because the ramifications of sleep and food deprivation can be severe. Even a younger, relatively healthy person at home and without illness can become physiologically stressed and immunocompromised after 24-hours of fasting and a poor night's sleep.
Martin Makary, MD
In older, frail patients, already stressed by a hospital stay, food and sleep deprivation can worsen complications and overwhelm a patient's physiological reserves.
"Coming out of surgery, not only has your body undergone a physiological stress, now your body, if it's been without food, is in a vulnerable state, even without surgery," he says. "So, when we scratch our heads and ask 'how can we lower our infection rates' or 'how can we improve patient satisfaction?' Well, we know patients are happier and healthier when they're eating and sleeping."
On the subject of sleep deprivation, Makary once again listened to his patients.
Archaic Protocols Amidst a Cacophony
"One thing the patients told me at Johns Hopkins—and I have seen this at every hospital I have worked at— is 'they come in at 2AM and stick a needle in me and draw my labs,'" he says. "The people ordering the labs say they have to do that because they need the lab results before 5AM, which is when the youngest residents come in and pre-route and get all the information together to pass on to the chief resident. Then the chief resident uses all the information from their 6:30AM rounds and passes it on to the head surgeon at 7:30AM. So, there is this communication cascade that is archaic, burdensome, and technologically immature that results in patients' sleep getting interrupted at night."
Beyond the early morning wake-up calls, hospitals are a cacophony of sound, with overhead pages, phones ringing, loud conversations, and monitors beeping. Makary says Johns Hopkins has eliminated overhead pages on clinical units, ended overnight lab draws, and provides private rooms for most patients.
"We are learning more and more that many of these labs are not needed, and we can work with the patients to learn when they're planning on going to bed and do the labs just beforehand," he says. "We got rid of overhead pages after recognizing that there are better technological forms of communicating that do not need to wake up or alarm patients."
Makary also suggests that hospitals provide patients with eye masks, pipe in soft music, and display artwork that encourages relaxation and sleep.
Every Hospital Can Do Better
Makary's recommendations are particularly appealing because every hospital can do it, regardless of size or budget. There really is no excuse not to.
"Hospital leaders are having great success putting together groups of doctors and nurses who are asking how they can reduce noise, how they can change the time for lab testing, and how can they insure that patients are given better information about eating and drinking before surgery," he says.
A renewed emphasis on the importance of rest is overdue.
"We're supposed to promote health, but we create these hostile environments," Makary says. "There is a long tradition in medicine that rest is still good medicine. That's been under-represented in the litany of treatments that we have memorized and compartmentalized as doctors."
"We in medicine often don't have the methods and vehicles to study treatments because every patient is different and studies are labor intensive," he says. "As a result, we rely heavily on tradition. We rely heavily on consensus wisdom. And that reliance is so strong that even when there is science, it can't overcome the tradition."
Health system executives saw a median salary increase of 3.6%, while hospital executives saw an increase of 2.6% in the last year. Physician assistants saw a 4.05% bump.
Median base salaries for health system and hospital executives rose 3.1% in the past year, according tosurvey data from Sullivan, Cotter and Associates, Inc.
The data, reportedly gleaned from more than 400 health systems and 1,300 hospitals, found that large systems with more than $1 billion in revenue and large hospitals with $300 million or more in revenue saw median base salaries increase at a faster rate than their smaller counterparts. The increases were both above average at 3.6% and 3%, respectively.
Health system executives saw a median increase of 3.6%, while hospital executives saw an increase of 2.6%.
Tom Pavlik, Managing Principal, Sullivan Cotter, says some of the compensation increases are related to the size of the systems, "but also to the complexity of the roles."
"It is a combination of the growth in the organization, the growth in the role, and the growth in the span of responsibilities for the executives," he says. "We are starting to see new positions come along for executives that have clinical integration or population health expertise. We didn't have those positions in the survey five or 10 years ago."
Pavlik says today's healthcare executives are grappling with the transition to value-based care, consolidation and integration strategy, all in an increasingly competitive healthcare sector.
"Does the expertise have to be broader or deeper? The answer is both," Pavlik says. "There has to be a deeper knowledge of our current healthcare delivery environment. But now we are having to look beyond the typical acute care setting to looking at health plans, health insurance markets, ambulatory care, and physician networks. If you look at the vertical and horizontal integration, it is happening in both directions and that will impact roles as well."
