Bond raters cited the COVID-19 pandemic and ongoing structural issues as key drivers for the slight downgrade.
Sutter Health's stellar credit portfolio lost a bit of its luster when two bond rating agencies downgraded the health system's long-term rating from A+ to A, each with a stable outlook.
Fitch's Investor Services and S&P Global Ratings both cited the COVID-19 pandemic and ongoing structural issues as key drivers for the downgrade.
"The rating action reflects our view of Sutter's weakened performance in 2020, largely as a result of COVID-19 but also a result of an underlying operating structure that will likely take a couple of years to fully address, with the post-pandemic environment and Sutter's broader operating environment in Northern California potentially complicating a sizable and multiyear turnaround," S&P Global Ratings credit analyst Suzie Desai said.
Fitch noted that Sutter Health's challenged extended back "even before the pandemic generated material operating losses in 2020."
"Sutter Health's softening margins in recent years revealed the challenges of operating in the complex and competitive Northern California market," Fitch said. "Fitch believes that management is evaluating significant strategies and actions to sharply reverse recent financial results, but ongoing pressures may limit Sutter's ability to sustainably recover to operating EBITDA margins much above the 7% level."
Like virtually every other health system in the United States, Sutter Health saw steep margin declines in 2020 during the pandemic owing to revenue loss from volume drops and the high expenses. However, the bond raters noted that that decline was offset by about $800 million in federal stimulus money. Sutter has also attempted to offset revenue losses by consolidating services, divesting "non-core assets" and layoffs.
"Management is also working on a longer-term forecast for business growth and rationalizing costs to support the growth. Fitch expects that ultimately Sutter Health's cash flow margins should rebound to a level of around 7%, most likely after 2021," Fitch said.
Sutter is also expected to pay a $575 million in Q3 of 2021 in two consolidated antitrust lawsuits. The health system recorded the expense in its 2019 financials.
Fitch noted that Sutter Health's "overall environmental risk" was "elevated" but manageable because of the health system's location in Northern California, an area with a history of earthquakes and wildfires.
"In our view, Sutter has demonstrated an ability to use its diversity of facilities to
execute facility plans to manage environmental challenges effectively," Fitch said.
The report examines exposure risks, testing rates, and testing positivity at a subcounty level.
New research published in Health Affairs by Stanford researchers reaffirms earlier studies showing that the COVID-19 pandemic is disproportionately affecting communities of color in California.
The report, which examined exposure risks, testing rates, and testing positivity at a subcounty level, found that California's Latinos are 8.1 times more likely to live in high-exposure-risk homes than White people (23.6% vs. 2.9%), are overrepresented in cumulative cases (3,784 vs. 1,112 per 100,000 people) and are underrepresented in COVID-19 testing (35,635 vs. 48,930 per 100,000 people).
The disparity is glaring, the report finds, after noting that Latinos represent 39% of the 40 million people living in California. Whites represent 37.5% of the population, Asians 14.4% and Blacks 5.3%. California has recorded 59,258 COVID-19 deaths through April 14—the most of any state.
"These risks and outcomes were worse for Latino people than for members of other racial/ethnic minority groups," the study found.
The findings are consistent with other studies that examine the effects of the pandemic on communities of color. In March, the Centers for Disease Control and Prevention found that counties with higher proportions of Latino, Black and Asian populations were hit harder by COVID-19's first and second waves than were counties that were predominantly White.
The Stanford study said demographic analysis of the pandemic at the subcounty level "can inform targeting of interventions and resources, including community-based testing and vaccine access measures."
"Tracking COVID-19 disparities and developing equity-focused public health programming that mitigates the effects of systemic racism can help improve health outcomes among California's populations of color," the study said. cumulative testing (35,635 versus 48,930 per 100,000 people). These risks and outcomes were worse for Latino people than for members of other racial/ethnic minority groups.
However, the savings would be limited to developed nations where access to required devices and Internet connectivity is prevalent.
A new study by Juniper Research projects that telemedicine will save the healthcare industry $21 billion in costs by 2025, up from $11 billion in 2021, and a growth rate of more than 80% in the next four years.
The report notes that there were more than 280 million teleconsultations performed in 2019. Owing to the COVID-19 pandemic, that number shot up to 348 million in 2020. Juniper projects that third party healthcare service developers will play a critical crucial in accelerating the use of emerging telemedicine services.
A potential damper on the boom, at least in the United States, could be the hefty investment needed to integrate telemedicine services and mandates for data protection under the Health Insurance Portability and Accountability Act (HIPAA).
Juniper said those restrictions "will discourage adoption amongst smaller healthcare providers."
