The suit was in response to the 2018 site-neutral final rule that paid hospitals the same reimbursement for some inpatient and outpatient services.
The American Hospital Association expressed dismay this week with news that the U.S. Supreme Court declined -- without comment -- to consider the hospital lobby's appeal of a lower court ruling upholding Medicare's site-neutral payments.
The suit by the AHA and other provider stakeholders was in response to the 2018 Trump-era Outpatient Prospective Payment System final rule by the Department of Health and Human Services that paid hospitals the same reimbursement for some inpatient and outpatient services.
"We are disappointed that the U.S. Supreme Court has declined to hear the compelling arguments in our case on payment cuts for hospital outpatient visits," AHA General Counsel Melinda Hatton said Monday.
"These cuts to hospital outpatient departments directly undercut the clear intent of Congress to protect them because of the many real and crucial differences between them and other sites of care," she said.
OPPS had reduced reimbursement rates for clinic visits at hospital-owned outpatient provider departments by 40%, to match the rates paid under the Medicare Physician Fee Schedule for office visits. CMS estimates that the OPPS final rule could save the Medicare program about $760 million annually.
The Trump administration – and now the Biden administration -- has maintained that CMS has the authority to impose payment cuts under the Bipartisan Budget Act of 2015 to reduce unnecessary and costly increases in hospital procedures.
The AHA had argued that the site-neutral cuts undercut the intent of Congress to protect hospitals.
A federal appeals court had twice ruled that HHS exceeded its statutory authority when it reduced these payments. In July 2020, however, a three-judge appeals panel unanimously reversed those decisions.
"Hospital outpatient departments are held to higher regulatory standards and are often the only point of access for patients with the most severe chronic conditions, all of whom receive treatment regardless of ability to pay," Hatton said.
"While we are disappointed, we will continue to fight to ensure the ability of all hospitals and health systems to continue to provide the essential services and programs their patients and communities need to realize their highest potential for health."
LUGPA Cheers
The Large Urology Group Practice Association, one of the few medical associations that filed a friend-of-the-court brief supporting HHS, cheered SCOTUS' decision.
"We believe the Supreme Court made the right decision to reject the hospital industry's challenge to the site-neutral payment rule," said LUGPA President Jonathan Henderson, MD.
"The court's denial of the AHA's petition sends a clear message the argument had no merit, and more importantly, it's an acknowledgment of the value of independent practices as a crucial counterbalance to monolithic health care systems," Henderson said.
Henderson said his association would keep pushing "to level the playing field for independent physicians to fairly compete with hospitals systems to increase quality and access to care for all Medicare patients across the country."
Hospital margins remained narrow despite in May rising patient volumes.
Physician compensation and hospital volumes, revenues, and margins all saw strong gains in May, signaling that the healthcare sector may be returning to pre-pandemic levels, two reports Monday from consultants Kaufman Hall suggest.
Meanwhile, employed physician groups saw gains in productivity, revenues, and compensation in the first quarter of 2021 compared to the same period in 2020, due in part to higher patient visits.
At the same time, the average investment required to supplement physician revenues fell slightly, according to the latest Physician Flash Report.
"The data reflect an encouraging trajectory for our nation’s hospitals and health systems, as they continue to recover from the devastation of COVID-19," Erik Swanson, a senior vice president of Data and Analytics with Kaufman Hall, said in a media release. "We expect to see gains over the lows seen in early 2020, but comparisons to 2019 provide greater insights to how hospitals are faring relative to pre-pandemic performance."
Hospital margins remained narrow despite rising patient volumes. The median Kaufman Hall hospital operating margin index was 2.6% in May, not including federal Coronavirus Aid, Relief, and Economic Security (CARES) Act funding.
With the funding, it was 3.5%. The average operating margin rose 95.2% from January to May 2021 compared to the same period in 2020 without CARES, and 56.6% year-to-date with CARES. Compared to pre-pandemic levels in the first five months of 2019, however, operating margins were down 20.5% YTD without CARES and down 9% YTD with CARES.
Patient volumes increased YTD compared to low levels seen with national shutdowns and restrictions on non-urgent procedures early in the pandemic. However, volumes were down compared to 2019 levels in most cases.
Adjusted discharges were up 9.1% YTD from January-May 2020, but fell 7.1% YTD compared to January-May 2019. Adjusted patient days rose 14.3% YTD from 2020 to 2021, but were close to pre-pandemic performance—down only 0.4% YTD compared to the first five months of 2019.
Emergency department visits were essentially flat compared to January-May 2020, but remained significantly below 2019 rates, while operating room minutes grew 28.3% YTD in May compared to 2020 and were close to 2019 levels.
