The Detroit Medical Center board voted Tuesday to delay its $417 million purchase agreement with Vanguard Health Systems until the end of the year to allow more time to complete governmental approvals.
DMC and Nashville-based Vanguard amended the definitive purchase agreement to conform it to the final vote by the DMC Board as soon as practicable, the two companies said in a joint statement. "All of us are looking forward to completing this process to bring DMC into the Vanguard family as soon as possible," said Keith Pitts, vice chairman of Vanguard.
Neither company detailed specific reasons for the delay.
DMC Chairman Steve D'Arcy said the complexity and size of the transaction have taken more time than expected. "Everyone involved is committed to getting this done quickly. We are absolutely confident this will be completed by the end of the year," he said.
The purchase agreement, signed in March, includes approximately $417 million for the sale of assets and to retire all outstanding DMC bonds and other long-term indebtedness. It also requires Vanguard to assume all DMC liabilities. Vanguard has also pledged to invest $850 million in capital improvements over the next five years at DMC hospitals, which D'Arcy has called "the single largest private investment in the city's history."
While the deal has drawn generally favorable reviews since it was announced last spring, some observers have raised concerns about the sale of Michigan's largest charity care provider to a private, for-profit company from out-of-state.
Vanguard and DMC said this week that—as an example of their commitment to the City of Detroit—they have formed a joint venture and will break ground Nov. 1 on a five-floor 105,550-square-foot Children's Specialty Center.
"The Children's Specialty Center is critical to this community. It is scheduled to open in January of 2012, but if we don't break ground before winter, completion will be delayed for months," said Mike Duggan, DMC president/CEO.
Children's Hospital of Michigan President Herman Gray, MD said the new specialty center will improve services to families who use many of the outpatient specialties currently located within the hospital.
"The new specialty center will improve the overall experience for families who require frequent outpatient visits at Children's because they will not have to navigate a large multi-story parking deck just to see the doctor," Gray said.
Complications after gastrointestinal endoscopies appear to be higher than previous estimates. However, most of the problems are minor and the rate of serious complications is lower than previously anticipated, a study in this week's Archives of Internal Medicine shows.
The overall risk of complications was two to three times higher than had been reported. However, the risk of severe complications such as perforations and bleeding, heart attacks or even death, were lower than previous studies by about half, says study author Daniel Leffler, MD, director of clinical research at the Celiac Center at Beth Israel Deaconess Medical Center in Boston.
Leffler says electronic medical records might emerge as a better way to track complications from different hospital procedures.
About 15 million to 20 million GI endoscopic procedures are performed each year in the U.S. In this study, Beth Israel Deaconess Medical Center's electronic medical records were used to monitor emergency department visits and hospitalizations of patients who had had an endoscopy within the past two weeks. Previous research shows that most post-endoscopy-related hospital visits occur within two weeks after the procedure.
The system recorded 6,383 endoscopies and 11,632 colonoscopies between March 1 and Nov. 30, 2007. A total of 419 ED visits and 266 hospitalizations took place within two weeks following the procedures. Of these, 134 (32%) ED visits were related to complications related to the endoscopies, as were 76 (29%) of the hospitalizations. Traditional reporting by physicians recorded only 31 such complications, the study shows.
Almost half of the visits were due to abdominal pain, 12% to gastrointestinal tract bleeding and 11% involved chest pain. Older patients were more likely to have complications, the study found.
Most complications were minor but the cost of follow-up care was not. The average cost per ED visit following endoscopy was $1,403 and the average cost of hospitalization for post-procedure complications was $10,123, the study reports.
The findings may help guide how doctors counsel patients following one of these procedures. "We've done a lot over the years to mitigate the risks of bleeding and perforation, and rightly so," Leffler says. "Now [that] we know of the underlying iceberg of minor complications, we can really look at those because they're a significant burden to patients and the healthcare system."
Two of three medical practices surveyed—67% of respondents—say they will either limit the number of new Medicare patients they accept or stop seeing Medicare patients altogether if Congress does not halt reimbursement cuts of about 30% that take effect by the end of the year, a survey by the Medical Group Management Association shows.
