Saint Luke's Health System in Kansas City, MO, has formalized a partnership with Cardiovascular Consultants, PA.
The new business is called Saint Luke's Cardiovascular Consultants and has 37 cardiologists who will provide services at Saint Luke's four metropolitan hospitals and outlying regional facilities. Financial terms of the deal were not disclosed.
"This heightened level of integration with Cardiovascular Consultants strengthens our commitment to a delivery model that ensures that heart patients in our system receive the best care available in the region," said G. Richard Hastings, president and CEO of Saint Luke's. "This represents a significant step forward in completing our vision of a seamlessly integrated continuum of care that ensures clinical excellence to the patients we serve."
Kenneth C. Huber, MD, co-executive medical director of Saint Luke's Mid America Heart and Vascular Institute and CEO of Saint Luke's Cardiovascular Consultants, said the new entity leverages the strengths of both organizations. "This new model allows us to embrace these changes with a fully-integrated model that meets the needs of today and anticipates the needs of tomorrow," he said. "The goal is simple—deliver the most efficient, effective, and seamlessly integrated care possible."
Patients will see slight changes in billing practices, but otherwise all other aspects of patient care will remain the same.
Negotiations for the new business began in August 2009.
Saint Luke's Mid America Heart and Vascular Institute opened in 1982.
Cardiovascular Consultants became the primary provider of cardiovascular services for Saint Luke's Health System in 1999 when it was awarded a management agreement to provide strategic and operational oversight.
Tenet Healthcare Corporation today confirmed it is in "preliminary discussions" with Healthscope about acquiring the second-largest private hospital company in Australia.
Dallas-based Tenet said in a media release that it usually does not comment on speculation on possible acquisitions, but did so this time because of the recent volatility on Tenet stock.
Healthscope owns and operates 43 hospitals representing approximately 15% of Australia's private hospital market, and also operates the country's third-largest pathology business. Healthscope had an EBITDA margin of approximately 13.8% in 2009, and 11.1% revenue growth, Tenet said.
More than 40% of Australians, who have universal access to healthcare, are covered by private health insurance and private hospital expenditures are expected to realize a mid single-digit real-rate of growth for the foreseeable future. Australia's private hospitals complement government-run hospitals and generally serve patients who have purchased private insurance or pay for their hospital care directly, while public hospitals provide emergency care and treatment for patients without private insurance coverage.
Tenet said the acquisition would improve Tenet's payer mix and enhance Tenet's margins and growth rates, advance Tenet's position as a global hospital operator, and provide opportunities for cross-border sharing of knowledge and capabilities.
Australia-based Healthscope Ltd. has become the target of a bidding war among U.S. private-equity firms, as it received new bids valuing the hospital operator at US$1.56 billion. Healthscope said it received two new takeover offers each at 5.80 Australian dollars (US$4.92) a share, valuing the company at about A$1.84 billion. The company didn't disclose the identity of the bidders, though one person familiar with the matter said one of the bidders was U.S. private equity firm Kohlberg Kravis Roberts & Co., the Wall Street Journal reports.
Intercare Health Systems, Inc., the ex-owner of City of Angels Medical Center, will pay the federal government a $10 million consent judgment in a Medicare and Medi-Cal fraud and kickback scheme involving homeless patients at the Los Angeles hospital, the Justice Department announced today.
The consent judgment resolves a civil lawsuit filed against Intercare by the federal government and California in the U.S. District Court for the Central District of California. Also named in the suit were the former owners of Intercare, Robert Bourseau and Rudra Sabaratnam, who entered $10 million consent judgments in January.
Federal prosecutors alleged that City of Angels paid recruiters employed at homeless shelters in the skid row area of Los Angeles to deliver their homeless clients by ambulance to the hospital for medical treatment regardless of whether they needed or asked for the treatment. City of Angels billed Medicare and Medi-Cal for medical services allegedly provided for the homeless patients, many of which were not necessary, a violation of the False Claims Act. Payments that City of Angels made to its recruiters were a violation of the federal anti-kickback statute.
"Performing unnecessary medical services on homeless people who are struggling to survive is particularly egregious and will not be tolerated," said Tony West, assistant attorney general of the Civil Division of the Department of Justice. "Companies, institutions, and individuals will be held accountable for fraudulent conduct that takes money from taxpayers and undermines the integrity of the healthcare system."
