Same facility revenue per equivalent admission increased 3.9%;
First quarter 2018 results include $405 million in gains generated by the sale of some Oklahoma hospitals;
Salaries, benefits, supplies and other operating expenses totaled $9.314 billion, or 81.6% of revenues, compared to $8.628 billion, or 81.2% of revenues, in Q1 of 2017.
Nashville-based HCA operates 178 hospitals and about 1,800 surgery centers, freestanding ERs, urgent care centers, physician offices and other medical facilities in 20 states and the United Kingdom.
Executives at the two Northern California health systems say the joint operating company is needed to serve remote and rural populations of mostly Medicare and Medi-Cal enrollees.
The recent announcement that California's Adventist Health and St. Joseph Health will integrate clinical services under a joint operating company comes as regulators in the state are taking a renewed look at healthcare consolidation.
In March, the California Attorney General’s Office filed a lawsuit alleging that Sutter Health—the largest health system in Northern California—is engaged in anticompetitive practices that are raising healthcare costs for consumers.
The AG’s complaint came shortly after a new report showed how the rapid consolidation of healthcare markets in California has led to rising healthcare costs for consumers throughout the state.
Despite those potential headwinds, Jeff Eller, president of the Northern California Region for Adventist, says he's confident that the JOC with St. Joseph's will survive regulatory scrutiny.
Eller spoke with HealthLeaders Media about the proposal. The following is an edited transcript.
HLM: Why are you entering the JOC?
Eller: We are two strong and prestigious healthcare systems that are both faith based. We come from different faith traditions but we have a common goal, and that is to better serve our communities. The best way we could do that and preserve our religious identities was by forming a joint operating company, which would reserve powers back to the sponsors for the religious identity and unique missions that they've been proud of for so many years, in some cases over 100 years.
HLM: How are you splitting the revenues under this JOC?
Eller: The governance is 50-50. We have a 10-member board and Adventist Health and St. Joseph's each will have five members. The governance is straight up 50/50. When it comes to the presumptive splits on the economic side, St. Joseph's is 69% and Adventist Health is 31%. They came to the table with a little bit larger organization.
HLM: Concerns have been raised about healthcare consolidation in California and its effect on the prices consumers pay for healthcare. Do you think this will adversely affect your JOC proposal?
Eller: There is always that chance. I think we are a whole different story. We serve rural communities that are predominantly Medicare and Medi-Cal. In Lake County we are almost 80% governmental payers.
There is not a whole lot of contracting that takes place out there. This really is about a population health strategy and securing and strengthening healthcare access in these smaller rural communities.
HLM: Is the JOC a merger by another name?
Eller: We are forming a JOC. We are coming together to form an organization that will manage the day-to-day operations, that will help develop strategies, and ultimately help us to create value back in the communities that we both serve.
HLM: Is this JOC in response to healthcare consolidation in Northern California?
Eller: This is more about how do we strengthen and secure healthcare access in this region that is predominantly rural. It is sometimes quite difficult to recruit a single specialist into these communities but by having a little bit of scale we are able to work together to recruit physicians, build care networks and secure the safety net that is so important for these rural communities.
HLM: Is the regulatory bar lower with a JOC than with an outright merger?
Eller: No one has told me that. The regulatory screens are going to be in front of us. Our narrative is going to be about how we can improve care for these communities and how we can transition from fee for service to value, but the screens are still going to be there.
HLM: Will your role change under this JOC?
Eller: Our roles as leaders absolutely will change. But if you are doing it from the perspective of leadership, you do what is right for the organizations you've been asked to lead and the communities you represent. It makes it a lot easier. You are stepping out but you're called to do that in leadership from time to time.
(Eller will remain president of the Northern California Region for Adventist, and he will oversee hospitals and clinics that are not part of the JOC. In addition, Eller will still be active with those hospitals in the JOC, as board chair of Adventist Health Ukiah Valley, Adventist Health Feather River, Adventist Health Howard Memorial and board secretary of Adventist Health St. Helena/Adventist Health Vallejo and Adventist Health Clear Lake.)
