Civista Health System of Charles County, Maryland said Wednesday that it has signed an agreement to become a member of the University of Maryland Medical System, effective July 1.
Civista Health, with its flagship 130-bed Civista Medical Center in La Plata, MD, has been operated by UMMS under a management agreement that began in 2009. The renewal terms of the 2009 agreement included a provision for UMMS and Civista Health to affiliate, subject to the approval of both the UMMS and Civista Health Boards.
"The past two years have given us an opportunity to experience what a full partnership with the University of Maryland Medical System could mean for Civista Health and the communities we serve," Sara Middleton, chair of Civista Health's Board, said in a media release. "UMMS possesses the resources and scale to help us fulfill our mission to provide the finest in health care services to Charles County and all the citizens of Southern Maryland."
Civista Health and Civista Medical Center will continue to be governed by their own boards and will retain their own foundation. The Civista Health Board will nominate a member to the UMMS Board.
"Healthcare is very local, and to realize our goals of providing effective healthcare in the communities in which we own hospitals, we must have vibrant, local boards as partners," Robert Chrencik, president/CEO of UMMS, said in a media release.
Working with the UMMS over the past two years, Civista Medical Center implemented clinical quality best practices and is now among the leaders throughout the UMMS in core measures of clinical quality. UMMS and the University Of Maryland School Of Medicine also helped Civista recruit new physicians to the underserved area. The hospital has also seen patient volume increases in the emergency department, inpatient, and surgical services.
Civista has increased the size of its campus through several land and building acquisitions, growing by 40% over the past two years. Financially, following five years of losses, Civista Medical Center experienced three consecutive years of operating gains, assuring that it will meet its financial commitments and reserve funds for needed capital upgrades in the future.
Mark Reiboldt, a mergers and acquisitions analyst with Coker Group, told HealthLeaders Media that the deal "is another example of the healthcare delivery system moving towards consolidation at faster rates than ever before."
"Civista reported just under $119 million in gross patient revenue in 2010, up from nearly $113 million the previous year. They are running at 73% occupancy, which was also up from 2009, and an average daily census of 87.5. And almost 40% of their revenue is derived from commercial and HMO managed care with another 40% being Medicare," Reiboldt says.
"This is a health system located in a decent market; they have had very decent historical volume and revenue growth; and, they are generally known as a quality-oriented system. However, even the decent and high performers are struggling from the same challenges that every other healthcare facility throughout the country is facing: rising costs, declining reimbursement, increasing regulatory pressure and general economic uncertainty. And as clinical integration and physician alignment become more critical to the hospital business model, Civista, like many other health systems that we are seeing go through consolidation, appears to be pursuing a partner that will attract the physicians, market demographics and operational efficiencies needed to facilitate growth for hospitals in the future," he says.
Civista Health CEO Noel Cervino, CFO Erik Boas, and CMO Mark Dumais, MD, were employees of UMMS under the management agreement and will continue in their current jobs. Employees of the hospital will remain locally directed and employed by Civista Health, and the existing Civista pension and benefit plans will not be affected by the affiliation.
UMMS is a private, not-for-profit network of 12 academic, community and specialty hospitals throughout Maryland. The system has $2.5 billion of annual operating revenues, employs 15,000 people, has more than 2,300 licensed beds, and has more than 115,000 annual patient admissions, which is more admissions in Maryland than any other healthcare provider.
UMMS also has a strategic affiliation with Upper Chesapeake Health System which is expected to lead to a full merger by 2013. Upper Chesapeake Health includes Upper Chesapeake Medical Center in Bel Air and Harford Memorial Hospital in Havre de Grace.
Johns Hopkins Medicine and Walgreens said Wednesday they will collaborate on population-based research and jointly develop protocols to improve outcomes of patients with chronic diseases, which will include training programs for the pharmaceutical retailer's 70,000 healthcare service providers.
"Improving the care of people with chronic conditions, like asthma, diabetes, obesity, high blood pressure and heart disease, is a central goal of health professionals, health systems and U.S. policy makers," Fred Brancati, MD, professor of medicine and director of the Division of General Internal Medicine at Johns Hopkins University School of Medicine, said in a media release. "It makes sense medically, and under health care reform, it makes sense financially, too. It's a part of the Hopkins mission that Walgreens can help us advance. Combining our clinical expertise and research know-how with their nationwide resources — including pharmacies, clinics, worksite health centers, information systems and 70,000 health care service providers — will generate new approaches to improve population health."