Thechanges in base salary were consistent with 2014's overall change. However, total cash compensation increased 6.9% for top executive positions. This is higher in health systems at 7.4%, and up from 1.8% in the 2014 findings.
Pavlik says the prevalence of annual incentives has remained the same but the number of healthcare organizations paying incentive awards and paying at target levels increased in 2015.
"More organizations paid out incentive awards and those that did paid at target levels or higher for a significant number of those organizations. That drove total cash to a nearly 7% increase from last year," Pavlik says.
PAs See Solid Compensation Growth
Physician assistants fared relatively better than executives. The median base salary for PAs in 2014 was $93,800, a 4.05% increase over 2012, according to a survey from American Academy of Physician Assistants.
AAPA administered the online survey between February and March, 2015. More than 10,000 AAPA members and nonmembers responded.
The AAPA administered online survey heard from more than 10,000 respondents. Fifty-four percent of all PAs received monetary bonuses and more than 75% receive some other form of compensation, such as research stipends, profit sharing, student loan repayment, paid relocation, tuition reimbursement or signing bonuses.
"PAs are a dynamic and driving force across all of healthcare. This survey is invaluable to those who are looking to change specialties or geographic location, or who just want to understand their position in the marketplace," AAPA CEO Jennifer Dorn said in prepared remarks. "It's also a key tool for employers, as they recognize and reward the crucial role PAs play in reducing costs, increasing access for patients and delivering quality care."
The survey additionally found that:
PAs at critical access hospitals ($115,000), industrial facilities ($115,000), and hospital emergency departments ($101,920) reported the highest median compensation levels.
PAs in the cardiovascular and cardiothoracic surgery specialty reported the highest median base salary ($117,000) followed by interventional radiology ($105,500), emergency medicine ($102,960) and pediatric surgery ($102,500).
PAs with less than one year of experience had a base salary of $85,000, which rose to $89,000 for those with 2 to 4 years, and $96,000 for those with 5 to 9 years' experience.
Founded in 1968, AAPA represents approximately 104,000 certified PAs across all medical and surgical specialties in all 50 states, the District of Columbia, the U.S. territories and the military.
This is not the first alert directed at falls, which are described as a "complex, chronic problem." The alert is directed at healthcare facilities in general, not only inpatient settings.
Despite widespread prevention efforts, patient falls remain a dogged and dangerous problem in healthcare settings, The Joint Commission says.
In a Sentinel Event Alert issued last week, The Joint Commission noted thatpatient falls with serious injury are among the top 10 sentinel events reported to its database, which has received 465 reports of patient falls with injuries since 2009. Of those falls, 63% resulted in death.
Erin DuPree, the Chief Medical Officer and Vice President for The Joint Commission Center for Transforming Healthcare says that this latest sentinel alert is not the first directed at falls, which have proved vexing for many providers.
"It's a complex, chronic problem and with the complexity of healthcare organizations today it is why we are still dealing with falls," she says.
"Ultimately, a lot of the falls work has been around identifying who is at risk and who are the high-risk patients. Really, especially in the hospital setting or any healthcare setting, all patients are at risk at some level. It's a different approach when you look at it from that lens."
The Joint Commission defines a sentinel event as a patient safety event not primarily related to the natural course of the patient's illness or underlying condition that reaches a patient and results in death, permanent harm, or severe temporary harm where intervention is required to sustain life.
Although the majority of falls reported to The Joint Commission occurred in hospitals, the ECRI Institute also reports a significant number of falls occurring in non-hospital settings such as long-term care facilities.
"This alert is about healthcare facilities in general," DuPree says. "A lot of the understanding around falls has come from the inpatient setting, but this alert is targeted to healthcare facilities in general."
The sentinel event alert cites these common contributing factors for falls:
Inadequate assessment
Communication failures
Lack of adherence to protocols and safety practices
Inadequate staff orientation, supervision, staffing levels, or skill mix
Deficiencies in the physical environment
Lack of leadership
DuPree says provider leaders have to ask themselves some tough questions about fall prevention strategies in their organizations.
"The first things leaders need to ask themselves is are they just trying to meet compliance with CMS or are they committed to preventing falls in their organizations, which would require them to understand their outcomes and their aims."