North Cypress Medical Center's latest appeal is rejected and the hospital must obey a trial court's order that it provide details on its negotiated rates with payers as part of a civil suit.
The Texas Supreme Court has ruled that a hospital in Cypress, Texas, must disclose its negotiated reimbursement rates with public and commercial health plans as part of the discovery process in a suit filed by an uninsured former patient.
In a writ of mandamus appeal, North Cypress Medical Center had asked the high court to strike down a trial court's ruling that the hospital disclose all contracts for reduced rates with payers, including Aetna, United Healthcare, Blue Cross Blue Shield, Medicaid and Medicare.
North Cypress had argued that the negotiated rates were irrelevant in determining if the charges to an uninsured patient were reasonable, and that the trial court had abused its discretion.
"We disagree," Justice Debra H. Lehrmann wrote for the majority in the 6-3 ruling.
"The reimbursement rates sought, taken together, reflect the amounts the hospital is willing to accept from the vast majority of its patients as payment in full for such services. While not dispositive, such amounts are at least relevant to what constitutes a reasonable charge," Lehrmann wrote.
The background
The case centers on a lawsuit filed against North Cypress by Crystal Roberts, an uninsured woman who was injured in a car wreck in June 2015.
Roberts was taken by ambulance to North Cypress's emergency department, where she spent three hours undergoing X-rays, a CT scan, and lab tests. She was charged $11,037.35 for the care and the hospital applied a hospital lien for the amount, based on the understanding that the other driver was at fault in the crash, and that Roberts would be compensated.
The at-fault driver's insurance company offered to settle for $17,380, of which $9,404 was attributed for medical expense. Roberts tried to negotiate the bill to $3,500. North Cypress countered at $8,278.31. Roberts countered at $6,269.33. North Cypress rejected the offer and Roberts filed suit, claiming the charges were unreasonable and that the lien was invalid.
As part of the discovery process, the trial court granted Roberts' attorney's request for all contracts that North Cypress had negotiated with commercial and public payers, along with annual cost reports to Medicare, and Medicare and Medicaid reimbursement rates for the ER services that Roberts received.
The trial court and an appeals court rejected North Cypress's argument that it would "suffer irreparable harm" from the disclosure of "confidential and proprietary" negotiated insurance contracts. North Cypress appealed the ruling to the Texas Supreme Court.
Chargemaster 'arbitrary, unreliable'
In her ruling, Lehrmann wrote that a review of the contracts with payers was necessary because the "increasingly arbitrary nature of chargemaster prices makes it an unreliable source when determining if hospital pricing is reasonable."
"Because of the way chargemaster pricing has evolved, the charges themselves are not dispositive of what is reasonable, irrespective of whether the patient being charged has insurance," Lehrmann wrote.
"Yet hospitals have incentive to continue raising chargemaster prices because of the positive correlation between those prices and hospital revenue."
While acknowledging that "government-payer reimbursement rates are not necessarily a perfect comparator in evaluating the reasonableness of a provider's charges," Lehrmann wrote that "the fact that explanations exist for disparate reimbursement rates does not render them wholly immaterial."
"Considered together, reimbursements from insurers and government payers comprise the bulk of a hospital's income for services rendered. It defies logic to conclude that those payments have nothing to do with the reasonableness of charges to the small number of patients who pay directly," she wrote.
Lehrmann also rejected North Cypress's concerns about confidentiality. "Nothing in the record indicates that the trial court is unwilling to issue a protective order if North Cypress requests and demonstrates entitlement," she wrote.
In dissent
In a biting dissent, Chief Justice Nathan L. Hecht, noted that the resources of the state's highest court were being used to weigh in on a civil dispute over $2,000 to $5,000 dollars.
Hecht said that a hospital is free to offer reduced charges to uninsured patients "but it is not required to do so."