The Department of Justice has used the False Claims Act to recover more than $2.7 billion since January 2009 in cases involving fraud against federal healthcare programs.
The University of Colorado Hospital in Aurora will add a second tower at a cost of about $400 million, the university announced.
The new 720,000-square-foot tower will open in 2013, will be dedicated to inpatient and emergency care, will add 144 staffed inpatient beds to the hospital's current capacity of 407, and will include space to add another 144 beds to meet future demand.
"As the only academic medical center in the Rocky Mountains, our team of specialists and sub-specialists provide unique care for patients with complex healthcare needs," said Bruce Schroffel, president and CEO of University of Colorado Hospital. "Expanding the hospital will allow us to provide that care to more people in Colorado and the entire Rocky Mountain region.
About 660,000 square feet of the new tower will be new construction and 60,000 square feet of existing space will be renovated. The new tower will include a much larger emergency department, more operating rooms and additional diagnostic and treatment facilities. The expansion includes additional parking and better access to the rapidly expanding Anschutz Medical Campus.
Planning for the new tower was completed in January when an executive committee and 22 user groups met to ensure that the tower will meet the needs of the region's growing population.
"University of Colorado Hospital has been working near or above capacity since moving our inpatient facilities to the Anschutz Medical Campus in 2007," Schroffel said. "The demand for our services only promises to grow, and expanding the hospital will help us continue to serve a growing patient population."
Schroffel touted the economic stimulus that the project will bring to the area, including hundreds of new jobs and millions of dollars in material costs and tax revenue to Aurora and the state. "This is a multi-million dollar project and while UCH and its patients will benefit from the expansion, the entire state of Colorado also will see the positive effects. We also will be bringing over a thousand jobs to our community," he said. "And we will be able to do this without any funding from the state or federal governments."
When finished, the tower will create another 1,400 jobs at UCH with an average annual salary of $81,000, including benefits. The project also will create 600-650 jobs during construction. An architect and general contractor have yet to be contracted.
UCH also is in the midst of a $67 million project to implement an integrated, patient-centered electronic medical record across all clinical areas. That project will bring another 150 jobs to the Anschutz Medical Campus during its three-year implementation.
Shands HealthCare CEO Timothy Goldfarb says the nonprofit health system's decision to sell a 60% controlling stake in three money-losing hospitals in rural Florida will help the economies of the small communities they serve.
"What we are describing is an opportunity to grow our facilities," Goldfarb said at a media availability announcing the $21.4 million deal with Naples, FL-based Health Management Associates.
"Shands facilities are the pivots in the economic growth of our communities. Yes we provide outstanding healthcare, but we surely drive the economies in most of these economies. What this partnership will facilitate is the growth of these programs." The three University of Florida-affiliated hospitals, Shands Lake Shore, Shands Live Oak, and Shands Starke, reported losses totaling $14 million in the last three years, and were projected to lose another $7 million this year, despite $54.8 million in facilities upgrades and renovations over the last 14 years.
The losses were blamed on increases in uncompensated care and a competitive market, and were a key factor in the decision to sell controlling interest, which allows HMA to concentrate on the business and management side, while Shands focuses on medical operations.
"We've done wonderful things in partnership with the employees and medical staff in these communities, but we also learned our limitations," Goldfarb says. "We learned that we don't know all there is to know about running hospitals in communities the size of Live Oak, Stark, and Lake Shore. We learned that we have only so much capital to go around in the Shands system and sometimes we don't invest in our communities the way we should invest to grow these programs. And we learned that we have a lot to do as an academic health center. To accomplish those goals it is better to do them in partnership with somebody who is talented and competent and knows what they are doing rather than trying to do it by yourself."
Shands HealthCare will retain 40% ownership in each hospital, which will continue to prominently carry the Shands name. The deal is expected to be finalized by July 1, with Shands and HMA sharing equal governance.
Gary D. Newsome, president/CEO of HMA, said the hospital chain will rely on experience to stem the red ink at the three Shands hospitals.
"We have carved out a niche very specific in nonurban healthcare. Because of that we have some strategies and processes and programs that we know work," he says. "This is an opportunity for us to not only bring our knowledge to the table in how to manage and grow local hospitals in small communities, but for us to leverage the knowledge of Shands because they have tremendous resources from an educational standpoint."