"Are they really aiming to prevent falls for every single patient? Then, look at how other staff and management teams are approaching the problem. Are they approaching it in a systematic, data-driven way? Are they using robust process improvement, or are they just throwing every solution set at the wall and hoping it works?"
Erin DuPree
DuPree says consistency across the entire organization is also a challenge.
"Everyone says 'oh yeah we have a falls risk assessment. We put that in our EMR,'" she says. "But when they drill down in a systematic data-driven way, they find that it's not implemented consistently or well. Every nurse has their own definition of what different aspects of the assessment mean and maybe it's not built into their orientation and so the new nurses don't even know and they learn through osmosis. So, the implementation and delivery of these preventive measures are done inconsistently."
DuPree says it is also important that every healthcare organization understand its own specific challenges and not rely on a one-size-fits-all approach.
"It's very important that they discover what their issues are to target solutions to their unique needs. That is at the heart of these tough, chronic issues in healthcare today," she says. "The approach to improvement is usually far too basic for the complexity of these problems. That is what we find in healthcare today. One size does not fit all, but that is the approach used by a majority of healthcare organizations today. We will not improve or transform in healthcare using that approach."
Some major healthcare systems, including Lifepoint, Tenet, and Geisinger have made recent announcements about mergers, acquisitions, and partnerships.
Nearly two years after signing a letter of intent, Geisinger Health System has finalized its acquisition of AtlantiCare, an integrated health system based in Atlantic City, NJ.
The acquisition took effect on Oct. 1, shortly after the deal cleared regulatory review by state officials.
"This is one of the most important things to create a sustainable AtlantiCare and one that will have the ability to be successful in the new world of the Affordable Care act and new value-based models," AtlantiCare President/CEO David Tilton told reporters after a signing ceremony at AtlantiCare.
David Feinberg, MD, and David Tilton
"The innovations and the change that we will see in healthcare here and across the nation are really a result of changing consumer views about healthcare, the Affordable Care Act, and its impact on healthcare," Tilton said. "What we are trying to do is create those models and those payment systems that will be appropriate for the consumer in the future. We have a partner now that has a proven track record in doing just that."
Tilton said Geisinger's "proven care models" have found traction at AtlantiCare, the 2009 winner of the Malcolm Baldrige Award. AtlantiCare operates an accountable care organization serving about 40,000 people, and is participating in the Medicare Shared Savings Program.
"We're bringing them into both our inpatient settings and our ambulatory settings so that our physicians can practice according to these proven models that have been customized for AtlantiCare and the way we practice in Southeast and New Jersey, and the needs of our patients here locally," Tilton said.
Geisinger CEO and President David Feinberg, MD, said the health systems share a commitment to deploy evidence-based medicine programs, enhance capabilities and clinical services, optimize the use of the electronic health record and clinical informatics, and implement population health management and value-based payment models. He said the collaboration between the two systems began about nine months before Thursday's signing ceremony.
"The results are outstanding. We've seen decreased utilization of unnecessary ER visits, decreased hospital admissions," he said. "The things that Geisinger is known for we're really excited to bring to this platform in Atlantic City."
Baptist Health South Florida, Bethesda Health to Merge
Coral Gables-based Baptist Health South Florida and Bethesda Health in Boynton Beach have agreed to merge, with a transition period culminating on Sept. 30, 2017.
In a joint media release, the two health systems said they would use the two-year transition period to "enhance effectiveness in their operations and share best practices to address the ongoing evolution of the healthcare industry."
"The challenge of healthcare reform not only requires better access to care for all, but also the improvement of efficiencies, quality, and outcomes. To survive the evolution of healthcare in our country today, we must be progressive and adjust our operations so that we remain accountable and stable," Baptist Health President and CEO Brian E. Keeley said in a letter to employees announcing the deal.
"By partnering with Bethesda Health, together we can develop and share best practices that can only enhance our commitment to our patients, employees, physicians and the communities we serve."
Brian E. Keeley
Roger L. Kirk, president and CEO of Bethesda Health, said in media release that the changing nature of healthcare makes it "essential to forge partnerships that can ensure our organizations remain on the leading edge as providers of quality medical care. As not-for-profit hospitals, we share similar missions and a common vision for improving the health of our respective communities that can be significantly strengthened by this affiliation."
Bethesda Health includes two hospitals, 670 physicians and more than 2,500 employees.