"There is no demonstrated relationship between reimbursement rates and prices regularly charged to uninsured patients," Hecht wrote. "It is unreasonable to limit a hospital to charging an uninsured patient insurer-negotiated reimbursement rates. The patient cannot confer on the hospital benefits of a predictable volume of business or ease of payment as an insurer can."
"The benefit of an insurer's discounted rate belongs to the insurer, not the insured," he wrote. "It certainly does not belong to an uninsured patient. Nor can reimbursement rates, which vary from insurer to insurer, be used to determine reasonable charges for uninsured patients."
The joint acquisition of the nation's second-largest provider of post-acute and long-term care gives Toledo-based ProMedica immediate access to fast-growing home health and post-acute care markets.
ProMedica Health System is acquiring bankrupt HCR ManorCare in a $3.3 billion deal that will make the 13-hospital, Toledo-based health system one of the largest in the nation by revenue.
The joint venture with real estate investment trust WellTower is being hailed as a "first-of-its-kind partnership" will give not-for-profit ProMedica immediate scale in the fast-growing home health and post-acute care markets.
Toledo-based HCR ManorCare is the nation's second-largest provider of post-acute and long-term care. The company filed for bankruptcy protection in March with $7.1 billion in debts, as it grapples with declining Medicaid and Medicare reimbursements. Its real estate assets are currently held by its landlord, Quality Care Properties.
The acquisition creates a $7 billion healthcare network with 70,000 employees in 30 states, making ProMedica the 15th largest health system in the nation, as measured by annual revenues.
"We want to take down the wall between traditional hospital and post-acute care services in an effort to enhance the health and well-being of our aging population," ProMedica President and CEO Randy Oostra said in a media release.
Oostra noted that the fastest growing demographic are people in their 70s and 80s, but that the senior care environment is fragmented, costly and inefficient.
Nearly eight million patients are using post-acute care services, he said, presenting a significant opportunity to coordinate those services with healthcare systems to improve quality and reduce the overall cost of care.
"The lines are blurring between where healthcare begins and stops. This acquisition provides us the platform to think differently about health and aging," Oostra said.
HCR ManorCare has more than 50,000 employees providing services in 450 assisted living facilities, skilled nursing and rehabilitation centers, memory care communities, outpatient rehabilitation clinics, and hospice and home health agencies operating under the names of Heartland, ManorCare Health Services and Arden Courts.
Under the joint venture, ProMedica will invest as much as $400 million of growth and upgrade capital over the next five years.
"This is an exciting opportunity for Welltower and singularly validates our strategy of partnering with major health systems to drive health care delivery to lower cost settings while improving health outcomes," said Welltower CEO Tom DeRosa.
"This acquisition will enable ProMedica to expand their service offering beyond acute care hospitals to include home health, post-acute care and residential memory care," DeRosa said.
With the buyout, Tenet has increased its ownership in USPI from 80% to 95%. Baylor University Medical Center continues to have a 5% ownership interest in USPI.
Tenet Healthcare Corp. has purchased the 15% ownership interest in United Surgical Partners International from the private equity firm Welsh, Carson, Anderson & Stowe for $630 million, the Dallas-based hospital chain announced Wednesday.
With the buyout, Tenet has increased its ownership in USPI from 80% to 95%, effective immediately. Baylor University Medical Center, a subsidiary of Baylor Scott and White Health, continues to have a 5% ownership interest in USPI.
The buyout was completed on an accelerated timeline from the previously disclosed expected completion date of July 2019. Tenet said it has satisfied all of its remaining obligations to WCAS.
"Accelerating our buy-up of the company is consistent with our efforts to move quickly to prioritize opportunities that will propel our future growth and deliver value to shareholders." Tenet CEO and Executive Chairman Ron Rittenmeyer said in a media release.
Addison, TX-based USPI owns more than 285 short-stay facilities serving more than 9,000 physicians and more than 2.8 million patients each year. USPI has joint-venture partnerships with more than 4,000 physicians and over 50 health systems nationwide, and employs 17,000 people.
D. Scott Mackesy, managing partner of WCAS, said the private equity firm enjoyed a two decades long relationship with USPI and leaves with "tremendous respect for the company – especially its people and track record of consistent execution."