Revenues and expenses both increased compared to the first five months of 2019. Gross operating revenue (not including CARES) was up 18.6% YTD from 2020, and 5.9% YTD from 2019. Total expense per adjusted discharge was down 1.7% YTD from January-May 2020, but up 16.6% above January-May 2019.
Physician Comp
For physician groups, the median investment/subsidy per physician full-time equivalent (FTE) was $239,502 for the first quarter of 2021, down just 1.9% from the first quarter of 2020.
Physician comp per FTE was $332,187 in Q1 2021, up just 1.1% from the same period in 2020. Increasing patient visits contributed to an increase in physician productivity, with physician work Relative value units (wRVUs) per FTE up 3.6% from Q1 2020 to Q1 2021.
Net revenue per physician FTE (including advanced practice providers or APPs) was $575,113 in the first quarter, up 9.4% from Q1 2020, and total direct expense per physician FTE (including APPs) was up 4% over the same period.
Clinical and front-office productivity has largely returned to pre-COVID levels as physician productivity has increased, with Support Staff FTEs per 10,000 wRVUs falling just 1.3% from the first five months of 2020 to the same period in 2021, KH said.
The bond rater downgraded the sector on March 25, 2020 to negative, and reaffirmed that rating in January 2021.
The outlook for the nation's not-for-profit healthcare sector -- rocked for more than one year by the coronavirus pandemic – has been upgraded from negative to stable by S&P Global Ratings.
The bond raters downgraded the sector on March 25, 2020 to negative, and reaffirmed that rating in January 2021.
S&P cited several reasons for the return to a stable outlook, including:
* A trend of revenue recovery, ongoing balance sheet strength, and proactive management teams' focus on maintaining financial stability;
* Declining risk levels that are consistent with pre-pandemic years when the outlook was stable;
* CARES Act funding over the past 15 months that propped up providers and helped curtail the negative and downside risk from the pandemic;
* Generally stable or positive outlooks for about 85% of S&P's rated healthcare organizations.
The upgrade for the not-for-profit healthcare sector means that all U.S. public finance sectors are stable in U.S., except higher education, including community colleges and student housing.
After announcing plans to merge, the outlook for both for-profit health systems was revised down from stable to "under review."
Moody's Investors Service has placed LifePoint Health Inc. and Kindred Healthcare on review for bond rating downgrades following the announcement this week that the two for-profit hospital companies were merging.
The outlook for both for-profit health systems was revised down from stable to "under review," Moody's said.
"LifePoint faces a moderate level of implementation risk, however, with respect to the outsourcing of revenue cycle management functions at some of its hospitals over the next few quarters," Moody's said, adding that it "has very low growth expectations for non-urban hospitals given multiple industry headwinds."
As for-profit hospital operators, Moody's said Kindred and LifePoint also face "high social risk."
"The affordability of hospitals and the practice of balance billing has garnered substantial social and political attention. Hospitals are now required to publicly provide the list price of all of their services, although compliance and practice is inconsistent across the industry," Moody's said, adding that the hospitals' reliance on Medicare, Medicaid and other government payers makes the hospitals particularly suseptible to reimbursement changes.
"Further, as LifePoint is focused on non-urban communities, slow population growth tempers the company's capacity to grow admissions," Moody's said.
Brentwood, Tennessee-based LifePoint, which merged with RegionalCare in 2018, operates 88 hospitals in 29 states, with revenues of approximately $8.2 billion annually. LifePoint is owned by Apollo Management, and Moody's said the private equity firm could deploy "aggressive financial policies."
"While LifePoint may pursue an IPO longer-term given its large scale, Apollo may take dividends along the way, particularly if the company achieves its cash flow and deleveraging goals," Moody's said.
Like LifePoint, Moody's notes that Louisville, Kentucky-based Kindred, "faces social risk but less so than operators in the general acute-care space."
"The affordability of hospitals and the practice of balance billing has garnered substantial social and political attention. However, this is less of an issue in the IRF (inpatient rehabilitation facility) and LTAC (long-term, acute-care) space because patient stays in these facilities are never a "surprise,'" Moody's said.
Kindred is one of the largest long-term and acute rehabilitation care providers in the nation, with annual revenues of about $3.1 billion. The hospital chain is owned by private equity firms TPG Capital and Welsh, Carson, Anderson and Stowe.
Teladoc's Livongo program focuses on sustainable behavioral changes that improve glycemic and HbA1c metrics for patients.
Telehealth provider Teladoc Health is teaming up with The Ohio State University Wexner Medical Center to improve remote disease management for people with Type 2 diabetes.
Starting July 1, Wexner patients can enroll in Teladoc's Livongo for Diabetes Program, a patient-centric customized wellness program designed to improve hemoglobin A1c and other metabolic markers that reduce diabetes complications and ultimately reducing the use of healthcare resources.