The UT Southwestern Accountable Care Network (UTSACN) will align primary and specialty care physicians, hospitals, and payers to provide better access to care, better clinical quality, and control costs. The network is made up of faculty physicians at UT Southwestern Medical Center and independent physicians practicing in Dallas County and surrounding areas, UT Southwestern said.
Bruce Meyer, MD
"This new network between UT Southwestern faculty and independent physicians reflects our commitment to a common standard of care that is of the highest quality," Bruce Meyer, MD, executive vice president for health system affairs at UT Southwestern, said in prepared remarks.
"For patients, the network offers more choices and greater access to world-class medical services closer to their homes, ranging from primary care to the most complex specialty care. For physicians, the clinical integration achieved through the network enables them to have advanced analytics and comprehensive patient information at their fingertips to better manage care."
The ACO will hold value-based contracts and fee-for-service contracts, and will rely on the combined physician leadership of GAPN and UTSW, using input from community and faculty physicians to create effective practice transformation.
"To be successful in the current environment of health care, physicians need to lean in to change. That is, embrace and implement clinical integration, population health management, and aligned reimbursement models," said Jim Walton, DO, MBA, president/CEO of Genesis Physicians Group, which includes about 900 specialists, and 450 primary care physicians.
"Physicians who don't make changes now or in the near future may run the risk of becoming marginalized by the shifting payment system," said Walton who will serve as president of the ACO.
The network links community physicians with the faculty practice and resources of UT Southwestern. Members will have access to tools for population risk stratification, predictive modeling, sophisticated disease registries, point-of-care management, automated appointment reminders, patient-centered medical home expertise, and practice-level quality and utilization performance reports with peer comparisons.
UT Southwestern has a faculty of more than 2,700 providing care in 40 specialties to about 92,000 hospitalized patients and oversee approximately 2.1 million outpatient visits a year.
LifePoint to Buy St. Francis (GA) Hospital LifePoint Health says it will purchase St. Francis Hospital, a 376-bed not-for-profit hospital in Columbus, GA.
Financial terms were not disclosed for the deal, which must first clear state regulatory hurdles. St. Francis will convert to for-profit status when the deal is finalized, which is expected by year's end.
"As part of LifePoint, St. Francis will have access to the support and resources needed to not only move beyond our previous financial challenges, but to strengthen our operations and advance how we care for our communities in the future," Richard Y. Bradley, chairman of the St. Francis Hospital Board of Trustees said in prepared remarks.
Under the deal, LifePoint has agreed to preserve local services and St. Francis' charitable mission. No layoffs are planned, and the hospital's 2,800 employees will be rehired when the transition is completed, after a pre-employment screening. LifePoint has also agreed to pay off St. Francis' outstanding debts.
The joint venture includes all Baptist Health System hospitals, Tenet's Brookwood Medical Center, and each organization's related businesses. Under the joint venture arrangement, Tenet is the majority partner and will manage the network's operations.
The JV unites Baptist Health System's four hospitals—Citizens Baptist Medical Center, Princeton Baptist Medical Center, Shelby Baptist Medical Center and Walker Baptist Medical Center—with Brookwood Medical Center. Together, the new system has more than 1,700 licensed beds, nine outpatient centers, 68 physician clinics delivering primary and specialty care, more than 7,000 employees and approximately 1,500 affiliated physicians.
Keith Parrott, the former CEO of Baptist, was named CEO of the JV. "This new partnership will strengthen our collective efforts throughout the region while also preserving and supporting the Baptist tradition and our faith-based approach to quality healthcare," Parrott said.
The presence of people with academic affiliations on the boards of for-profit healthcare companies is not necessarily illegitimate, but does pose questions about conflict of interest or the appearance of it, researchers say.
Conflict-of-interest regulations have removed drug company pens and note pads from physicians' offices, but they haven't addressed the propriety of academic leaders and researchers serving on the boards of for-profit healthcare companies, a new study suggests.
Researchers from the University of Pittsburgh School of Medicine found that nearly 10% of for-profit healthcare company board positions they examined were held by people with academic affiliations. The findings, which appear in the current issue of The BMJ, found that these board members were compensated an average of $193,000 in 2013, and that many of them also held stock in the companies.
Timothy Anderson, MD
Study co-author Timothy Anderson, MD, chief medical resident in Pitt's Department of Internal Medicine, says the findings show that academic leaders and professors may have relationships with for-profit companies that fall outside the parameters of the Physician Payments Sunshine Act.