No layoffs are planned. Shands employees—including leadership teams—will become HMA employees. They will keep their base salaries, and tenure will be honored. Employee benefits will change, but HMA said it provides "a wide variety of choices and a very competitive benefits package."
Most if not all local physician contracts will be transferred to the new jointly owned hospitals, with all service lines remaining in place. It is anticipated that practices will be added. Local advisory boards comprised of representatives from the medical staff, the local community, Shands, and HMA will be established at each hospital. Combined, the three hospitals operate 139 beds and generate approximately $100 million of annual net revenue.
When the deal is completed, HMA will operate 58 hospitals, with approximately 8,500 licensed beds, in non-urban communities in 15 states, including 22 in Florida. David Peknay, a director at Standard & Poor's, calls the deal "a pretty modest investment" for a company the size of HMA, which last year generated about $4.6 billion in net revenues from continuing operations.
Peknay says he couldn't say authoritatively what HMA might do differently to turn the Shands hospitals around financially, because he's not familiar with Shands' operations. Generally speaking, he says, "there are cases where a for-profit will come in and introduce aspects of operating a hospital that might be a little more cognizant of payer mix or service offerings, perhaps adding services that generate more revenues. On the for-profit side they have been very active in controlling costs. Many of them have been doing pretty well."
IPC The Hospitalist Company, Inc., the North Hollywood, CA-based hospitalist group practice, has acquired Continuum Geriatric Services PLLC in Livonia, MI. Financial terms of the deal were not disclosed.
CGS practices in more than 60 nursing and assisted living facilities in Michigan, where IPC has an established presence. CGS has an annualized volume of approximately 105,000 patient encounters.
Adam Singer, MD, chairman/CEO of IPC said the acquisition of CGS "represents continued expansion for IPC into closely related business segments that focus on the management and coordination of facility-based care."
"The highly dedicated geriatric physicians and midlevel providers at CGS offer IPC's Michigan operation an opportunity to improve coordination and integration of patient care with the goal of improving overall quality and offering a better experience for patients and their families," Singer said in a media release.
Jerry Wilborn, MD, co-founder of CGS, will join IPC as a practice group leader for the region's sub-acute practice groups. "This is a culmination of our long-term vision for developing a true continuum of care for our patients," Wilborn said. "IPC is well established in the area's acute care hospitals, and is best situated to develop a comprehensive program for care of the elderly in this market."
Deutsche Bank analyst Darren Lehrich estimated that the purchase "will add about 20 practitioners and is one of the larger sub-acute practices of its kind in the U.S. While revenue per encounter is slightly lower for these types of practices than hospitals, the gap is converging and we estimate revenue per encounter between $80-90 for a practice like this."
Lehrich estimated that "IPC paid roughly 1x revenue for CGS. The acquisition with 105,000 patient encounters will add roughly 3% to IPC's volumes and an estimated $8.4 million in revenue based on a Q1 run-rate numbers."
"We would not be surprised if IPC announces other similar investments ahead of their investor day scheduled on June 10," Lehrich wrote.
Patient volumes at the nation's acute care hospitals fell slightly in April, and are expected to be weak into the second quarter of 2010, according to the Deutsche Bank Hospital Volume Tracker.
Deutsche Bank's survey of more than 375 acute care hospitals found inpatient volumes down 2.2% and outpatient volumes down 1.1% for April. Inpatient surgeries were up 3%, outpatient surgeries were up 3.5%, and births were up 1.1%. ER visits fell 1.8%
"Uninsured mix looks fairly stable on a sequential basis, thus alleviating concerns about short-term bad debt volatility, although we are going to have to keep a close eye on MCO mix given steeper inpatient declines in recent months," the report stated.
Deutsche Bank said inpatient MCO volume declines are down about 5% on a rolling three-month basis. "This trend could be an indication that COBRA is beginning to roll-off, although we emphasize that we are not seeing corresponding growth in the uninsured volume," the report said.
Deutsche Bank anticipated Q2 volume growth of between 1% and 2%. "We believe our models have cushion in them with respect to conservative bad debt assumptions. We'll reassess volume, pricing and bad debt assumptions once we've gained a fuller picture on Q2 trends in the coming weeks," the report said.
