A federal appeals court has temporarily blocked Phoebe Putney Health System Inc.'s proposed $195 million acquisition of rival HCA's Palmyra Park Hospital, in Albany, GA.
The U.S. Court of Appeals for the 11th Circuit in Atlanta issued an injunction that was sought by the Federal Trade Commission in its antitrust complaint against the two hospital systems. The appeals court order late Wednesday afternoon was handed down minutes before the two hospital systems were preparing to finalize the deal. The appeals court agreed to an expedited hearing for the case.
"We are gratified by the 11th Circuit's order and are pleased that Phoebe Putney will not be permitted to complete its acquisition of Palmyra Park Hospital while the Eleventh Circuit considers our appeal," FTC Bureau of Competition Director Richard Feinstein said in a media statement. "We intend to show that the proposed transaction – which will lead to a monopoly in the Albany, Georgia area – will result in higher health care costs for local patients and should not be immune from federal antitrust scrutiny."
In its complaint, the FTC alleged that PPHS constructed an elaborate scheme that used the Hospital Authority of Albany-Dougherty County, GA as a "straw man" to "cloak private, anticompetitive activity in governmental guise in the hopes that it would exempt the acquisition from federal antitrust law."
"There is abundant evidence, and the defendants do not dispute, that Phoebe Putney's acquisition of Palmyra, its only rival hospital in the Albany, Georgia area, will create a monopoly," Feinstein said earlier this year. "This will result in dramatically higher healthcare costs for citizens of that community. The deal was specifically structured to avoid antitrust enforcement. We will immediately appeal the court's decision that the acquisition is immune from antitrust scrutiny."
However, U.S. District Judge W. Louis Sands in late June ruled that the PPHS was immune from federal antitrust liability under the FTC Act and the Clayton Act.
Earlier this year the FTC voted 5-0 to issue the administrative complaint and authorize staff to file a complaint for preliminary injunction in federal district court. The evidentiary hearing is scheduled before an administrative law judge at the FTC on Sept. 19.
A statement issued by Phoebe Putney reads in part, "While the Hospital Authority has been prepared to sign all necessary documents for the purchase by the close of this week, we are not surprised by the 11th Circuit action at this time. We are, however, pleased that the 11th Circuit has also agreed to expedite the appeal process. "
The nation's hospitals treated more than 127 million in-patients, employed more than 5.4 million people, and generated more than $2.2 trillion in economic activity in 2009, an American Hospital Association report says.
The report – Economic Contribution of Hospitals Often Overlooked – notes that hospitals provided outpatient care for 515 million people, performed 27 million surgeries, and delivered 4 million babies in 2009, and that the overall healthcare sector created an average of 24,000 new jobs a month that year, despite the recession.
"Every year, hospitals provide vital healthcare services like these to millions of people in thousands of communities. However, the importance of hospitals to their communities extends far beyond healthcare," AHA said in the report. "The healthcare sector is an economic mainstay, providing stability and even growth during times of recession."
Hospitals support one of nine jobs in the nation, and the overall healthcare sector is one of the largest sources of private-sector jobs in the nation, spending about $342 billion on goods and services from other businesses. "With these 'ripple effects' included, each hospital job supports about two more jobs and every dollar spent by a hospital supports roughly $2.30 of additional business activity," the AHA report said.
The report includes a state-by-state breakdown of economic activity generated by hospitals.
Wheaton Community Hospital in west central Minnesota has joined Sanford Health, the two health systems said Tuesday.
Financial terms of the acquisition were not disclosed, but the 15-bed, critical access hospital will now be called Sanford Wheaton Medical Center.
Sanford Health Network Vice President Jesse Tischer said the acquisition – which had been under discussion for "several years" -- furthers the not-for-profit health system's goal that patients are no further than 45 minutes away from access to care.
"Our belief is that healthcare is a local asset and we look forward to continuing the strong hospital-community relationship in Wheaton," Tischer said in a joint media release.
All Wheaton Community Hospital employees will become Sanford employees and no changes are expected in services, although additional services might be offered.