"Often when we talk about conflicts of interest in medicine, we are talking about physicians receiving pens and meals from sales representatives," Anderson says. "The stakes are much higher for the board members in our study."
The Pitt researchers analyzed public disclosures of all publicly traded U.S. healthcare companies listed on the NASDAQ exchange and New York Stock Exchange in January 2014 that specialized in pharmaceuticals, biotechnology, medical equipment, and providing healthcare services.
Of the 442 companies with publicly accessible disclosures on boards of directors, 180 (41%) had one or more academically affiliated directors in 2013. These individuals included professors, trustees, CEOs, vice presidents, presidents, provosts, chancellors and deans from 85 non-profit academic research and healthcare institutions. The 279 academically affiliated board members received annual compensation totaling over $54 million and owned more than 59 million shares of company stock.
Questions About Conflict of Interest
Anderson says the presence of academics on for-profit company boards is not necessarily illegitimate, but it does pose legitimate questions about conflict of interest or the appearance of it.
"Our view is not to pass judgment," he says. "We wanted to paint that landscape of how diverse these sorts of relationships are. Some may be quite beneficial and some might be quite concerning, but until we really understand what relationships exist, it is hard for the medical and academic community to have a good discussion about what we should do to minimize the risks and maximize the benefits of these collaborations."
"We do not expect a one-size-fits-all approach would work in managing these relationships, but we risk undermining the public's trust if these conflicts of interest are not addressed openly," he says.
The researchers did not disclose the names of the academically affiliated board members in their analysis. Anderson says the goal is to highlight the issue, not the individuals.
The Sunshine Act requires nearly all payments to physicians and academic medical centers be reported annually by pharmaceutical and medical device companies. The act does not require separate reporting of payments for serving as a company director.
Anderson says the problem could be larger than what his research uncovered.
"The Sunshine Act is limited to looking only at physicians and not people who aren't docs," he says. "It is also only subject to companies that currently sell a product that Medicare pays for. It will cover someone who covers drugs or medical devices but perhaps not a company that is still in development."
Anderson says sitting on a for-profit company board poses particular conflict-of-interest concerns for academics because it can split their loyalties. As academics, they have a primary duty to their patients, their colleagues, their research, and their academic institutions. As paid members of a for-profit board, they have a fiduciary obligation to act in the best interests of shareholders.
"Sometimes those two sets of responsibilities may overlap and sometimes they may not," he says.
"We know if someone is helping run a clinical trial there is some risk, but there is also some benefit from the knowledge gained in a clinical trial. It is a little less clear whether running a company from the board room is something that is going to benefit patients or research."
Anderson and his colleagues hope their study will spark a discussion.
"Some commentators have proposed just not allowing it; telling faculty 'we are comfortable with you participating with the research within the industry or other endeavors, but not leading a company because we feel that would be too great a conflict,'" he says.
"Other commentators recommend limiting how much reimbursement or time their faculty can spend in these roles. We talk about the dollar figures in this paper, but we don't have data for how much money is an influencing amount versus how much is appropriate for reimbursing services. A lot of folks have pointed out that there is not any evidence that this helps or harms individuals or companies, so future research should probably try to determine if there is any benefit or harm to these relationships."
In the second hearing this month to review competition in the healthcare marketplace, the CEOs of Aetna and Anthem and executives of the American Hospital Association told lawmakers about the benefits and perils of health plan mega-mergers.
A House subcommittee on Tuesday heard the pros and cons of two proposed mega-mergers involving four of the nation's largest health insurers.
Mark Bertolini
In the second hearing this month to review competition in the healthcare marketplace, the Subcommittee on Regulatory Reform, Commercial and Antitrust Law heard from a table of payers and providers, including Mark Bertolini, chairman and CEO of Aetna Inc., and Joseph R. Swedish, president and CEO of Anthem Inc.
Last week Bertolini and Swedish told Senators that "robust choice and competition will remain in the Medicare market."
They delivered a similar message Tuesday when the House subcommittee asked for an explanation of the benefits or perils of health plan mega-mergers.
"The acquisition of Humana is about bringing together two companies that are highly complementary," Bertolini said in prepared remarks. "Aetna has traditionally been a large commercial health insurance company while Humana has been a large Medicare company known for its leadership and expertise in Medicare."