Despite the soft volumes, Deutsche Bank said it will continue its Buy ratings on the major investor-owned hospitals, including Community Health Systems, Health Management Associates, Inc., LifePoint Hospitals, Inc., Tenet Healthcare Corp., and Universal Health Services, Inc., "based on reasonable valuations, upside risks associated with healthcare reform, accretive acquisitions, the potential for better volume and mix with an economic recovery, and continued execution with expense management over the short-run."
Pay increase budgets have fallen to 2.5%, down from 3% in 2009. Little change is expected over the next year, as healthcare organizations predict only a slight uptick in 2011 to 2.7%, according to the new 2010 Compensation Data Healthcare survey.
"With a slow economic recovery expected, healthcare organizations continue to make conservative compensation choices," said Amy Kaminski, director of marketing for Compdata Surveys, a compensation and benefits survey data provider. "Although organizations are making cuts to overall pay increase budgets, a larger portion of those budgets is likely being focused on providing the necessary pay increases to retain key employees, such as nurses and physical therapists."
Pay increase budgets vary within the industry, as critical access hospitals and physician clinics report the highest budgets, 2.8%. Home care respondents follow at 2.6%. Hospitals and rehabilitation facilities reported pay increase budgets of 2.5% and 2.3%, respectively. Behavioral healthcare had the lowest pay increase budget, 1.7%.
Physician clinics are projecting the highest pay increase budget in 2011 at 3.1%, with behavioral healthcare projecting the lowest, 1.8%.
The survey results show pay increase budgets vary by state. Arizona and Nebraska reported the highest pay increase budgets at 3.1%, closely followed by Nevada and Washington at 3%. Respondents in New York and California report pay increase budgets of 2.8% and 2.7%, respectively. Healthcare organizations in Minnesota had the lowest pay increase budget, 2%.
The survey contains data on more than 200 industry-specific job titles and more than 250 benchmark titles ranging from entry-level to top executives. Data was collected from more than 1,200 healthcare employers across the country.
Previously, CMS allowed hospitals and CAH to accept credentialing information about telemedicine providers from the distant site, but not privileging information.
"CMS has become increasingly aware, through outreach efforts and communication with various stakeholders in the telemedicine community . . . of the urgent need to revise the CoPs in this area so that access to these vital services may continue in a manner that is both safe and beneficial for patients and is free of unnecessary and duplicative regulatory impediments," the agency stated in its proposed rule.
Additionally, CMS cited smaller hospitals' lack of clinical expertise to adequately evaluate a variety of privileges as one of the reasons why a change was needed.
CMS will post the proposed rule on the Federal Register for a 60-day comment period, and the public can submit comments to www.regulations.gov. The revised language is contained in two sections of the CoPs: §482.12, "Governing body," and §482.22, "Medical staff."
"Upon reflection," CMS noted, "we came to the conclusion that our present requirement is a duplicative and burdensome process for physicians, practitioners, and the hospitals involved in this process, particularly small hospitals, which often lack adequate resources to fully carry out the traditional credentialing and privileging process for all of the physicians and practitioners that may be available to provide telemedicine services."
Under current CMS regulations, hospitals receiving telemedicine services from a distant site must privilege each physician or practitioner providing services to their patients as if the practitioners were onsite. While those hospitals could use third-party credentialing and verification organizations to make the process easier, the hospital's governing body remains responsible for all privileging decisions.
This process had been simplified: Hospitals that were accredited by The Joint Commission were deemed to also have met their Medicare condition of participation—including credentialing and privileging requirements—under the Commission's statutory deeming authority.
But with the passage of the Medicare Improvements for Patients and Providers Act of 2008, the statutory recognition of The Joint Commission's hospital accreditation program was ending—effective in several weeks on July 15. The law now would require The Joint Commission to secure CMS approval of its standards to confer Medicare deemed status on hospitals.
With this change, small and critical-access hospital medical staffs using telemedicine services could face "the burden of privileging hundreds of specialty physicians and practitioners" that large academic medical centers make available to them, CMS noted in the Register proposal.
Emily Berry is an associate editor for Briefings on CredentialingandCredentialing Resource Center Connection, and manages the Credentialing Resource Center. You can reach her at eberry@hcpro.com.Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached atjsimmons@healthleadersmedia.com.