"Sanford Health's affiliation with Wheaton will provide the stability, financial backing and resources to assure the long-term viability of quality healthcare in Wheaton," JoAnn Foltz, CEO of the new Sanford Wheaton Medical Center, said in the release. "Sanford shares our dedication to the work of healing and we are excited about the opportunity to continue quality care."
Wheaton, population 1,600, is located 93 miles south of Fargo-Moorhead. Sanford Wheaton Medical Center employs 95 people, serving Traverse County and neighboring towns.
Sanford Health, an integrated health system headquartered in Fargo, ND and Sioux Falls, SD, is the largest, rural, not-for-profit healthcare system in the nation with a presence in 111 communities in eight states.
Sanford Health includes 32 hospitals, 111 clinic locations and more than 900 physicians in 70 specialty areas of medicine. With more than 20,000 employees, Sanford Health is the largest employer in North and South Dakota.
Las Vegas physician Rakesh Nathu will pay the federal government $5.7 million plus interest to settle allegations that he submitted false claims to federal healthcare plans for radiation oncology services, including intensity- modulated radiation therapy, the Justice Department said.
“This case is about stealing millions of dollars from taxpayers,” Daniel R. Levinson, Inspector General of the Department of Health and Human Services, said in a DOJ media release. “And we’ll continue to fight this kind of unconscionable abuse of our Medicare program.”
The government alleged that Nathu submitted improper claims to Medicare, TRICARE and the Federal Employees Health Benefits Plan from 2007 through 2009. Federal investigators alleged that Nathu double billed for procedures affiliated with radiation treatment plans, billed for high reimbursement radiation oncology services when a different, less expensive service should have been billed, and billed for medically unnecessary radiation oncology services.
“Patients, employees, and others who suspect billing fraud on the part of doctors should not hesitate to report such fraud to federal authorities,” said U.S. Attorney for the District of Nevada Daniel G. Bogden. “Persons who file dishonest claims with the government in order to enrich themselves will be investigated and aggressively pursued by the Department of Justice.”
Three Cleveland-area hospitals have formed a non-profit collaborative that they say lets them pool resources while maintaining autonomy in their own communities.
EMH Healthcare, Parma Community General Hospital, and Southwest General Health System have announced jointly that they will share equal ownership of the newly created Community Health Collaborative, which they said is expected to improve the hospitals' buying power, and other efficiencies, and create a "base camp" for collaborative ventures among the three systems.
"We can no longer operate in isolation and expect to retain the necessary strength required to meet our mission to our community," Don Sheldon, MD, president/CEO of Elyria, OH-based EMH Healthcare said in the joint announcement. "This collaborative allows us to remain autonomous, remain responsive to our community, and to achieve the critical mass necessary for future success."
Frank Lordeman, a former COO at Cleveland Clinic, was named president/CEO of CHC, which has already begun developing information technology, supply chain management, and physician integration projects.
"This collaborative is not a replacement for existing relationships, and does not preclude the formation of new ones," Terry Deis, president/CEO of Parma Community Hospital said in the announcement. "It does, however, give us new and exciting opportunities to work together as healthcare systems which are similarly sized, similarly positioned and which face similar challenges."
Tom Selden, president/CEO of Middleburg Heights-based Southwest General, said the collaborative will work with physicians in the region to strengthen their practices. "We know the strength of a hospital is closely tied to the strength of the physicians in its community. That is why we made sure our new organization was structured to not only help support these practitioners, but also to closely integrate them with our new collaborative," Selden said.
The three hospitals did not provide details about the budget, expenses, or staffing for CHC but Sheldon said the object of the collaborative is to save money, not spend it, and that a small core CHC staff will operate between the three hospitals and work with existing staff.
Online job listings for healthcare practitioners, technical workers, and healthcare support staff fell in June, the third straight month of declines, according to The Conference Board Help Wanted Onlinereport.
Labor demand for healthcare practitioners and technical occupations fell by 16,500 listings in June to 548,700. Occupations that saw declines included physical therapists, general internists, and family and general practitioners. Healthcare support positions fell by 4,800 new listings to 114,500 in June, The Conference Board reports.
The board's Help Wanted Online Data Series tracks more than 1,000 online job boards across the United States.