"After the acquisition, Aetna will have a product portfolio balanced more evenly between commercial and government products such as Medicare and Medicaid. While this deal is primarily about Medicare, coming together will enable us to offer more consumers a broader choice of products and access to higher quality and more affordable health plan options."
Swedish told the subcommittee that Anthem's proposed merger with Cigna comes at a time when "health insurance is flush with competition."
"The number of health insurers increased by 26% in 2015 with 70 new entrants offering coverage," Swedish said in prepared remarks. "Increased competition in insurance means more choices for consumers. Further, when considering the various segments that make up health insurance, individual, small group, international, larger employer, Medicare Advantage, Medicaid, etc., it is apparent that this transaction will result in minimal shared local markets both geographically and by product segment."
Tom Nickels, executive vice president of the American Hospital Association, told the subcommittee that any benefits coming from the concentration of the health insurance industry would "pale in comparison to the enduring harm the deals could impose on healthcare consumers and providers."
"Among the claims that the insurers make to defend the acquisitions of their closest competitors are that the companies are complementary without significant overlaps and/or allow them to extend to lines of business they could not enter otherwise," Nickels said.
Andrew W. Gurman, MD
"These claims have— and should have —been met with significant skepticism. That also is true of their statements declaring that all healthcare is 'local,' followed by a recitation of national statistics on the number of supposed competitors to imply that there is more than sufficient competition in local markets. However, this is not the case. If all healthcare is local, then only the competitors in a particular local market count in assessing the anticompetitive impact of the deal. Our analyses… show that more than 800 markets for the Anthem deal and more than 1,000 markets for the Aetna deal lack sufficient 'local' competitive alternative."
American Medical Association President-elect Andrew W. Gurman, MD, told the committee that the nation's health insurance market was already heavily consolidated and that the proposed Anthem/Cigna and Aetna/Humana mega-mergers would just make things worse for consumers and providers.
Gurman cited AMA analyses released this month showing that the combined impact of proposed mergers would exceed federal antitrust guidelines designed to preserve competition in as many as 97 metropolitan areas within 17 states.
"We are at a critical decision point on health insurance mergers, because once consummated, there is simply no going back,"Gurman said in prepared remarks. "Post-merger remedies are likely to be both ineffective and highly disruptive. You can't unscramble an egg. Thus, we believe that the time for heightened scrutiny and careful consideration is now, before proposed mergers take effect and patients are irreparably harmed. The solution lies in more, not less, competition."
Relying only on risk-adjustment characteristics approved by Medicare—age, sex, and diagnosis—puts safety net hospitals in line for significant financial penalties for higher readmissions rates, researchers say.
More research is suggesting that a hospital's patient mix has a direct bearing on readmissions rates.
The latest evidence comes from Harvard researchers, who published a study this month inJAMAInternal Medicine that factors race, education level, poverty, disability and other socio-economic factors when measuring hospital readmissions.
Study lead author Michael L. Barnett, MD, a fellow in general internal medicine and primary care at Harvard Medical School and Brigham and Women's Hospital, says that relying only on risk-adjustment characteristics approved by Medicare—age, sex, and diagnosis—puts safety net hospitals in line for significant financial penalties for higher readmissions rates.
Michael L. Barnett, MD
Barnett recently spoke with HealthLeaders Media about his study findings and offered some recommendations that could level the playing field for hospitals with more challenging patient demographics. The following is an edited transcript.
HLM: What prompted you to do this study?
Barnett: The hospital readmissions reduction program is very much top of mind for hospitals across the country. The third round of penalties was just announced and almost 2,600 hospitals face penalties of $420 million for excess readmissions and 90% of those hospitals were penalized last year.
It appears that hospitals that serve disproportionate numbers of safety net patients get higher penalties and are disproportionately penalized more severely than other hospitals. There has been an active debate to what extent should the readmissions reduction program—which does not take into account any factors other than age, sex and diagnoses—account for other social and clinical factors.
HLM: How did you compile your study, and what did you find?
Barnett: We used a national representative survey of Medicare patients admitted to the hospital from 2009 to 2012. From this survey, we abstracted a very comprehensive set of 29 different characteristics encompassing a lot of social and clinical factors that CMS currently doesn't account for, including illness, disability, race, poverty, and social supports. We asked to what extent all of these characteristics that are not currently used by Medicare are associated with the risk of readmission after we account for everything that Medicare accounts for.