The collaboration will examine areas such as:
Research Programs. JHM and Walgreens researchers will work jointly to develop new ideas for disease management, screening and prevention that they will spin off into proposals for funding.
Clinical Protocol Development/Review. JHM faculty will share their expertise with Walgreens in developing healthcare protocols, medical guidelines and algorithms for chronic disease management.
Professional Training. Using JHM's expertise in onsite and distance education for physicians, nurse practitioners, nurses, technicians, pharmacists and others, the collaborative will expand and enhance professional education of healthcare workers in the Walgreens network.
Clinical Program Development and Health Plan Services. JHM and Walgreens will consider developing joint lifestyle, chronic care and disease-specific programs.
"By collaborating with Johns Hopkins Medicine, we will access some of the best expertise in healthcare to develop research, protocols and training programs designed to improve patient outcomes through our nationwide network of accessible community pharmacists, nurse practitioners, physicians and other clinicians," Kermit Crawford, Walgreens president of pharmacy, health and wellness, said in a media release.
Walgreens is the nation's largest drugstore chain, with fiscal 2010 sales of $67 billion, and 7,709 stores in 50 states, the District of Columbia, and Puerto Rico.
Patricia Brown, president of Johns Hopkins HealthCare LLC, said drug retailer's large patient and client base and sophisticated IT infrastructure "provides us with a unique opportunity to conduct large-scale population-based research. It also affords us the chance to augment Walgreens' existing quality and education programs to enhance care and outcomes for a very large number of people."
All patient information used for these studies will be anonymous.
Physicians are becoming savvy at negotiating employment contracts. Signing bonuses, paid relocation packages, and even loan forgiveness packages are not unheard of.
Median first-year guaranteed compensation was nearly $20,000 higher for specialty-care physicians in multispecialty practices than in single-specialty practices, according to the Medical Group Management Association's Physician Placement Starting Salary Survey: 2011 Report Based on 2010 Data.
Specialty physicians earned a median first-year guaranteed salary of $258,677 in multispecialty practices and $240,596 in single-specialty practices. However, primary care physicians received a median first-year guaranteed salary of $165,000 in multispecialty practices and $172,400 in single specialty practices – a difference of 4.5%.
Since 2008, primary and specialty-care physicians have either seen their first-year guaranteed compensation increase or stay the same, the survey from Englewood, CO-based MGMA found.
A physician's first-year compensation also depends upon geography. Median first-year compensation was the same for primary care physicians across the Eastern, Midwest, and Southern geographic sections at $170,000 per year.
Specialty care physicians' median first-year compensation varied more by geographic section. In the Southern and Western sections, first-year compensation was highest at $275,000 and $270,000, respectively. The Midwest and Eastern regions held the lowest median first-year compensation for specialists at $250,000 and $220,000, respectively, the survey found.
In addition to first-year guaranteed compensation, signing bonuses, loan forgiveness, and amount of paid relocation expenses helped shape physician recruitment. Fifty-six percent of physicians received signing bonuses as part of their employment offers. Twelve percent of physicians received loan forgiveness packages as part of their employment offers, most of which were $50,000 or less.
Employers were more likely to offer loan forgiveness packages to primary care physicians than specialty-care physicians. Fifty-six percent of physicians accepted paid relocation packages, the survey found.
The surveyincludes data on 4,295 providers categorized by specialty, as well as starting salary information on 1,986 physicians directly out of residency or fellowship, information on paid vacation, paid CME, signing bonuses, loan forgiveness, and relocation expenses, MGMA said.
The uncertainties around a sputtering economy have prompted the nation's healthcare workforce to delay retirement, a new study shows.
Research by The Conference Board shows that the healthcare industry experienced the largest decline in retirement rates among all workforce sectors in the U.S. economy. In 2009-2010, only 1.55% of full-time workers aged 55-64 retired within 12 months, compared with almost 4% in 2004-2007.
"Retirement rates declined significantly during and after the great recession," Gad Levanon, associate director of macroeconomic research at The Conference Board, and author of the report, said in a media release. "However, we see that delayed retirement has been more prevalent for some occupations and industries. For example, the healthcare industry experienced the largest decline in retirement rates in recent years. Jobs in this field are also in great demand. On the other hand, there was almost no retirement delay among government workers, who are more likely to receive defined benefit pension plans."