"We have enjoyed working with both USPI and Tenet on the growth and evolution of such a strong business, and we believe the company is well positioned to deliver continued success in the future," Mackesy said.
A RAND study found the VA health system performed as well or significantly better than non-VA hospitals on key measures for inpatient and outpatient safety and care effectiveness.
Despite its many, well-publicized problems, the VA delivers as good or better healthcare than non-VA systems on most measures of inpatient and outpatient care quality, albeit with wide variations across individual VA hospitals, a RAND Corporation study says.
Researchers examined common healthcare quality measures and found that VA hospitals generally provided better quality care than non-VA hospitals and the VA's outpatient services were better quality when compared to commercial HMOs, Medicaid HMOs and Medicare HMOs.
"Consistent with previous studies, our analysis found that the VA healthcare system generally provides care that is higher in quality than what is offered elsewhere in communities across the nation," said study lead author Rebecca Anhang Price, a senior policy researcher at RAND.
The study found wide variation in the quality of care provided in VA hospitals, but the variation is smaller than what researchers observed among non-VA hospitals.
For each of the VA's 135 hospitals, RAND identified three non-VA hospitals that had similar characteristics, such as geographic location. The performance of VA hospitals was compared to similar non-VA hospitals, as well as health systems overall.
The information analyzed includes the Healthcare Effectiveness Data and Information Set, and the Survey of Healthcare Experiences of Veterans.
The study found that:
VA hospitals performed the same or better than non-VA hospitals on all six measures of inpatient safety, all three measures of inpatient mortality and 12 measures of the effectiveness of inpatient care.
VA hospitals performed worse on three readmission measures and two effectiveness measures.
VA inpatient performance was lower on the patient experience measure for pain management, while performance of VA hospitals was higher on patient experiences for management of care transitions.
VA hospitals outperformed commercial HMOs and Medicaid HMOs for all 16 measures of the effectiveness of outpatient care. The VA outperformed Medicare HMOs on 14 of the 16 measures of effectiveness.
The smallest difference between the VA and commercial HMOs was in the rate of antidepressant medication management during the acute phase. The largest difference was in the rate of eye examinations for patients with diabetes.
The smallest difference between the VA and Medicaid HMOs was in the rate of ongoing beta-blocker treatment after an acute heart attack. The largest difference was in the rate of eye examinations for patients with diabetes.
The variation between individual VA facilities was large on some of the quality measures. For example, there was a 50 percentage point difference in performance between the lowest and highest performing VA facilities during 2014 on the rate of beta blocker treatment for at least six months after discharge for an acute heart attack.
RAND said some of the variation could be attributed to a sicker, older patient demographic at some VA hospitals. However, they said the findings show the VA needs targeted quality improvement efforts to ensure that veterans receive uniformly high-quality care.
The Veterans Health Administration, which operates the nation’s largest integrated health system, has been the subject of ongoing public scrutiny and criticism for a series of scandals involving care backlogs, mismanagement, and uneven leadership at the top.
The RAND study relies upon data and surveys complied in 2013 and 2014, when the VA was embroiled in a scandal over a care backlog and cover up at several of its hospitals across the nation.
Last month, the Trump administration fired VA Secretary David Shulkin, MD, an Obama administration holdover, amid allegations of ethical lapses, and a move by conservatives in Congress to press for more privatization of the VA.
This morning, Rear Adm. Ronny Jackson, MD, President Trump's personal physician and the administration's nominee to replace Shulkin, withdrew his nomination after more than 20 former colleagues accused him of drunkenness on the job, careless dispensing of prescription drugs, including opiates, and creating a toxic work environment.
The nationwide value-based initiative will link hospital compensation with quality improvements in three key areas: patient experience, patient safety, and patient outcomes.
Humana, Inc. has launched a value-based Hospital Incentive Program that will pay general acute care hospitals more money for delivering on key quality and efficiency metrics.