Even with June's decline in online job listings, there were nearly three jobs for every healthcare technician and practitioner job seeker, with an average salary of $34.27 an hour. Conversely, there were 1.9 healthcare support workers for every online job listing, with pay averaging $12.94 an hour, The Conference Board reports.
In the overall economy, on line job listings fell by 99,700 listings in June, to 4.4 million, partially offsetting the overall increase of 148,800 new listings in May. The Supply/Demand rate stands at 3.11, which means there were just over three unemployed for every online advertised vacancy in May, the latest monthly data available for unemployment.
"The national trend in labor demand, while still positive, has definitely slowed in the last few months as gains in one month are partially offset by a pullback in advertised vacancies in the next," June Shelp, Vice President at The Conference Board, said in a media release.
"The pattern over the last few months is beginning to look like the very slow growth in labor demand in 2010. After the large increase of 526,000 in January, average monthly job growth over the next five months has been choppy and has averaged about 33,000/month," she said. "The current number of advertised vacancies is close to the monthly 4.5 million posted just prior to the recession. However, in May there were just over three unemployed workers seeking jobs for each vacancy—double the number of 1.5 unemployed for every advertised vacancy just prior to the recession."
Online job listings in healthcare continue to yo-yo from month to month. In May, demand for healthcare practitioners and technical occupations fell by 3,400 listings to 565,100. The drop was led by declines in advertised vacancies for speech-language pathologists, occupational therapists, and physical therapists. Healthcare support positions grew by 4,100 new listings to 133,200, even though there were declines in openings for physical and occupational therapist assistants.
In April, labor demand for healthcare practitioners and technical occupations fell by 28,600 listings to 568,500, while support positions fell by 11,400 new listings to 129,100 for the month. In March, healthcare practitioners and technical occupations grew by 3,700, and healthcare support positions posted 4,400 new listings, with the primary demand coming for physical therapist assistants, home health aides, nursing aides, and medical assistants.
In January, The Conference Board reported 78,500 new listings for healthcare practitioners and technicians, and 16,600 new ads for healthcare support jobs, as healthcare jobs led a strong first month of 2011. However, February saw online job ads for practitioners and technical occupations drop by 4,300 owing largely to decreases in advertised vacancies for registered nurses and occupational and physical therapists, while support positions posted a decrease of 4,200.
The Federal Trade Commission will appeal a federal judge's ruling this week to deny a preliminary injunction against Phoebe Putney Health System Inc.'s proposed $195 million acquisition of rival HCA's Palmyra Park Hospital, in Albany, GA.
"There is abundant evidence – and the defendants do not dispute – that Phoebe Putney's acquisition of Palmyra, its only rival hospital in the Albany, Georgia area, will create a monopoly," FTC Bureau of Competition Director Richard Feinstein said in a media release. "This will result in dramatically higher healthcare costs for citizens of that community. The deal was specifically structured to avoid antitrust enforcement. We will immediately appeal the court's decision that the acquisition is immune from antitrust scrutiny."
U.S. District Judge W. Louis Sands on Monday ruled that the PPHS was immune from federal antitrust liability under the FTC Act and the Clayton Act.
PPHS issued a statement lauding the ruling: "In a well reasoned and well documented order, Federal Judge Louis Sands has affirmed our position. He has ruled that the FTC does not have jurisdiction in this case and that the Hospital Authority of Albany and Dougherty County is immune from federal anti-trust liability. His order dismisses the case and dissolves the temporary injunction that prevented us and HCA from moving forward with our consolidation plans."
The Georgia Attorney General's Office had joined the FTC in the complaint, but will not appeal Sands' ruling. "We respect the ruling of the district court, and do not intend to appeal," Attorney General Sam Olens said in a media release. "My office filed a joint complaint with the Federal Trade Commission after the FTC voted 5-0 to seek an injunction and provided my office with robust evidence that the merger will reduce competition and raise healthcare prices in Dougherty County. Through the district court litigation, we were able to highlight our concerns with the acquisition process."