Instead, the report recommends that healthcare regulatory bodies, such as the Centers for Medicare & Medicaid Services, "continue to deregulate telemedicine services to minimize any remaining barriers to entry for smaller healthcare providers."
"Any deregulation must ensure that patient confidentiality is not undermined," report author Adam Wears said. "Additionally, we recommend that innovative and emerging teleconsultation services are integrated into existing healthcare technologies, such as electronic health records, to maximize their benefits to healthcare providers."
Wears warned that savings would be limited to developed nations where access to required devices and Internet connectivity is prevalent. As a result, more than 80% of savings will be attributable to North America and Europe by 2025.
The legislation Lamont signed Monday allows relaxed rules enacted through his executive order to remain in place through at least June 30, 2023.
Connecticut Gov. Ned Lamont on Monday signed legislation that extends for two years "relaxed telehealth services provisions" initially mandated by executive order during the COVID-19 pandemic.
"Making it easier for people to connect with their doctors or medical advisors is a goal that we should strive to attain," Lamont said in a media release.
"Throughout the last year, patients across Connecticut have found that connecting with their medical providers through videoconference or telephone has been incredibly beneficial and practical for a wide variety of reasons, so it absolutely makes sense to allow for these services to continue."
With the onset of the pandemic in March 2020, Lamont issued Executive Order No. 7G to temporarily relax state laws regulating telehealth. The legislation Lamont signed Monday, House Bill 5596, allows the relaxed rules enacted through his executive order to remain in place through at least June 30, 2023.
The extended services:
Expand types of providers and licensed professions to provide telehealth services, such as dentists, behavioral analysists, music therapists, art therapists, physician assistance, physical therapist assistance, and occupational therapy assistants;
Permit audio-only telehealth services;
Permit licensed providers in other states to offer telehealth services to Connecticut residents as long as they have the minimum professional liability insurance coverage.
"I appreciate the state legislature for recognizing the benefits of the emergency executive order that I signed at the beginning of the pandemic, and I appreciate their bipartisan cooperation in passing this legislation so that I could sign this into law today and these relaxed telehealth rules can continue," Lamont said.
The NUHW staged the protest to expose what it said were systemic safety issues affecting patients and staff at Fountain Valley.
Investors attending Tenet Healthcare's annual shareholders meeting at Fountain Valley Regional Hospital were met by picketing workers from the for-profit hospital chain who were protesting staff shortages, poor pay, and unsafe working conditions.
The National Union of Healthcare Workers staged the protest on Thursday to expose what it said were systemic safety issues affecting patients and staff at the 400-bed, acute care hospital in Orange County, California.
Those bonuses came, the NUHW said, despite a 2020 state inspection that found "systemic infection control violations, infection control violations — including placing an adult COVID patient in a pediatric unit — that put both caregivers and patients at increased risk for contracting COVID-19."
The protesters included respiratory therapists, housekeepers, nursing assistants, medical technicians, and kitchen staff. Many of the employees work for Compass, a staffing firm subcontracted by Tenet that the protesters said pays less than Tenet and charges more for health insurance, leaving many workers without coverage during a pandemic.
"I have to travel to Tijuana just to see a doctor that I can afford," Tomasa Miguel, a housekeeper, who has cleaned COVID units at Fountain Valley, said in a NUHW media release.
"They call us healthcare heroes, but we can't afford healthcare for our families," Miguel said.
Tenet issued a statement saying "this matter is not about us."
"It's about a negotiation strictly between the NUHW and the Compass Group, which is a vendor that provides a range of food, laundry and other support services to hospitals," Tenet said. "At all times, our main concern is the safety of our staff, the integrity of our facilities and the best possible outcomes for our patients, and we remain hopeful that the NUHW and Compass will reach a positive outcome at the conclusion of their respective negotiations."
Christina Rodriguez, a respiratory therapist at Fountain Valley, said Tenet's profits "are not helping workers or patients."
"They're being made at the expense of patient care and the people who have put their health on the line to help patients during this pandemic. At the height of the surge, I would go home crying that we didn't have enough staff to help patients struggling to survive," Rodriguez said. "We don't need more executive bonuses, we need safely staffed hospitals."
Babylon will acquire Meritage's care management, claims processing, medical management, and population health programs functions and Meritage Health Plan.
Digital healthcare provider Babylon has acquired Meritage Medical Network, an independent physician network serving six counties in Northern California. Financial terms of the deal were not disclosed.
Under the agreement, Babylon will acquire Meritage's care management, claims processing, medical management, and population health programs functions and Meritage Health Plan, a subsidiary that holds a Restricted Knox Keene license.
The partners hope to couple Babylon's digital capabilities with Meritage's care cost management, a pairing that Babylon CEO Ali Parsa, MD, said "will allow for streamlined physician operations and more efficient end-to-end care delivery within Meritage's network, freeing providers up so they can focus on proactively managing patient care."