The nationwide program is designed to encourage more integrated care, reduce duplicative services, readmissions, and complication rates in acute care inpatient settings.
HIP it will base compensation on quality improvements in three key areas: patient experience, patient safety, and patient outcomes. The program is voluntary and open to hospitals with an active commercial contract with Humana.
Metrics used to gauge the improvements will include healthcare-associated infection rates, care coordination, and palliative care, and will incorporate two care certification programs developed by The Joint Commission.
Within the three core areas of focus are seven measures individually weighted totaling 100% of the eligible incentive, recognizing the hospital's continuous improvement efforts via earned annual rate increases.
"This program expands Humana’s reach in value-based care as we broaden our efforts to provide a better experience for our members and help them achieve their best health," said Caraline Coats, vice president of Humana's Provider Development Center of Excellence.
Humana said that HIP is the latest addition to its commitment to value-based care, which emphasizes:
Personal time with clinicians and personalized care;
Access to proactive health screenings and preventive services;
Improved care for the chronically ill;
Using technologies, such as data analytics, that connect physicians and coordinate care;
Reimbursement to physicians linked to the patient outcomes rather than fee-for-service.
By the end of 2017, Humana said it had 1.9 million of its 2.9 million (66%) Medicare Advantage enrollees and 140,000 commercial plan enrollees accessing value-based care with more than 52,000 physicians in 43 states and Puerto Rico.
"Many hospitals understand the importance of and embrace value-based care in the inpatient setting, as it creates a more holistic and collaborative approach to care that physicians, patients, and payers alike truly value. Pairing that focus with the opportunity for aligned incentives creates a win-win for the hospitals, patients, and Humana," Humana said.
The high court upholds the constitutionality of a patent appeals process that the health insurance industry says will help to negate stall tactics used by brand name drug makers.
A U.S. Supreme Court ruling this week that upholds the constitutionality of a patent review process is being hailed as a win for consumers by the health insurance industry.
America’s Health Insurance Plans says the high court's 7-2 decision in Oil States v. Greene’s Energy Group upheld the inter partes review process as a way to prevent drug manufacturers from inappropriately prolonging patent monopolies past the time intended by Congress.
“Patients had a lot at stake in the Supreme Court’s determination. Congress designed inter partes review as a quick and cost-effective way to weed out weak patents – including patents for branded prescription drugs," AHIP said in prepared remarks.
Nicole S. Longo, senior manager of public affairs at Pharmaceutical Research and Manufacturers of America (PhRMA), said the ruling "was narrowly tailored, finding only that IPR is constitutional, not that it is efficient or fair."
Longo pointed to another Supreme Court ruling this week, SAS Institute v Iancu, that raises concerns about the patent review process.
"SAS Institute v Iancu makes clear there are problems with the IPR process that need to be addressed. This decision points toward reforms to IPR, something stakeholders have raised time and again to the Patent and Trademark Office and members of Congress," she said.
"Given this narrow decision, we call on Congress and the PTO to take steps to address the Supreme Court’s ruling in SAS Institutes v Iancu and concerns raised by stakeholders, and we stand ready to work with policymakers to make the IPR process more fair for all."
According to Reuters, Congress created the reviews in 2011 to handle the perceived high number of flimsy patents issued by the patent office in prior years. Since then, the agency’s Patent Trial and Appeal Board has canceled all or part of a patent in about 80% of its final decisions.
The health insurance lobby said that the ruling ensures that millions of people will have faster access to affordable medicine.
"By upholding a faster and less costly patent review process, the Supreme Court has protected an important pathway that allows generic prescription drugs to get to patients faster. Generic drugs increase competition and choice in the market, which helps to lower drug prices," AHIP said.
Longo said PhRMA has raised significant concerns with the IPR process because it requires drug makers to defend patents in multiple venues under different standards and with procedural rules that are less fair to patent owners than a federal court.
"This creates significant business uncertainty for biopharmaceutical companies that rely on predictable intellectual property protections to justify long-term investments needed to discover new treatments and cures," Longo said.