Nancy Jennings, a vice president of clinical operations at Chesapeake Regional Medical Center in Chesapeake, VA, told HealthLeaders Media she was not surprised by The Conference Board's findings.
"I probably have 90 people right now who could walk in right now and hand in their papers. They just can't afford to. They're worried about the economy and whether or not they can live off their retirement," she says. "Maybe the 401(k) took a hit, or the husband might not have a job, or their kids have moved back home because they're unemployed."
Even with the uncertainty, Jennings says, the aging demographic can't be denied. "And as the economy improves those people are going to slowly retire and leave the rest of us hanging," she says. "This has helped the nursing shortage, no doubt. Unfortunately, from an economic standpoint it hasn't helped anything else. As these folks retire it's just going to widen the gap. There is no way that the rest of us baby boomers are going to stay home and not seek health services, and there aren't enough nurses in the pipeline to manage the rest of us."
Marcia Donlon, a vice president/CNO at Holy Family Memorial Hospital told HealthLeaders Media it's the same story at the Manitowoc, WI-based hospital, where the average age of the nursing staff is 47. "A big piece is economic. But a lot of them love what they do," she says. "They're saying 'I don't want to give everything up. I would just like not such a hectic pace, maybe work four-hour shifts. Maybe do education for patients or staff, different types of roles.'"
Donlon says Holy Family is doing a lot of "role transitioning" for nurses on the cusp of retirement. "We have had some groups looking at, 'if you want to stay in the workforce, what would keep you here?' We don't want to lose those years of experience. We are looking at different roles and that has been well received," she says.
Some ideas that have surfaced include more flexible working hours, including four-hour shifts, seasonal work, or teams that allow veteran nurses with years of experience to coordinate patient care.
Donlon says she's even more concerned about a looming gap in nurse leadership. "It's very difficult to find nursing leaders. People are somewhat intimidated by it," she says. "I was talking to the dean of nursing at a nearby school and she said only 10% of nurses are interested in a leadership position. We have a lot of work to do there. As leaders, what are we modeling?"
The Conference Board also found several trends in the overall workforce:
The construction industry experienced a large decline in retirement rates. This is likely the result of a long slump in the industry, which resulted in many laid-off workers trying to stay in the labor force to make up for lost income.
There was no retirement delay among government workers. That is expected, since these workers are more likely to receive defined benefits, making them more insulated from the decline in financial asset values in their pensions.
Mature workers in high-paying occupations were much more likely to delay retirement than workers in low-paying ones. Those in higher-paying jobs tend to have higher financial expectations for their retirement years. Also, high-paying occupations tend to have limited physical requirements, making it easier to continue working. Among lower-paid workers, there is often an increased physical demand, and unemployment rates tend to be much higher. As a result, even if those workers wanted to continue working, finding replacement jobs is often extremely difficult, forcing them to retire.
Delayed retirement has affected the demographic distribution within the U.S. Part of the decline in net migration to states like Florida and Arizona is likely due to the trend of delayed retirement. Fewer individuals are leaving the labor force and moving to retirement destinations.
Those who suffered from a significant decline in home or financial asset values, lost a job or experienced a compensation cut during the recession were much more likely to delay retirement. Workers in states where home prices suffered especially large slumps (such as California, Michigan, Florida, Arizona) were more likely to delay retirement.
"Overall, the macroeconomic implications of delaying retirement are largely positive," Levanon said. "Delayed retirement allows households to consume more today and reduce the probability of a prolonged slowdown in the U.S. economy, and enables households to reach retirement with more financial resources."
The American Federation of Government Employees on Monday rapped the Department of Veterans Affairs for continuing to pay "exorbitant bonuses" to managers in VA hospitals and benefits offices while medical staff struggle to meet growing demand.
"The idea that frontline employees have to stretch resources with limited staff, while executives continue to receive large bonuses is mindboggling," Alma Lee, president of AFGE's National Veterans Affairs Council, which represents 160,000 employees in the VA, said in a media release. "If the VA is serious about recruiting and retaining highly trained and capable staff, it should reinvest in frontline staff, not top level bureaucracy."
The VA did not return telephone calls on Monday afternoon from HealthLeaders Media.
AFGE said in a media release that the VA was "rightly reprimanded" by Congress two years ago when media reports exposed that it was paying bonuses to executives, despite mounting claims backlogs, reports of poor patient care and suspicious deaths in VA hospitals. "However, despite the Congressional reproach, the agency has continued to shower executives with lavish bonuses.