The Meritage acquisition comes on the heels of Babylon's recent investment in FirstChoice Medical Group, a Fresno-based independent physician association that serves nearly 50,000 Medicare Advantage and Medi-Cal members with a network of 180 primary care providers and 1,000 specialty providers. In March Babylon brought to California its Babylon 360 digital virtual care platform.
"In less than a year, Babylon has gone from being unknown in the U.S. to today managing the total cost of care for up to 90,000 lives," Parsa said. "That is why we are thrilled to be partnering with the incredible providers under Meritage Medical Network, as it allows us to bring the benefits of our Babylon 360 healthcare service to thousands more people across California and the U.S."
Meritage CEO Wojtek Nowak said partnering with Babylon gives the physician network "the latest healthcare technology along with new growth opportunities and significant resources we can now deploy in supporting our physicians and their patients."
Meritage serves a patients Madera, Fresno, Marin, Napa, Sonoma, and Solano counties.
The healthcare sector has shed 542,000 jobs since the start of the pandemic in February 2020.
Hospitals shed 5,800 jobs in April as disappointing U.S. job numbers in the larger economy for the month remained largely stagnant and the unemployment rate held at 6.1%, new federal data show.
The healthcare sector recorded a net loss of 4,000 jobs for the month. While ambulatory healthcare services saw an increase of 21,000 jobs, that was mostly offset by hospital job losses and 19,000 job losses in nursing homes, the Bureau of Labor Statistics reported on Friday.
The healthcare sector has shed 542,000 jobs since the start of the pandemic in February 2020. There are 15.9 million people attached to the healthcare sector workforce, BLS said.
The stagnant employment rates for April were reported in wide swaths of the larger economy. The U.S. gained only 266,000 jobs for the month, the unemployment rate held at 6.1%, and 9.8 million people were unemployed, all largely unchanged from March, BLS said.
"These measures are down considerably from their recent highs in April 2020 but remain well above their levels prior to the coronavirus (COVID-19) pandemic (3.5% and 5.7 million, respectively, in February 2020," BLS said in a media release.
CareCloud Health said it "admitted no wrongdoing in this matter and has accepted settlement in an effort to move forward ... and avoid costly litigation."
CloudCare Health Inc. will pay $3.8 million to settle whistleblower allegations that the Miami-based electronic health records vendor offered cash bonuses and other kickbacks to clients who recommended the vendor's software to prospective clients, the Department of Justice said.
According to federal prosecutors, violations of the False Claims Act and the Anti-Kickback Statute occurred between January 2012 and March 2017, when CloudCare launched a marketing referral initiative called the "Champion Program."
Prosecutors said that CareCloud paid existing clients cash equivalent credits, cash bonuses and percentage success payments to recommend CareCloud's EHR products to prospective clients.
"Existing clients who participated in the Champions Program ("participants") executed written agreements prohibiting them from providing negative information about CareCloud's EHR products to prospective CareCloud clients," DOJ said. "Prospective CareCloud clients were not told about this referral-kickback arrangement or about the contract that prohibited participants from sharing negative company information with them."
Prosecutors alleged that CareCloud's kickbacks rendered false the claims submitted by CareCloud for federal incentive payments under the Medicare and Medicaid Electronic Health Records Incentive Programs and the Merit-Based Incentive Payment System.
"Product functionality, reliability, and safety should drive a medical software company's success, not illegal kickbacks paid to promote its products," Acting United States Attorney Juan Antonio Gonzalez said. "There is simply no place for kickbacks in our country's healthcare system. Companies who ignore this will be held accountable."
CareCloud was acquired by publicly held MTBC, Inc., in January 2020. The Champion Program was ended as part of the DOJ settlement.
CloudCare Responds
CloudCare offered the following response on Wednesday:
"On January 8, 2020, CareCloud, Inc. acquired the company now known as CareCloud Health, Inc. (formerly CareCloud Corporation). The acquired company was, at the time of the transaction, subject to a civil investigation, which began with the filing of a sealed complaint in 2017. CareCloud Health has admitted no wrongdoing in this matter and has accepted settlement in an effort to move forward, focusing its efforts fully on the vital support and services it provides to its clients, and avoid costly litigation."
"This settlement is in response to government allegations that certain elements of CareCloud Health’s client reference program violated the Federal Anti-Kickback Statute several years prior to acquisition. The US government declined to intervene on and pursue any claims regarding CareCloud’s EHR product, Charts. The investigation was considered as an element of the acquisition, and adequate reservations were made."
The whistleblower in the settlement, identified as Ada De La Vega, will get $803,000 from the settlement.