An Express Scripts survey finds a strong majority of people with chronic diseases want some sort of reward for staying on their medications.
Apparently, the prospect of improved health is not motivation enough to keep some people on their medications regimens.
A new survey from Express Scripts finds that strong majorities of people with chronic diseases want a reward for taking their medications.
Two-thirds of the 800 chronically ill adults polled say they are more likely to take better care of their health and adhere to their medications when rewarded for their efforts. Those numbers vaulted to 88% for adults ages 18 - 34.
By some estimates, medication noncompliance costs about $300 billion each year in the form of increased downriver care costs, such as complications that require emergency department visits.
Given the potential savings and improved healthcare outcomes, and the popularity of rewards programs with patients, the idea is being vigorously pursued by Express Scripts, says Kyle Amelung, a senior clinical consultant with the company.
"We have seen this in healthcare in a number of different areas, particularly in wellness programs that incentivize people to stop smoking or exercise or be mindful of their health," Amelung says.
"We are taking it a step further," he says. "We want to reward people with chronic conditions for becoming more health literate. We want to reward them for tracking biometrics like blood pressure and blood glucose, and we want to reward them for sticking on their medication."
Personal financial rewards were cited as the overwhelming preference by 82% of respondents while charitable contributions were chosen by 3%.
"Behavioral science has shown us that incentives are the one thing that can increase this behavior," Amelung says. "Even if you showcase the possible negative outcomes that can occur from non-adherence, most people just aren't incentivized to take care of their health for one reason or another."
While he didn't provide specific numbers, Amelung says the rewards program, which is subsidized by fees charged to providers, is generating about $2 in savings for every $1 spent, a ratio they hope to improve upon.
Amelung says Express Scripts hasn't found a one-size-fits-all "silver bullet" approach to medication adherence, but a rewards program they've launched through its Mango Health app shows potential.
"About 80% of U.S. adults use a smart phone, so if we can use that to encouraged improved clinical behavior, and that is a win-win for everybody," Amelung says.
The app asks patients to report daily on key metrics, such as blood pressure or blood glucose, and in exchange they build up rewards points. Each week, there's a raffle with gift cards at retailers such as Starbucks, Amazon, and Whole Foods.
"This encourages people to go in there every day, state what their biometrics are, how adherent they are to their medications, and they can win these gift cards that are applicable to their daily lives," Amelung says.
While 60% of the patients who access Mango Health are aged 50 or older, Amelung says the app – and the rewards -- are particularly popular with younger adults.
"This younger generation has been on cell phones pretty much their entire lives and they understand the rewards that can come through them and how the technology can help them live a healthier lifestyle," he says.
The faith-based health system says the new names for its hospitals and other medical facilities "reflects our unity and organizational commitment to providing exceptional healthcare."
SSM Health in Oklahoma this week unveiled new, more uniformed signage at all of its healthcare facilities that more prominently displays the SSM Health affiliation.
"Our new name reflects our unity and organizational commitment to providing exceptional healthcare services, improving the lives of our patients and improving the health of our communities," the Oklahoma City-based, Catholic health system said in a media release.
Beginning this week, the hospitals, medical group and other facilities in Oklahoma will be known as:
SSM Health St. Anthony Hospital - Oklahoma City
SSM Health Bone & Joint Hospital at St. Anthony
SSM Health St. Anthony South
SSM Health St. Anthony Healthplex
SSM Health St. Anthony Hospital - Shawnee
SSM Health Medical Group
"For nearly 120 years, we have had the honor and privilege of serving patients in central Oklahoma and beyond," said Joe Hodges, regional president, SSM Health in Oklahoma.
"Today we are renewing our vow to this community and everyone we serve," he said. "While our look may be changing, we remain a Catholic health system dedicated to our Mission. Our commitment to provide an exceptional experience to every patient remains the same."
SSM Health said the signage transition will take a few months, but will have no effect on care delivery.
"Patients will see the same providers they have come to know and trust in the same locations they are familiar with," the health system said.