A reimbursement cut of 23.6% is slated to take effect Dec. 1, followed by an additional 6.5% cut on Jan. 1, as part of the Medicare's controversial sustainable growth rate formula.
The SGR formula has called for an across-the-board reduction in physician payment rates every year since 2002, and since 2003, through May 31, 2010, the cuts have been averted by legislative action.
"This is a situation that must be dealt with immediately when Congress returns after the elections," said MGMA President/CEO William F. Jessee, MD in a statement. "Further congressional delays jeopardize patients and the medical practices that serve them."
If no action is taken to stop the reductions, 49.5% of medical groups said that they will stop seeing new Medicare patients, and 27.5% of respondents said they would cease treating Medicare patients.
In addition, physician practices are considering other steps to address reimbursement cuts:
76% will likely delay the purchase of new clinical equipment and/or facilities;
60% will likely reduce the number of administrative support staff;
54% will likely reduce clinical staff; and
45% will likely delay purchase of electronic health records systems
Nearly 30% of practices began reducing the number of appointments for new Medicare patients last spring when Congress failed to avert Medicare payment cuts by the June 1 deadline. Congress temporarily delayed the cuts retroactively.
MGMA's survey shows the uncertainty created by the retroactive legislation has already triggered:
37% delayed purchasing electronic health records systems;
32% reduced administrative staff; and
27.5% reduced clinical staff
"The concrete actions already taken by medical groups as a result of the uncertainty created by congressional inaction have added significant barriers to quality care," Jessee said.
"Uncertainty about the future is creating an unsustainable environment for many who practice in areas with large Medicare populations."
Jessee called on Congress to block the cuts and provide an updated SGR that lasts, at a minimum, through the end of 2011. "This will provide lawmakers and the provider community time to develop a long-term solution that ensures beneficiaries have continued access to quality care," he said.
MGMA conducted its SGR survey from mid-September to mid-October, and received responses from more than 2,860 practices where 63,000 physicians practice.
One in 10 U.S. adults has diabetes now, but as many as one in three adults could have diabetes by 2050 if current trends continue, a Centers for Disease Control and Prevention analysis shows.
The prevalence is expected to rise sharply over the next 40 years due to an aging population more likely to develop type 2 diabetes, increases in minority groups that are at high risk for type 2 diabetes, and people with diabetes living longer, CDC projections published in Population Health Metrics show.
The projections are higher than previous estimates because the study factored in aging, minority populations and lifespan. The report predicts that the number of diabetes cases each year will increase from eight per 1,000 people in 2008, to 15 per 1,000 in 2050, and that the number of Americans with diabetes will range from one in 3 to one in 5 by 2050, reflecting differing assumptions about how many people will develop diabetes, and how long they will live.
"These are alarming numbers that show how critical it is to change the course of type 2 diabetes," said Ann Albright, director of CDC's Division of Diabetes Translation. "Successful programs to improve lifestyle choices on healthy eating and physical activity must be made more widely available, because the stakes are too high and the personal toll too devastating to fail."
Proper diet and physical activity can reduce the risk of diabetes and help to control the condition. Prevention programs directed at groups at high risk of type 2 diabetes can reduce future increases in diabetes prevalence, but will not eliminate them, the report says.
The projection that one-third of all U.S. adults will have diabetes by 2050 assumes that recent increases in new cases of diabetes will continue, and people with diabetes will live longer, which adds to the total number of people with the disease.
Projected increases in U.S. diabetes prevalence also reflect the growth in the disease internationally. An estimated 285 million people worldwide had diabetes in 2010, according to the International Diabetes Federation. The federation predicts as many as 438 million will have diabetes by 2030.
Diabetes was the seventh-leading cause of death in 2007, and is the leading cause of new cases of blindness among adults under age 75, kidney failure, and non-accident/injury leg and foot amputations among adults. People with diagnosed diabetes have medical costs that are more than twice that of those without the disease. The total costs of diabetes are an estimated $174 billion annually, including $116 billion in direct medical costs. About 24 million Americans have diabetes, and one-quarter of them do not know they have it.