In their complaint, the FTC and the Georgia AG allege that PPHS constructed an elaborate scheme that used the Hospital Authority of Albany-Dougherty County, GA as a "straw man" to "cloak private, anticompetitive activity in governmental guise in the hopes that it would exempt the acquisition from federal antitrust law."
The Georgia AG and the FTC wanted Sands to delay the acquisition until the conclusion of the FTC's administrative proceeding and any subsequent appeals.
Phoebe, the Authority, and HCA argued that the transaction is exempt from federal antitrust liability under the "state action" doctrine – which provides an exception for anticompetitive conduct if it is an act of government. In this case, the complaint alleged, the transaction was motivated and planned exclusively by Phoebe, acting in its own private interests.
Besides Phoebe and Palmyra, there is one other independently owned hospital within the six-county area around Albany. The merger would give Phoebe more than 85% of the market. By eliminating the direct and substantial competition between Phoebe and Palmyra, the transaction would give Phoebe the ability and incentive to increase reimbursement rates charged to commercial health plans and their members, leading to higher healthcare costs, the complaint said.
Phoebe's board approved a recommendation from its management that it make a formal offer to HCA for Palmyra on Oct. 7, 2010. However, instead of directly approaching HCA with its offer, Phoebe developed a plan under which the Authority would acquire Palmyra and then lease it to a non-profit corporation controlled by Phoebe.
The FTC contends this structure was arranged by Phoebe to avoid federal antitrust scrutiny. On Nov. 16, Phoebe made a formal offer to HCA for Palmyra, an offer that was not reviewed by the Authority. On Dec. 2, 2010, Phoebe's board approved the final terms of the deal, but the transaction still had not been presented to the Authority. The deal was presented to the Authority for the first time at a special meeting held on Dec. 21, 2010. At that meeting, the Authority approved the deal that would give Phoebe control over Palmyra immediately after the deal was closed, the complaint said.
The FTC voted 5-0 to issue the administrative complaint and authorize staff to file a complaint for preliminary injunction in federal district court. The evidentiary hearing is scheduled before an administrative law judge at the FTC on Sept. 19.
The American Hospital Association-led Coalition to Protect America's Health Care on Monday launched a national advertising campaign to "educate" Congress about the impact of further federal funding cuts to hospitals.
The 30-second ads feature quick shots of kids in crutches, kids and seniors in wheelchairs, an abandoned teddy bear, and white-smocked healthcare professionals giving patients reassuring pats on the shoulder. With The Ink Spots You Always Hurt the One You Love playing in the background, a voiceover raises concerns that the more than $100 billion federal funding cuts proposed by Congress will hurt patient care -- particularly for the nation' most vulnerable people – children, the elderly, and the disabled.
"Cutting Medicare and Medicaid payments to hospitals could overload emergency rooms, shut down trauma units, and reduce patient access to the latest treatments. Tell Congress to protect hospital care," the voiceover warns, as a toll-free number for the coalition flashes on the screen.
AHA President/CEO Rich Umbdenstock says the proposed cuts were the wrong medicine at the wrong time. "In communities across this country, people turn to their hospitals for care and comfort in times of need. This is even more true as America ages and chronic illness is on the rise, that's why further cuts to hospital funding are misguided and would jeopardize the care hospitals provide to the communities they serve," Umbdenstock said in a media release.
The Coalition, created in 2000, includes the AHA, the Federation of American Hospitals, the Association of American Medical Colleges, the National Association of Children's Hospitals, the National Association of Public Hospital and Health Systems, and the Catholic Health Association.
"It is clear that our nation needs to reduce its debt and deficit spending but harming seniors and poor persons is neither a smart nor compassionate way to balance the budget," Sr. Carol Keehan, DC president/CEO of the CHA, said in the coalition media release. "Protecting Medicare and Medicaid is crucial for vulnerable people, as well as the hospitals and long-term care facilities that depend on fair federal payments to serve their communities. Catholic-sponsored health care providers stand ready to work with Congress and the Administration to determine the best way to reduce spending while also protecting all those who need Medicare and Medicaid."
The multi-week ad campaign will feature radio, television, and print spots.
While the majority (86 percent) of states responding to a federal audit claim to meet the legal requirements to collect on claims for certain physician-administered drugs, the results of the audit are decidedly mixed.