The Livongo program focuses on sustainable behavioral changes that improve glycemic and HbA1c levels for patients. The program relies on real-time feedback, live coaching, curated educational content, health nudges, and five-day mini challenges for patients. The system eases data sharing with patients' physicians, allowing them to monitor their patients' progress.
Livongo patients will get a cellular-connected blood glucose meter, unlimited test strips, 24/7 interventional support, and ongoing access to Teladoc clinicians.
"With the prevalence of diabetes growing nationwide and in Ohio, patients are faced with ever-increasing challenges to manage this disease," Hal Paz, MD, executive vice president and chancellor for Health Affairs at The Ohio State University and CEO of the Ohio State Wexner Medical Center, said in a media release.
"This partnership with Teladoc Health's Livongo disease management and chronic care unit is a complementary platform to deliver high quality care to our patients living with diabetes while advancing our commitment to digital health and innovation," Paz said.
It's the second time in four years that Kindred has been sold.
LifePoint Health has entered a "definitive agreement" to buy specialty and long-term care provider Kindred Healthcare, the two for-profit health systems announced jointly on Monday.
Financial terms of the sale were not disclosed.
LifePoint said it will provide details of the transaction in "the near future," but stressed that the acquisition is not funded by money received under the Coronavirus Aid, Relief and Economic Security (CARES) Act and other federal legislation.
The sale is expected to be finalized by the end of 2021.
It's the second time in three years that Louisville, Kentucky-based Kindred has been sold.
In 2017, Humana Inc. and private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe aquired Kindred and split the company in two, with Humana becoming a minority investor in the Kindred at Home business, and the private equity firms acquiring the long-term care and rehab hospitals.
"Kindred's focus on healing and hope, provided through its long-term acute care hospitals, rehabilitation centers and most recently its behavioral health services – an important and growing need across the country – is highly complementary to the current LifePoint network," Dill said.
Kindred CEO Benjamin A. Breier called the sale "a validation of Kindred's success."
"Over the last several years, we have transformed Kindred into the nation's leading specialty hospital company, known for improving outcomes and providing compassionate care for the most medically complex patients," Breier said. "LifePoint’s investment in Kindred underscores the outstanding reputation our team has built upon a foundation of innovation, and clinical and operational expertise."
Brentwood, Tennessee-based LifePoint operates 89 community hospitals in 29 states.
Kindred operates 62 long-term acute-care hospitals, 27 inpatient rehabilitation hospitals, and two behavioral health hospitals in 16 states.
The deal more than doubles Steward's Florida hospital footprint, and cuts Tenet's Florida hospital stake in half.
Steward Health Care System, LLC will buy five hospitals and their physician practices in the Miami and Fort Lauderdale area from Tenet Healthcare Corporation for $1.1 billion, the two for-profit health systems announced jointly Thursday.
The hospitals are Coral Gables Hospital, Florida Medical Center, Hialeah Hospital, North Shore Medical Center and Palmetto General Hospital. The acquisition halves investor-owned Tenet's hospital stake in Florida, with five of the 10 hospitals remaining with Tenet all located in nearby Palm Beach County.
Tenet's Conifer Health Solutions subsidiary will provide revenue cycle management for the five hospitals after the deal is finalized. Tenet will keep its ambulatory facilities operated by United Surgical Partners International in these markets.
Steward's Florida operations will be directed by Sanjay Shetty, MD, president of Steward North America.
Steward Founder Ralph de la Torre, MD, who grew up in Florida as the son of Cuban immigrants, said the physician-owned health system was "eager to offer both patients and healthcare providers in South Florida the full support of the Steward network as we all seek to emerge stronger and healthier from the pandemic."
"As a Floridian with close family ties to the area, I am proud of Steward's significant investment in the people of South Florida, whose tight-knit communities and vibrant diversity have always represented the very best of American culture," de la Torre said.
When the deal is finalized, Steward will more than double its footprint in Florida as the five new hospitals join Melbourne Regional Medical Center, Rockledge Regional Medical Center, and Sebastian River Medical Center on Florida's Treasure Coast and Space Coast.
Spectrum Health President and CEO Tina Freese Decker will lead the unified system when the merger is completed.
Michigan's Beaumont Health and Spectrum Health have signed a letter of intent to "explore creating a new health system," the two health systems said Thursday in a joint announcement.
If the merger of the cross-state, not-for-profit providers is consummated, the unified health system -- temporarily named "BHSH System" -- will operate 22 hospitals and 305 outpatient locations, with more than 64,000 employees, including more than 7,500 physicians, more than 3,000 advanced practice clinicians, and more than 15,000 nurses, the health systems said.
"Beaumont Health and Spectrum Health are leaders in our respective markets, and by bringing together our organizations to create a new system, we have the opportunity to deliver greater value in high-quality and affordable health care to our communities," said Spectrum Health President and CEO Tina Freese Decker, who will lead the unified system when the merger is completed.