Standard & Poor's came out with a notable—if unsurprising—annual report last week showing that medical inflation rose 7.3% in the 12 months ending in August, a pace that is nearly seven times that of the 1.1% increase in the Consumer Price Index for the same period.
This is not surprising because the runaway growth of medical inflation is a trend that has gone on for decades or longer. U.S. Bureau of Labor Statistics data show that medical inflation grew by 48% in the last 10 years, while the CPI grew at 26%.
Think about the ramifications of this trend, which will significantly worsen the physical and financial health of tens of millions of Americans.
Imagine a chart with two lines drawn on it. The top line, holding horizontal with tiny annual increases, is the average income for Americans. The bottom line, rocketing upward like a surface-to-air missile on an intercept course, is the rising cost of healthcare. How long before those two lines collide? What happens when they do? If this trend continues—and there is nothing to suggest that it won't—is it conceivable at some point in the future that every dollar an American worker earns will be spent on healthcare?
I ask this because I don't see anything, anywhere that comes close to addressing this catastrophic rise in the cost of healthcare. The Obama Administration claims its healthcare reforms will save Americans' money. Perhaps, but we don't really know. Critics note the president's reforms are more concerned with expanding access than with containing costs. This may be true. Many of those same critics—from Congress and the private sector—have been obstructionists satisfied with the untenable status quo.
There are several versions of cost containment out there, but they all dump it back on the same source: the consumer. It doesn't matter if it's a hospital executive, a physician, a health insurance bean counter, or a CMS bureaucrat. When they talk about "cost containment," they're talking about shifting more costs onto consumers, who are nearing the breaking point.
Government contains costs by cutting Medicare/Medicaid. Providers will cover much of that lost revenue by shifting even more costs onto consumers. Health plans and employers raise premiums, co-pays, and deductibles to cover the rising cost of coverage and to discourage consumers from seeking medical care by making it unaffordable for people on a fixed wage.
We are already seeing consumers opt out of accessing healthcare because of pocketbook reasons. Moody's Investors Service this month issued a report which showed that for the first time in at least 18 years, the rate of growth of patient admissions to not-for-profit hospitals declined in 2009 over 2008. Moody's blamed the decline on the recession, and projected that the trend likely will continue into 2011.
Yes, of course, more and more hospitals are focusing on outpatient services, so that may have played a role in the decline. It could be argued, however, that a major reason for the decline of hospital in-patient admissions is less by design and more owing to the simple fact that people can't afford to be admitted.
And yes, of course, healthcare consumers aren't blameless here. Poor diets and sedentary lifestyles have done much to drive up the cost of care for chronic diseases like diabetes and hypertension. People have to take responsibility for their own health. Be careful, however, when throwing the blame at working- and middle-class Americans who toil for stagnant salaries while the cost of everything else goes up, who may not live in nice neighborhoods with lighted sidewalks, or who can't afford or don't have the time and energy for the gym when they're working two jobs or trying make a mortgage payment.
Even people with health insurance may forego care because they can't pay the high deductibles—a particularly heinous example of "cost containment"—that makes the idea of preventive medicine a cruel joke for those who can't afford $115 or more out-of-pocket for a proactive visit to their physician's office. Speaking of which, good luck finding a primary health provider who is taking new patients. If you find one, the wait may be as long as 18 months for a well patient exam.
Some time in the next few days or weeks, Americans lucky enough to have a job that provides health insurance will trudge into their company meeting rooms to learn how much more they will have to pay for a vital benefit that many already cannot afford. HR directors across the nation should drop the bad news at the same time so we can have a national day of mourning. It would allow our overworked, overstressed, underpaid workforce a shared moment of commiseration as their financial burden gets a little heavier, their paycheck gets a little lighter, and they adjust to the anxiety that comes with praying they don't get sick.