According to the union, these bonuses, when coupled with the already high salaries of medical and benefits executives, represent a misguided approach to compensation lacking fairness and transparency," AFGE said.
The union said that media reports from 2007 showed that the VA performance review boards, which make determinations about who receives bonuses, were stacked with the same executives who were scheduled to receive the incentive payments. These members had input on bonus recommendations involving themselves, fellow members and spouses that made questionable performance claims and neglected agency problems.
AFGE says its field members report no signs that such conflicts of interest have been corrected since that time. In fact, members report that even when frontline staff members are rewarded with bonuses, the awards are disseminated arbitrarily and with favoritism, AFGE said.
AFGE has also opposes legislation that would increase the maximum amount of nurse executive and pharmacist executive incentive pay to $100,000 and $40,000 respectively. Amendments introduced to S.252 would allow VA executive nurses who are not involved in direct patient care to receive a 400% increase in incentive pay. These amendments also move to exempt VA executive physicians and dentists from the fair pay setting process established by Congress in 2004, the union said.
Congress in 2004 enacted a system for setting physician and dentist pay that relies on a panel of peers in the same medical field to set market pay. "If the VA is serious about maintaining a secure and sustainable workforce, it should apply its rules of compensation equally," said Lee. "The newly proposed provision would exempt healthcare executives from the same balanced process and pay standards that apply to their counterparts on the frontline, who actually provide direct patient care."
An earlier version of this article incorrectly identified the journal in which the NPA study will be published.
A study in an upcoming issue of the Archives of Internal Medicine has created a field-tested "Top 5" list of potentially unnecessary cost drivers for primary care that -- if limited -- could improve cost and efficiency.
Stephen R. Smith, MD, a family medicine physician in New London, CT, and a lead author of the study published Monday in the online edition of AIM – told HealthLeaders Media that primary care physicians are often motivated to perform unnecessary and costly practices either out of habit, or because of defensive medicine. Patients also pose a challenge.
"The other thing is we heard from a lot of field testers that looked at this list and gave us an opinion was 'Yes the evidence is there and we agree, But it's going to be difficult to get the patients to go along with this too,'" Smith says. "Sometimes patients come in with misunderstandings. So, it's a matter of also changing patient perceptions."
The list of recommendations – compiled by the National Physicians Alliance project -- suggest limiting antibiotics for some respiratory infections, avoiding imaging for low back pain and osteoporosis screening for certain patients, and not ordering cardiac screening tests in low-risk patients.
The NPA, working on a grant from the American Board of Internal Medicine Foundation, held a Good Stewardship Working Group teleconference to identify cost-saving, efficiency improving practices in family medicine, internal medicine, and pediatrics. The list of suggestions was culled after they were weighed against evidence in scientific literature.
Members of the specialty working groups recruited other physicians to test the suggestions in the field; each of the 83 testers rated the activities by way of an online survey. A mass e-mail to all NPA members recruited 172 other physicians for a second round of field testing, which involved completing the same survey that the initial testers completed. "Each activity was to be well supported by evidence, have beneficial effects on patient health by improving treatment and/or reducing risks, and, where possible, reduce costs of care," the article said.
According to the study, the field testers agreed with the following practices:
Family medicine—limit early imaging for low back pain, avoid routinely prescribing antibiotics for sinus infections, avoid ordering electrocardiograms or other cardiac screening in low-risk patients with no symptoms, reserve Pap tests for patients age 21 years or older who have not had hysterectomy for benign disease, and reserve dual-energy X-ray absorptiometry osteoporosis scans for women ages 65 years and older and men 70 years and older or who have risk factors
Internal medicine—limit early imaging for low back pain, do not order blood panels or urinalysis for screening in healthy adults with no symptoms, avoid ordering ECGs or other cardiac screening in low-risk patients with no symptoms, limit initial statin prescriptions to generic medications, and reserve DEXA osteoporosis scans for women ages 65 years and older and men 70 years and older or who have risk factors
Pediatrics—avoid prescribing antibiotics for sore throats unless tests for streptococcus are positive, limit diagnostic imaging for minor head injuries without loss of consciousness or other risk factors, do not refer middle-ear infections (otitis media with effusion) to specialists too early, tell parents to avoid giving children over-the-counter cough and cold medicines, and ensure that inhaled corticosteroids are used properly by patients with asthma
The NPA plans to distribute the Top 5 lists for each specialty to its members in those fields, create training videos to help doctors communicate the value of these behaviors, and create videos that explain to patients why the steps on the Top 5 lists should be taken, and reach out to consumer groups and patient-safety groups for their endorsements.