"Together, we can provide a more personalized experience that prioritizes individuals’ health while also attracting and retaining great talent to our vibrant communities," she said.
Beaumont Health President and CEO John Fox will leave the health system after the merger, and a new president will be hired for as president of BHSH Beaumont Health.
The new system will operate dual headquarters in Southfield and Grand Rapids, the current headquarters of Beaumont and Spectrum, respectively. Freese Decker and senior leaders will spend time on both sides of the state.
A 16-member board will include seven seats appointed by each system, Freese Decker, and a new Board member to be appointed when the merger is finalized. The board will include at least three physicians. The temporary legal name of the new organization will be "BHSH System."
The first board chair will be Julie Fream, the board chair of Beaumont Health.
Harmon replaces outgoing AMA President Susan R. Bailey, MD, an allergist from Fort Worth.
Gerald E. Harmon, MD, a retired Air Force major general and a family medicine physician from Pawleys Island, S.C., was sworn in Tuesday as the 176th president of the American Medical Association.
The ceremony was remote during the virtual Special Meeting of the AMA House of Delegates, where the ongoing pandemic and its exposure of systemic problems in the healthcare system were the center of attention.
Harmon replaces outgoing AMA President Susan R. Bailey, MD, an allergist from Fort Worth.
During his one-year term, Harmon has pledged to focus on the agenda put forward by the AMA in recent months, including ongoing efforts to promote vaccinations and improve the public health infrastructure, addressing systemic racism as a public health issue, and improving care access and equity, especially in areas such as telehealth, which is often hamstrung in rural and underserved areas by lack of broadband.
"The COVID pandemic has revealed enormous gaps in how we care for people and communities in America, demonstrated in the disproportionate impact of this pandemic on communities of color and in the weaknesses of our under-funded and under-resourced Public Health infrastructure," Harmon said in his inaugural address.
"During such times of struggle and heartbreak, it is important for us to 'remember our why.' Why did we enter medicine? Why do we continue to struggle against overwhelming administrative and regulatory burdens? Why are we risking our health and our families during this global pandemic," Harmon said. "I would submit that the education, the training, the years of experience and sacrifice we have gone through has prepared us for such a time as this."
Harmon served 35 years in the U.S. Air Force, before retiring as a major general. He has been practicing family medicine for more than 30 years, currently in his hometown of Georgetown, S.C. He has been an AMA board member since 2013 and was board chair from 2017 to 2018. He has also served in several leadership roles at the physicians' association, including the AMA Council on Medical Service. He has also served in several leadership roles at the South Carolina Medical Association, including chairman of the board and president.
Harmon is a clinical professor at two South Carolina medical schools, and a member of the clinical faculty for the Tidelands Health MUSC Family Medicine residency program. He is also an adviser to the board of trustees of a community health system and vice president in a multispecialty physician practice. He is also a medical director for several organizations including a non-profit hospice, and volunteers as medical supervisor for his local school district’s 23 schools.
Harmon received his undergraduate degree in physics and mathematics from the University of South Carolina and his medical degree from the Medical University of South Carolina. He completed a residency training program in family medicine with the U.S. Air Force at Eglin AFB, in Florida.
Noblesville, Indiana-based IDS provides cloud-based video communications platforms for business, healthcare, and government.
Tech sector private equity firm Berenson Capital said Monday that it has acquired Interactive Digital Solutions, a cloud-based, telehealth and video conferencing platform.
Financial terms of the deal were not disclosed.
Noblesville, Indiana-based IDS provides a cloud-based video communication platform for healthcare systems, government, and the private sector, and features a proprietary virtual patient observation platform called MedSitter.
IDS developed MedSitter in 2017 to help healthcare systems address patient falls by using two-way video and audio observation tools and virtual patient monitoring.
"More so than ever before, this past year has highlighted the importance of strategically leveraging best-of-breed video solutions to foster communication and collaboration both internally and externally across organizations," Tracy Mills, CEO and Founder of IDS, said in a media release.
"IDS has thrived by continuously helping clients across all segments overcome a variety of challenges. We look forward to the partnership with Berenson Capital as we continue to invest in our portfolio of next-generation solutions," Mills said.
Veteran healthcare tech executive David Fetterolf will join IDS as executive chairman. Most recently Fetterolf was president of Stratus Video, a private-equity-backed healthcare video interpreting platform that was sold to AMN Healthcare for $475 million.
"IDS's portfolio of solutions is driving incredible value for their clients across all segments of the market," Fetterolf said. "In healthcare specifically, their proprietary MedSitter solution is revolutionizing how healthcare facilities address reducing patient falls within their facilities. I look forward to supporting the company as it continues providing best-in-class solutions into all markets."