Data from 1,600 hospitals from 1997 through 2007 shows that medical malpractice claims are declining slightly and the average amount per claim has stabilized, reports Zurich, the hospital and healthcare provider insurer.
The fifth annual benchmarking report on claims trends in the healthcare industry from Schaumburg, IL-based Zurich shows that claims severity—the average amount per claim —has stabilized. The average annual rise over the past 11 years is 4%.
Teaching and children’s hospitals have higher claim severity than acute-care community hospitals and outpatient facilities. Non-profit hospitals have the lowest severity; and among non-profits, faith-based institutions have the lowest severity of all, Zurich said.
"It’s interesting to note that severity does continue to rise among claims valued under $1 million, which are the claims considered more typical within an institution's loss experience," said Leo Carroll, head of Healthcare-Specialty Products, Zurich North America Commercial. "While the most severe claims (those valued above $1 million and $5 million) have stabilized overall, the frequency of those large losses has increased slightly."
Carroll said the most severity prone states continue to be New York, Illinois, and Pennsylvania. "We’re continuing to monitor the impact to claim activity by changes in tort reform, patient safety initiatives, and use of technology to improve quality of care," he said.
While tort reform efforts to reduce malpractice lawsuit threats, such as those suggested in the Affordable Care Act, might have limited impact on reducing costs, other efforts, such as a move away from the fee-for-service system of reimbursement may contribute to further declines, according to a report published in last month's Health Affairs.
The nation's hospitals reported 10 "mass layoffs" of 50 or more employees in September, and the pace of these job cuts in 2010 lags slightly behind the record 152 mass layoffs in 2009, Bureau of Labor Statistics data show.
In the first nine months of 2010, there have been 112 mass layoffs at hospitals, averaging more than 12 mass layoffs each month. At this pace, hospitals would record 149 mass layoffs in 2010.
Through September, hospital layoffs resulted in 8,867 initial claims for unemployment benefits. In 2009, there were 11,787 initial claims for unemployment linked to hospital layoffs, BLS data show.
In the first half of 2010, there were 33 extended mass layoffs of 31 days or longer involving 7,112 workers, which resulted in 5,339 initial unemployment claims. In 2009, there were 71 extended mass layoffs affecting 14,131 employees, with 12,405 initial unemployment claims, BLS data show.
Extended mass layoffs are a subset within mass layoffs for reporting purposes, BLS says.
Despite the layoffs, overall hospital employment growth continues in 2010, albeit at a slower pace than in the years preceding the recession. Hospitals created 2,900 payroll additions in September, and 28,200 payroll additions so far this year, a rate of job creation that is more than double that for the same period in 2009, BLS preliminary data show. Hospitals reported 86,200 payroll additions in the first nine months of 2008.
The average, per capita cost of providing healthcare services in the United States rose by 7.32% for the past 12 months ending in August, a rate of inflation wildly above the 1.1% overall inflation for the same period, according to new study by Standard & Poor's.
The new numbers are consistent with a trend that from August 2000 to August 2010 has seen healthcare inflation rise 48% while overall Consumer Price Index has risen 26% for the same period, U.S. Bureau of Labor Statistics data show.
"Given the last 10 years, no we are not surprised," Maureen Maitland, vice president of S&P Indices, says of the findings in the new report. "If you look at the public data that are out there and have been out there, the national health expenditure data, what we have seen is not only healthcare costs have basically risen over the last 10 years at a 7% rate. But the percentage of GDP has gone up dramatically too, because we are outpacing not only inflation but the rate of growth in GDP."
Maitland attributes the rise in healthcare costs to supply and demand; healthcare providers are charging more because they can. "Basically the demand for healthcare is high, and physicians and hospitals are trying to meet their budgets, and are able to put these rate increases through," she said.
A further breakdown of the data from the S&P Healthcare Economic CompositeIndex show that physician and hospital claims costs associated with commercial plans rose 8.66% for the 12-months ending in August, while similar claims associated with Medicare rose 5.08%—a 70% difference in the rate of increase, despite Medicare's sicker, older population.