Although the study focuses on primary care physicians, Smith says he hopes that specialists will take up the challenge and identify cost-savings and inefficiencies in their own realms. "The specialists have just as much responsibility. But this is where we wanted to start. It seems like a good beginning and hopefully it will lead to other specialists doing the same," he says.
It's one of the great ironies of healthcare human resources.
There is arguably no other labor-intensive industry that is so reliant upon a highly skilled, highly educated, high-cost, and high-in-demand workforce that literally makes life-or-death decisions every day. And yet, in many hospitals and health systems HR remains an afterthought in the C-suite. HR is considered the domain of pencil-pushing functionaries whose job descriptions do not include strategic planning, and who are better suited for tactical tasks and processes.
There is a growing sense, however, that changes in healthcare brought on by the commercial market and by the federal healthcare law, the inevitable and growing shortages of skilled healthcare professionals, and the newfound and measurable importance of patient satisfaction scores for reimbursements will prompt a reassessment of HR in strategic planning.
Stephanie Drake, executive director of the American Society for Healthcare Human Resources Administration (ASHHRA), concedes that healthcare HR has traditionally been "reactive and not necessarily proactive" around long-term planning and other strategic aims.
"It's all over the board. Some of our ASHHRA members are quite engaged at the board level, looking at turnover and performance issues as they relate to patient safety and experience. But we have other members who might be at the board table but they aren't sure what they should be contributing," she says.
That mindset must change.
"HR needs to understand what the CEO needs, where the organization is headed to better prepare itself," Drake says. "I know we talk about workforce shortages, but many of our hospitals haven't seen it yet and if they aren't paying attention. Five years down the road they are going to hit a wall where they don't have enough nurses or physicians. People will be retiring at an astronomical rate and maybe HR hasn't done enough to prepare or even to understand that this is coming down the pike."
Perhaps the biggest single impetus for expanding the strategic role of healthcare HR will come from the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS), which attaches cold, hard cash to the once-fuzzy term "patient satisfaction."
"HCAHPS will go a long way in changing attitudes," says Michael DiPietro, with HealthcareSource, which has created a brief survey for ASHHRA that address the strategic role of healthcare HR. "Now there is transparency. Now there is so much more focus on patient satisfaction and quality outcomes. Patient satisfaction is directly impacted by the competencies and behaviors of employees. That is a key driver. As CEOs get more pressure to improve HCAHPS scores, there are certain things you can do on the clinical side, but they are going to turn to the VP of HR and say 'you need to help solve this.'"
The ASHHRA survey asks healthcare HR executives what they're doing in three strategic areas -- patient safety, patient satisfaction, cost containment -- and what technologies they're using to support initiatives in these areas.
"We are always trying to figure out what is the connection between talent management or the role of HR as it links to quality and patient safety, and where we fall in," Drake says. "We have a variety of groups working in hospitals and in the pursuit of excellent and quality and patient safety roles, but we struggle as a professional society to figure out where we fit in. This study will help us find more linkages."
If you've got a few minutes, take the survey. It provides an opportunity to assess where you are as an HR executive, and what your strategic role will be for your healthcare organization. You'd better prepare, because HR is going strategic, with or without you.
A critical shortage of drugs, especially chemotherapy and pain relief medications, is endangering patient safety and costing hospitals an estimated $200 million per year as they scramble to procure substitutes, often at higher prices.
Now Sen. Herb Kohl (D-WI) wants the Federal Trade Commission to examine the impact that consolidation in the pharmaceutical industry may be having on the nation's drug supply.
Kohl said in a letter to FTC Chairman Jonathan Leibowitz that he was prompted to make the request after fielding numerous complaints from healthcare providers about widespread drugs shortages. Kohl is chairman of the Subcommittee on Antitrust, Competition Policy and Consumer Rights, which oversees the FTC.
"As you know, pharmaceutical industry consolidation in recent years has left fewer manufacturers for both branded and generic drugs," Kohl said in his letter. "There have been at least nine major pharmaceutical mergers since 2000, most of them valued at over $40 billion each. Just two years ago, in 2009, for example, there were three major mergers – the $68 billion Pfizer/Wyeth merger, the $ 41 billion Merck/Schering Plough merger, and the $47 billion Roche/Genetech merger. And just a few weeks ago, two of the leading generic drug companies, Teva and Cephalon, announced their intention to merge, a transaction valued at $7.5 billion. The impact of this consolidation may be having a serious effect on the availability of prescription drugs."