We found that a majority of them were significantly associated with readmission risks—obvious stuff like education, income, race, and disability. Then we asked which patients are admitted to hospitals with high versus low publicly reported readmission rates, and to what extent are these characteristics distributed differently across these hospitals.
For instance, are hospitals that have high publicly reported readmission rates more likely to have patients with lower education, lower income, more disability, or more illnesses? That is what is going to determine whether or not adjusting to those factors will change the hospitals' expected readmission rate.
We took all these factors we collected and we added them into the factors that Medicare adjusts for in a model to predict readmission rates. We found that incorporating all these characteristics would decrease the difference in the readmission rates between the highest and lowest performers by 48%.
When we adjusted for everything that Medicare uses, we found that the top and bottom quintile hospitals readmission rates were 4.4 percentage points apart. When we incorporated everything that we found in our study we shrunk that difference down to 2.3 percentage points. Even though the numbers seem small, the magnitude of the penalty is directly tied to how far off your readmission rates are from the national average.
So any adjustment that is going to change your readmission rate relative to the national average is going to affect your penalty. Our analysis suggests that the penalty is being disproportionately leveled on hospitals serving those who are at a higher risk of admission and readmission, [and those who are sicker] and poorer.
HLM: Were you able to put a dollar figure on the cost of these penalties for safety net hospitals?
Barnett: It is something we wanted to do and a lot of people have asked for it. Unfortunately, our data is a national representative survey. We don't have a big sample in any individual hospital, so we can't tie a dollar amount to it.
HLM: Why is CMS reluctant to make concessions for socio-economic factors in patient populations?
Barnett: CMS's position has been that adjusting for socio-economic factors potentially holds hospitals that are serving disadvantaged populations to a lower standard. The concern is that it could dis-incentivize hospitals to address healthcare disparities.
What we propose is a more sophisticated risk adjustment and program design that can lead to a program where you can address disparities and incentivize quality.
There are a number of pieces of legislation recently passed and currently in Congress addressing this issue. There is the IMPACT Act passed in 2014 which directs HHS to examine the effects of socio-economic status on quality and resource use for Medicare patients. If those studies find a relationship between those factors and quality measures, they require the Secretary to make recommendations for how Medicare can adjust for them.
HLM: What can be done to ensure more balanced risk adjustment?
Barnett: We have a couple of suggestions. We acknowledge that risk adjustment is difficult. We have to accept that the data we access isn't the sort of stuff you can gather for every single patient on Medicare. One or our recommendations is based on an alternative payment models like global payments that preserve incentives for hospitals to reduce readmissions without unfairly penalizing them based on their patient populations.
Of course, those kinds of programs require some sort of risk adjustment for how much you pay the hospital.
Another model we put forward is inspired by the ACO program, where ACOs are rewarded based on their improvement versus their historical average, which in the case of the ACO program is based on prior cost growth. We would have to come up with a different kind of metric for something like readmissions, but we want to incentivize improvement at each hospital, and what the readmissions reduction program does is compare every hospital to a national average.
There is an incentive for every hospital to improve, but to have every hospital held to a similar standard. We think that it could be better to incentivize improvement based on prior performance and come up with a new system where the benchmark you are performing against is either held constant or gradually increases over time so hospitals have an incentive to improve and maintain improvements. But we are also not holding them to an unrealistic standard. It's not like every hospital can improve readmissions every year. That's not possible.
The CEO of Horizon BlueCross Blue Shield of New Jersey defends its value-based care collaborative, which has been criticized by the Medical Society of New Jersey.
Horizon BlueCross Blue Shield of New Jersey's statewideOMNIA Health Alliancevalue-based care collaborative is getting a rocky reception in the Garden State.
At its launch earlier this month, the alliance of the state's largest insurer with six health systems (comprised of 22 hospitals) and the state's largest physician group was called "an unprecedented collaboration that will significantly transform how healthcare is financed and delivered in New Jersey for the better," by Robert A. Marino, chairman and CEO of Horizon BCBSNJ.
Robert A. Marino
Since then, however, the collaborative has faced criticism and concernsthat it might create competitive disadvantages for hospitals and physicians outside of OMNIA, or create access issues for some citiesthat aren't represented in the alliance.