The audit, conducted by the Office of Inspector General, provides a mixed picture of states' efforts to collect Medicaid drug rebates from pharmaceutical companies. The Deficit Reduction Act (DRA) requires states to collect rebates on all claims for certain physician-administered drugs for Federal matching funds to be available.
Most states appear to have made significant improvements in the collection process over the last decade, but the quality of the reporting was so poor in some cases, that OIG said it "could not determine the financial impact of collecting rebates for physician-administered drugs because of incomplete and potentially inaccurate data provided by States."
The OIG audit tried to determine how many states were meeting federal requirements for the collection of physician-administered drugs in the first six months of June 2009; the dollar amount of what the states requested and what they collected from drug makers in those six months; and what issues prevented states from collecting rebates.
The audit found that 36 of 49 states that responded to OIG's query reported collecting rebates on single-source physician-administered drugs, and 20 multiple-source, physician-administered drugs with the highest dollar value. An additional 12 states reported collecting rebates but were not in full compliance with federal requirements.
OIG last conducted an audit of states' efforts to collect Medicaid drug rebates in 2001, and found at that time that only 17 states had done so, and that most states reported at the time that they had no way of determining which drugmaker was responsible for which rebates.
That prompted the federal government in 2005 to require states to collect the rebates or risk losing matching federal funds. To help, the federal government created national drug codes that identified a drug's manufacturer.
Most nonprofit hospitals don't readily reveal the salaries and compensation packages of their top executives to public scrutiny. That information is not on their Websites, and it's usually not in those glossy – and often irrelevant – community benefit reports that are long on portrait photographs, architectural designs, and colored pie charts, but short on detail.
They're not hiding the compensation, of course. They can't. That information is on the Form 990 filings that nonprofits submit to the Internal Revenue Service, which are easily accessible on GuideStar. But there is always a significant lag time in those filings, and much of the public may not be aware of how to access that data anyway.
Last week, for example, Rhode Island nonprofit Care New England declined news media requests to detail the compensation package for its new CEO Dennis Keefe. CNE spokeswoman May Kernan told a Providence, RI television station and later HealthLeaders Media that it was the three-hospital health system's "policy" to provide executive compensation information through the 990 reports.
I respectfully suggest that the policy be changed.
These are rough times for a lot of people. Unemployment hovers at nearly 10% for many sectors of the economy outside of healthcare and even in hospitals, there appear to be almost daily notices of layoffs. For workers everywhere, salaries are stagnant and healthcare inflation eats away at any marginal salary gains. It is not unreasonable to expect that nonprofit hospitals that receive significant tax breaks would be willing to share the compensation information on their top executives on a real-time basis.
Here's a more practical reason: The issue of executive compensation is not going away, and it's always better to ride the wave than risk the undertow. Executive compensation and the widening prosperity gap between the few at the top and everybody else are hot topics. So hot that the Los Angeles Times won a Pulitzer Prize in April for its coverage of outrageous salaries paid to city officials in Bell, CA.
That investigation broadened and led to the finding that three California hospital district CEOs were among the highest paid public workers in that state. Both stories got a lot of play, and assuredly did not go unnoticed by just about every assignment editor at every news outlet in the nation.
This is not to suggest that hospital executives aren't worth the compensation they're getting. Some probably aren't, but most are, and more than a few are probably underpaid. But it's hard to say either way when we don't have the information readily at hand. If you're a six-figure CEO, and you feel that you earn your keep, why not explain it to the public you serve? If you're uncomfortable justifying your compensation, maybe it can't be justified.
The fact is, when the compensation is put in its proper context, a few curmudgeons will still howl and write letters to the editor. They always do. But most people will understand a reasoned and honest explanation. Health systems and hospitals are huge, complicated, labor- and capital-intensive operations that require not only highly skilled professional oversight for complex day-to-day operations, but visionary thinking for strategic planning.
Bottom line: It's a question of trust. It's a hard sell if you want the community, and taxpayers at large who subsidize non-profit healthcare through tax breaks, to buy into your healing mission when you're not willing to say up front what the people at the top are paid.