Robert Zirkelbach, press secretary for America's Health Insurance Plans, said comparing medical inflation to overall inflation is not an accurate measure for explaining premiums increases. "There is inflation, but there is also utilization, new technologies, and price increases above that, particularly when it’s the result of hospital consolidation," Zirkelbach says. "A lot of studies recently [show] that hospital consolidation is leading to higher healthcare costs, meaning that some hospital systems are able to basically dictate the prices they charge for their services. That is why our members in some parts of the country are seeing rate increase requests from hospitals by as much as 40% and 50%."
Zirkelbach says commercial health plans are also bearing increased cost shifting from Medicare/Medicaid because of the recession. "We have seen that trend in both Medicare and Medicaid, particularly in a weak economy when you see more people relying on Medicaid -- that is shifting the costs to the private sector," he said.
AHIP did a study two years ago estimating that the average family of four paid a "hidden tax" of $1,500 each year to offset underpayments from Medicare/Medicaid.
Given the cost shifting and other pressures on commercial health plans, Zirkelbach says the S&P data do not undermine the claim that commercial plans do a better job containing costs than does the government, despite Medicare's older, sicker population. "I don’t think you can make that judgment. I haven’t seen any evidence to show that," he says. "Keep in mind the government simply dictates the price they pay for services and those costs get shifted on to employers and families in the private sector. It's administered pricing, is how it works."
Maitland said the S&P data reflect an increase in the per capita costs of commercial plans and Medicare, but not necessarily the "total basket" of Medicare costs.
"The total budget may actually be larger but for each person, it is government funded and the government will only allow a certain amount of increases each year. A lot of this simply has to do with government funding and what they will allow in terms of what they will pay," she says. "It's not saying anything about the size of Medicare versus the size of commercial plans. This is per capita."
Maitland said it's also apparent that the commercial plans are also cost shifting their costs to consumers. "If you happen to have commercial health insurance, each of us is paying approximately 9% more than we did for the same services last year," Maitland said. "The cost is not just to the insurance plan, but it's our deductibles and copayments, all of that that is going on. They are passing some of the extra cost on to the consumer directly."
Maitland said the sweeping healthcare reforms passed by Congress this year have yet to take effect and were not a factor in the cost increases.
Also this week, the Thomson Reuters' Consumer Healthcare Sentiment Index for September, which showed that Americans‘ confidence in their ability to obtain and afford healthcare rose for the second consecutive month, reversing a 5% downward trend that had prevailed in the first half of the year.
"It’s too early to call this a trend, but two months of increased confidence may auger growing optimism as we approach the end of the year," said Gary Pickens, chief research officer at the Thomson Reuters Center for Healthcare Analytics. "The next several months will show whether this optimism has legs."
In September, for the second month in a row, consumers expressed increased confidence that they could access and pay for healthcare in the next three months and fewer people reported that they had postponed or cancelled treatment in the past three months. The Consumer Healthcare Sentiment Index is based on responses from a survey subset of 3,000 respondents each month. Its baseline measurement of 100 was set in December 2009.
Two Miami-based mental healthcare companies, their four owners and senior managers were indicted Thursday for allegedly billing Medicare for $200 million in bogus mental health services, the Departments of Justice, and Health and Human Services say.
A 13-count indictment unsealed Thursday in U.S. District Court in Miami charges American Therapeutic Corp., and Medlink Professional Management Group Inc., Lawrence S. Duran, Marianella Valera, Judith Negron, and Margarita Acevedo (aka Margarita De La Cruz) with counts that include healthcare fraud, conspiracy to commit healthcare fraud, and related illegal healthcare kickbacks counts.
"Since the Strike Force began operation, we have rarely seen anything like the illegal conduct charged in this indictment, both in terms of the nature and size of the scheme," says Assistant Attorney General Lanny A. Breuer of DOJ's Criminal Division.
The defendants were arrested Thursday in Miami. Federal agents conducted search warrants at six ATC and Medlink locations in South Florida.