Marino spoke with HealthLeaders Media about the rollout, and addressed some of the criticism. The following is an edited transcript.
HLM: Are you surprised by the rocky rollout?
Marino: We felt strongly, given who we are in New Jersey and our industry and given what our customers were telling us, that the current system is not sustainable. We needed to do something different, innovative and bold.
When you announce anything that is new, that is innovative and bold, there is going to be some fear of change and further it is complicated by a significant amount of misunderstanding and misinformation out there and we are trying to do our best to correct this.
HLM: The Medical Society of New Jersey has expressed concerns that OMNIA "may not have adequate provider networks or realistic consumer costs. We have been saying for years that we have network adequacy problems in this state, and that they are only being exacerbated as narrow and tiered networks are introduced." Is this a valid concern?
Marino: They might be confusing the definition of a 'narrow network' with a 'tiered network.' We are not introducing a narrow network in the state of New Jersey. We are introducing a tiered network, meaning that our entire broad-access network is the basis of this new product and that is the largest broad-access network in the state.
Our members will continue to have access to the same broad-access networks that they have always had access to. With respect to the tiered network in terms of professional coverage, we have 52% of all primary care physicians in Tier 1. When you add all the specialists it is something like 62% to 64% of all professional providers are in Tier 1. We clearly meet the access standards that are imposed on us by the state of New Jersey and actually exceed them.
HLM: The New Jersey Hospital Association has raised questions about "geographic coverage and access to care; whether it will exacerbate out-of-network issues; and education and awareness – so that consumers fully understand their coverage and the potential out-of-pocket impact." Are these concerns valid?
Marino: With respect to the out-of-pocket impact, perhaps the hospital association isn't aware of the plan design. Members who choose to use a Tier 1 facility will see substantial savings in their out-of-pocket cost in the form of lower deductibles, [and] in some cases no deductibles.
Members still are going to have access to the broad network. There isn't any disincentive to use a Tier 2 provider. The benefits will be essentially the same as they are today. It is basically an incentive-based product design for Tier 1 while still providing broad access to the wider network with essentially the same product design as today.
OMNIA is one of several product offerings we have. We are not withdrawing any products. Our customers will still have access to a broad portfolio of Horizon products. We are just providing an additional choice with the addition of the OMNIA product.
With respect to tiered networks, if my memory serves me correctly, it might be the hospitals in New Jersey that first developed the tiered network concept for their own employee benefits plans.
HLM: Are there any concerns that OMNIA could hinder competition in New Jersey?
Marino: I am not certain that the OMNIA alliance or the products we have in the market are in any way going to limit the competition here. It might actually accelerate some of our competitors also shifting toward value-based benefits designs.
HLM: Observers have criticized the lack of transparency in the process of selecting OMNIA hospitals.
Marino: The process that we used to prioritize and ultimately select our hospital partners was a very deliberate, strategic, almost proprietary process. No hospital was invited into something that resembles an RFP-like process. There were six broad categories that we used in the prioritization process, including: clinical quality, the service offering across the continuum of care, consumer preference data from publicly available sources, value-base care capabilities, scale of the organizations we selected, and their commitment to value.
There is a misconception that we didn't ask certain hospitals to participate. We asked no hospitals to participate. We identified the potential partners we wanted and we approached them. They had no knowledge that they were being prioritized in this process.
HLM: Do you anticipate regulatory hurdles?
Marino: We believe our products in the marketplace to support the new alliance are consistent with regulation both at the federal and state level. I don't anticipate any regulatory roadblock at this time.
HLM: When do you hope for OMNIA to be operational, and how many lives will be covered?
Marino: It's difficult to project the demand because it's the marketplace that tells you whether or not the product is going to be acceptable and meets the demand. In the first year, 2016, our best projection is that about 250,000 members will select the product out of our nearly 3.9 million members.
HLM: How seriously do you take these criticism?
Marino: Obviously we are listening very hard to the critics. We embarked on a significant education program. We are trying to correct a lot of misinformation out there. We are hopeful once people understand what we are trying to do some of the pushback will subside.
We believe we are doing the right thing. We are listening to our customers and we simply believe that in order to contain out-of-control healthcare costs we have to move to a value-based system. All I can tell you is we are committed to doing this. We think we are on the side of goodness on this one.