Roslyne Schulman, director for Policy Development at the American Hospital Association, told HealthLeaders Media that healthcare providers have been dealing with drug shortages for years, but that the problem has grown considerably in the last year or so. "It's a huge and growing issue. As the Senator mentioned, the number of shortages is unprecedented and it's affecting the ability of hospitals to provide care. They sometimes don't find out about a shortage until they try to place an order and they're told there is a backlog, with no idea when the shortage will be resolved," she says.
Schulman says the biggest shortages are linked to "the old standby generic drugs, many of them are what are referred to as sterile injectable drugs." Those are the biggest issue with regard to shortages now. A couple of generic manufacturers have been working with this coalition. They have been part of the discussion, looking at potential solutions.
Karl Uhlendorf, the deputy vice president of the Pharmaceutical Research and Manufacturers of America, said in a statement that "myriad factors contribute to drug shortages, including natural disasters; shifts in clinical practices; wholesaler and pharmacy inventory practices; raw material shortages; changes in hospital and pharmacy contractual relationships with suppliers and wholesalers; adherence to distribution protocols mandated by the Food and Drug Administration; individual company decisions to discontinue specific medicines; manufacturing challenges and consolidations.
"Regardless of the cause, in order to provide patients with uninterrupted access to medicines it is important for all of us who provide life-saving medications to work collaboratively to minimize unexpected disruptions in the supply of vital medicines," Uhlendorf said.
Schulman said the AHA supports Senate bill (S.296), which would strengthen FDA oversight of the nation's drug supply. The bill requires drug manufacturers to notify FDA at least six months in advance of a planned discontinuation or interruption to the drug supply, with penalties in place for noncompliance; requires the FDA to post on its Web site information about drug shortages and to distribute that information to providers and patients' advocacy groups so they can plan ahead; and requires FDA to develop criteria to identify drugs that are vulnerable to shortages, and plan for ways to mitigate or prevent the shortage.
Government action, however, may not be enough.
"It's going to be a combination of industry actions, regulatory change, and some legislative change," Schulman says. "I don't think FDA has the authority it needs to mitigate these issues."
Kohl, who has served four terms in the Senate, announced this month that he will not seek re-election next year.
The average per capita cost of healthcare services covered by commercial insurance and Medicare grew 5.77% over the 12 months ending in March 2011, continuing a nearly year-long deceleration of cost growth, Standard & Poor's Healthcare Economic Indices show.
March's results represent the lowest cost growth in the six-year history of the measure, and reflect a deceleration in healthcare cost growth from the +6.17% in annual growth posted in February, and +6.31% in January 2011 for this index, S&P said.
Even with the deceleration, healthcare costs grew by more than double the 2.7% growth in overall inflation as measured by the Consumer Price Index for the same 12-month period ending in March, Bureau of Labor Statistics data show.
In its six-year history, the highest annual growth rate for the S&P Composite index was during the 12-months ending May 2010, when it posted +8.74%. With March's report of +6.19%, claims costs growth rates have decelerated 2.97 percentage points in 10 months, S&P said.
A further breakdown shows that, over the 12 months ending March, healthcare costs covered by commercial insurance rose +7.57%, down from +7.97% for the 12-month period ending in February, as measured by the S&P Healthcare Economic Commercial Index. Medicare claim costs rose at an annual rate of +2.78%, for the 12-month period ending in March, down from of +3.22% for February, as measured by the S&P Healthcare Economic Medicare Index. This is also the lowest annual rate of growth posted for the Medicare Index in its six-year history, S&P said.
"If you look over the last year or so of data, it is apparent that the rates of increase in healthcare costs continue to slow down," David M. Blitzer, Chairman of the Index Committee at Standard & Poor's, said in the report. "While there was some volatility within months, the general trend has been a slowdown across all nine of the indices we publish. Most of the annual growth rates peaked in the late winter/early spring of 2010. Since then, most of these rates have fallen by 2 percentage points or more."