Better-than-expected tax revenues and a tsunami of federal aid have helped states bolster Medicaid and safety net programs during the pandemic.
When the coronavirus public health emergency was declared in early 2020, public health experts feared that Medicaid and safety net programs would get pummeled.
They anticipated a huge increase in demand for public assistance colliding with an anticipated drop in state tax revenues and slashed budgets owing to the pandemic-driven recession.
That didn't happen.
"The circumstances were not as dire from a budget perspective," said Stacey Mazer, senior staff associate with the National Association of State Budget Officers, during a recent virtual round table sponsored by the Urban Institute.
"We saw the additional federal aid packages, the fact that higher-income people could work at home and pay taxes, and online sales," Mazer said. "For all those reasons, as the year progressed, the feeling was that 'huh, this is not that bad.'"
"Not that there wasn't revenue lost and extremely expensive costs and complexities to delivering services," she said. "But that was the biggest surprise from a year ago when it looked like it was going to be a crater."
Two new reports this week by the Robert Wood Johnson Foundation found that states used better-than-expected tax revenues, and an infusion of federal aid and regulatory flexibility to increase key safety net programs such as food assistance, emergency rental assistance, moratoria on evictions and utility shut offs, direct payments to Medicaid providers, and expanded access to telehealth.
"States are now in a position to equitably and efficiently spend the large and temporary influx of federal relief funds," the studies concluded, adding that the challenge now is to determine what policy investments and innovations worked best and which to carry forward to best address racial and ethnic disparities and economic inequality that was exacerbated by the pandemic.
There are hopes that the pandemic will provide policymakers with a base from which to redesign safety net programs that are more nimble, holistic, and equitable, and which focus on prevention and preparation for the next public health emergency.
"One thing the pandemic taught us is that Medicaid, which is a $600 billion program covering one-in-five Americans, can move really quickly," said Matt Salo, executive director of the National Association of Medicaid Directors, during the Urban Institute roundtable.
"You can get things done quickly when the rules don't matter, but at some point, the rules are going to matter again, and things are going to slow down again, and the auditors are going to come in again, and we're going to have to take a breath, but we can do it," Salo said.
The survey found that the key to accessing telehealth was the ability to access broadband.
Slightly more than half (51%) of Californians went virtual for their healthcare during the pandemic, using either a telephone, smartphone or computer, a new survey finds.
And those new habits will likely continue when the coronavirus pandemic wanes and the public health emergency is lifted, according to the survey from the University of Southern California.
The survey of 1,650 Californians also found that 55% of workers with access to broadband have been working from home full- or part-time.
"The hesitancy towards remote work, learning and telehealth was swept away by necessity during the pandemic," said study lead researcher Hernán Galperin, an associate professor at the USC Annenberg School for Communication and Journalism.
"Now we’re seeing a seismic shift in the way people want to work, learn and manage health visits among those who have broadband access. Those changes give us a real opportunity to cut congestion and carbon emissions," Galperin said.
The survey found that the key to accessing telehealth was the ability to access broadband, said Sunne Wright McPeak, president and CEO of the California Emerging Technology.
"These findings call out the need for strategic broadband investments by government leaders, transportation planners and health systems to help close the digital divide, returning triple bottom-line dividends for the economy, environment and equity," McPeak said.
The survey also found that telehealth eliminates vehicle trips and reduces waiting times and time away from work. However, those benefits are not shared equally, owing largely to income, educational levels, and a lack of access to broadband in remote areas and underserved communities of color.
More than half of Hispanics (56%) said they didn’t use telehealth, compared with 44% of non-Hispanics. One-third (34%) of White respondents said they didn't use telehealth, as did 44% of Black respondents, and 54% of Asians.
Among Hispanics, 56% report no use of telehealth compared to 44% of non-Hispanics, likely reflecting both their lack of access to health care and internet. The first survey released in March reported that low-income households, and particularly low-income Spanish-speaking households, were more likely to have no or limited home internet access.
"Telehealth access is a vital component of broadband access and equity," said Dorian Traube, associate professor at the USC Suzanne Dworak-Peck School of Social Work, and a contributor to the survey.
"While the COVID-19 pandemic opened new access points for patients, disparities still exist in access related to essential social determinants of health, including race and place of residence. Closing the digital divide holds promise for increasing health equity," she said.
Although less tech-savvy and less likely to be connected to the Internet, seniors aged 65 and older also used telehealth more than any other demographic, with most seniors access services.
Within California, the Bay Area has the highest telehealth engagement in California, with 58% of respondents from the area reporting that they used telehealth, followed by Inland Empire, Orange and San Diego counties and the Central Valley.
Los Angeles County had the lowest level of telehealth participation at 46%.