In a related civil action, a temporary restraining order froze the assets of Duran, Valera, Negron, Acevedo, ATC and Medlink.
HealthLeaders Media attempted to contact the defendants Thursday afternoon. No one answered the telephone at ATC, and a recorded voice said the Medlink number had been disconnected.
According to criminal and civil documents, the defendants allegedly submitted false claims to Medicare for medically unnecessary or non-existent mental health services administered at ATC facilities. ATC operated purported partial hospitalization programs—- which provide intensive treatment for mental illness—in seven Florida locations from Homestead to Orlando.
Prosecutors allege that Duran, Valera, Acevedo and ATC paid kickbacks to operators of assisted living facilities and halfway houses in exchange for delivering patients from their facilities to ATC. The indictments allege that in many instances the patients got part of the kickbacks. ATC allegedly billed Medicare for services purportedly provided to these recruited patients. The indictment alleges that the services were not medically necessary or were not provided at all.
ATC allegedly routinely admitted patients to the PHP program who suffered from Alzheimer?s and dementia and therefore were not eligible for the PHP program because their mental capacity did not allow them to benefit from group therapy.
Prosecutors allege that patient charts and notes from therapy sessions were routinely altered at ATC to make it appear that the otherwise disallowed patients qualified for PHP treatments. The indictment alleges that Duran and Valera told employees and doctors at ATC to alter diagnoses, and medication types and levels to make it appear that the patients qualified for PHP treatments. Prosecutors allege that Valera also manipulated the length of patients? stays to maximize Medicare payments.
The civil complaint and temporary restraining order also name American Sleep Institute Inc. and D&V Development Inc., as participants in the fraud. Civil court documents allege that ASI—owned and operated by Valera and Duran—submitted false claims to Medicare for sleep studies, and that D&V was established to divert funds from ATC and ASI.
"Community mental health centers across the country serve a uniquely vulnerable population," says HHS Inspector General Daniel R. Levinson. "Those attempting to defraud this critically important program—as we are charging here today—should expect to pay a heavy price."
Since its inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 825 people who collectively have falsely billed the Medicare program for approximately $2 billion.
For the first time in at least 18 years, the rate of growth of patient admissions to not-for-profit hospitals declined in 2009 over 2008, owing mostly to the economic recession, says a report from Moody's Investors Service.
Moody's began publishing not-for-profit hospital medians in 1991, and this is the first time the rating agency found slower growth from one year to the next. The median growth rate declined to .02% in 2009 from 1.03% in 2008.
"Hospitals are largely reimbursed on a per-case basis by governmental and private payers, creating a direct link between all volume indicators and hospital financial performance," said Lisa Goldstein, Moody's senior vice president and author of Flat Admissions Put Pressure on Not-for-Profit Hospitals. "We also outline how this will likely continue in 2010 and into 2011, particularly given the anemic economic recovery."
Erratic volumes in the recession's wake make it harder to predict admissions, forcing hospitals to adapt to unexpected revenue shortfalls, Goldstein said.
"Less predictability in revenue is, of course, an important factor in a hospital's credit rating," she said.
Other factors contributing to flat admissions include the expiration of COBRA benefits for many people, a decline in the birth rate since 2006, higher co-pays and deductibles required by employers, and discontinued employer-provided healthcare coverage.
The continued shift from inpatient to outpatient services is also having an impact.
"Inpatient reimbursement levels are typically higher than outpatient, allowing hospitals to cover a greater portion of their fixed and variable costs," Goldstein said. "Declines in admissions will challenge management teams to identify ways to preserve revenue and better control costs."
She said hospitals that have long focused on improving operating efficiencies and maximizing revenue through revenue cycle management and growth strategies will likely be able to compensate for admission shortfalls and produce better financial performance.
The report also looks at President Obama's healthcare reform, the shift away from fee-for-service reimbursements, and how admissions will likely become less important under bundled payments.
"Even in the best of economic times, this system will present its own challenges in terms of hospitals predicting their revenues and managing their costs to do well with bundled payments," Goldstein said.