Blitzer said the biggest slowdown has been in the Hospital Medicare Index, where the annual growth rate fell from +8.30% in August 2009 to +1.18% in March 2011. "On the other hand, we have not seen an equal trend for the Hospital Commercial Index, where the annual growth rate peaked at +9.36% in May 2010, and is still reporting a healthy +8.36% as of March 2011," he said. "This phenomenon could be the possible result of two things: (1) costs for Medicare patients are being better contained than those covered under commercial insurance plans and (2) hospitals are using more procedures and services covered under commercial plans, contributing to the increase in total costs. We see a similar differential across the Professional Services Indices, but not as severe."
The S&P Healthcare Economic Indices estimate the per capita change in revenues accrued each month by hospital and professional services facilities for services provided to patients covered under traditional Medicare and commercial health insurance programs. The annual growth rates are determined by calculating a percent change of the 12-month moving averages of the monthly index levels versus the same month of the prior year, S&P said.
Community Health Systems Inc. said Wednesday it is fighting legal battles on several fronts that include subpoenas from two federal oversight agencies.
In a filing with the Securities and Exchange Commission, Franklin, TN-based CHS disclosed that it has been has been subpoenaed separately by the SEC, and the Department of Health and Human Services Office of Inspector General in Houston.
The SEC subpoena, dated May 13, requests "documents related to or requested in connection with the various inquiries, lawsuits, and investigations regarding, generally, emergency room admissions or observation practices at our hospitals," CHS CFO W. Larry Cash said in the SEC filing. "The subpoena also requests documents relied upon by the company in responding to the Tenet litigation, as well as other communications about the Tenet litigation."
The May 10 subpoena from HHS OIG calls for 71 patient medical records from a CHS hospital in Shelbyville, TN to be sent to the Assistant U.S. Attorney handling the OIG investigation of a CHS hospital in Laredo, TX. "We are unaware of any connection between these two facilities other than they are both affiliated with us. We will cooperate fully with the Department of Justice and the Office of the Inspector General in this investigation," Cash said in the SEC filing.
Also Wednesday, Cash said in the SEC filing that rival Tenet Healthcare Corp. -- until last week the subject of a hostile takeover attempt by CHS -- has filed an amended lawsuit in federal court in Dallas that "expands on the unverified facts set out in its prior complaint (filed April 11, 2011) and continues to assert that a mathematical difference between our observation visit rate and/or inpatient admission rate and industry averages is, in and of itself, fraudulent."
Cash said the refiled suit seeks an award of costs and disbursements that Tenet purportedly incurred in analyzing alleged false and/or misleading disclosures in CHS' proxy solicitations and related statements. "The suit arises out of the now withdrawn offers to acquire the common stock of Tenet and notification of an intention to nominate directors at Tenet's annual meeting of stockholders," Cash said in the filing. "We believe the allegations are without merit and will vigorously defend this suit."
Finally, Cash said in the SEC filing that CHS is a defendant in at least two shareholder lawsuits filed in federal court in Nashville. "Although we have not yet been served in either case, we are aware that two lawsuits have been filed, both in U.S. District Court for the Middle District of Tennessee. Norfolk County Retirement System v. Community Health Systems, Inc., Wayne T. Smith, and W. Larry Cash was filed on May 9. De Zheng v. Community Health Systems, Inc., Wayne T. Smith, and W. Larry Cash was filed on May 12," Cash said in the SEC filing.
"Both suits seek class certification on behalf of purchasers of our common stock between July 27, 2006 and April 11, 2011 and allege that misleading statements resulted in artificially inflated prices for our common stock. We believe these suits are without merit and will vigorously defend them."
In a somewhat related filing with the SEC earlier on Wednesday, CHS said that shareholders had overwhelmingly reelected three board members this week, including Cash, despite the call by one investor group to toss them out.
William Patterson, executive director of CtW Investment Group, in an April 21 letter to fellow shareholders, had called for the ouster of Cash, and board members James S. Ely III, and John A. Fry, "given their culpability for the growing scandal surrounding proper oversight of Medicare billing practices, which has precipitated a 25% decline in Community's market value."
Patterson was referring to Tenet's allegations in a lawsuit filed in April that CHS overbilled Medicare by as much as $377 million using medically unnecessary admissions that improved its bottom line and appeal to investors.
CHS abandoned its hostile takeover bid for Dallas-based Tenet earlier this month, after the Tenet board unanimously rejected what CHS called its "best and final offer" of $7.25 per share cash, or about $4.1 billion. Tenet CEO Trevor Fetter and Tenet board chair Edward A. Kangas said in a letter to Smith that the offer "grossly undervalues the company and is not in the best interests of Tenet or its shareholders."
