Breaking news and significant developments in health care and health policy

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Buy-Outs, Practice Consolidation, and Access to Quality Care

May 14, 2023

The New York Times reports on a growing trend among healthcare organizations in the US, the impact of which may be of concern for patients and taxpayers. The Times reported on May 8, 2023 (“Corporate Giants Buy Up Primary Care Practices at Rapid Pace”) that:

“CVS Health, with its sprawling pharmacy business and ownership of the major insurer Aetna, paid roughly $11 billion to buy Oak Street Health, a fast-growing chain of primary care centers that employs doctors in 21 states. And Amazon’s bold purchase of One Medical, another large doctors’ group, for nearly $4 billion, is another such move.

“The appeal is simple: Despite their lowly status, primary care doctors oversee vast numbers of patients, who bring business and profits to a hospital system, a health insurer or a pharmacy outfit eyeing expansion.

“And there’s an added lure: The growing privatization of Medicare, the federal health insurance program for older Americans, means that more than half its 60 million beneficiaries have signed up for policies with private insurers under the Medicare Advantage program. The federal government is now paying those insurers $400 billion a year.”

This consolidation isn’t a new phenomenon. Again from the Times:

“The absorption of doctor practices is part of a vast, accelerating consolidation of medical care, leaving patients in the hands of a shrinking number of giant companies or hospital groups. Many already were the patients’ insurers and controlled the distribution of medicines through ownership of drugstore chains or pharmacy benefit managers. But now, nearly seven in 10 of all doctors are either employed by a hospital or a corporation, according to a recent analysis from the Physicians Advocacy Institute.”

This could be of great concern for patients. As the Times noted:

“This consolidation of medical care may also run afoul of state laws that prohibit what is called corporate medicine. Such statutes prevent a company that employs doctors from interfering with patient treatment.

“And experts warn of the potential harm to patients, when corporate management seeks to control costs through byzantine systems requiring prior authorization to receive care.”

The COVID-19 pandemic accelerated this trend. KFF, the healthcare foundation formerly known as the Kaiser Family Foundation, noted in September 2020 (“What We Know About Provider “Consolidation”) that:

“Depending on the severity and duration of revenue loss, some hospitals and physician practices may find it difficult to operate independently, which could increase the rate of consolidation among health care providers. Lower margins among some providers may create new opportunities for large chains to acquire smaller providers. The Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Paycheck Protection Program and Health Care Enhancement Act allocated $175 billion for grants to providers that were partly intended to help make up for revenue lost due to coronavirus, but analysis shows that the first $50 billion in grants were not targeted to providers most vulnerable to revenue losses.² Another $13 billion was subsequently targeted to safety net hospitals and $11 billion has been targeted to rural providers.³ However, it is not clear whether this infusion of funds plus other government loans—including those from the Paycheck Protection Program—will be sufficient to stabilize providers who are least equipped to weather this revenue decline. Even if sufficient government assistance is provided, the disruption of the COVID-19 pandemic may make operating independently seem less attractive and riskier to some smaller providers. Therefore, financial assistance to providers may not be sufficient to prevent an increase in the pace of consolidation.”

There are concerns that these private equity buyouts will have a negative impact on competition, health, and quality of care. The American Antitrust Institute and experts from the UC Berkeley School of Public Health released a report on this in 2021 entitled “Soaring Private Equity Investment in the Healthcare Sector: Consolidation Accelerated, Competition Undermined, and Patients at Risk.” Among their findings, they noted that:

“Private equity funds, by design, are focused on short-term revenue generation and consolidation and not on the care and long-term wellbeing of patients. This in turn leads to pressure to prioritize revenue over quality of care, to overburden health care companies with debt, strip their assets, and put them at risk of long-term failure, and to engage in anticompetitive and unethical billing practices. Adding to the mounting evidence of the negative impact of private equity on healthcare, two recent National Bureau of Economic Research studies of the nursing home and dialysis markets found that private equity ownership is correlated with worse health outcomes and higher prices.”

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Medicaid Re-Enrollment Begins Again

March 31, 2023

US states are restarting yearly Medicaid and Children’s Health Insurance Program (CHIP) eligibility reviews. The Kaiser Family Foundation reported on February 22, 2023 (“10 Things to Know About the Unwinding of the Medicaid Continuous Enrollment Provision”):

“Primarily due to the continuous enrollment provision, Medicaid enrollment has grown substantially compared to before the pandemic and the uninsured rate has dropped. But, when the continuous enrollment provision ends, millions of people could lose coverage that could reverse recent gains in coverage. As part of the Consolidated Appropriations Act, 2023, signed into law on December 29, 2022, Congress set an end of March 31, 2023 for the continuous enrollment provision, and phases down the enhanced federal Medicaid matching funds through December 2023. States that accept the enhanced federal funding can resume disenrollments beginning in April but must meet certain reporting and other requirements during the unwinding process.”

According to the federal Centers for Medicare and Medicaid Services (last accessed March 31, 2023:

“This means your state will use the information they have to decide if you or your family member(s) still qualify for Medicaid or CHIP coverage. If your state needs more information from you to make a coverage decision, they’ll send you a renewal letter in the mail. Most children can still be covered through the Children’s Health Insurance Program. For details, check your Medicaid notice or contact your state Medicaid office at the links below.

“Get ready to renew now

“Here are some things you can do to prepare for the renewal process:

1. “Update your contact information – Make sure your state has your current mailing address, phone number, email, or other contact information. This way, they’ll be able to contact you about your Medicaid or CHIP coverage.
2. “Check your mail – Your state will mail you a letter about your coverage. This letter will let you know if you need to complete a renewal form to see if you still qualify for Medicaid or CHIP.
3. “Complete your renewal form (if you get one) – Fill out the form and return it to your state right away to help avoid a gap in your coverage.”

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New at JAMA: Viewpoint: The Existential Threat of Greed in US Health Care

February 7, 2023

The journal JAMA published a Viewpoint on Jan. 30, 2023 by Donald Berwick, MD, MPP, entitled Salve Lucrum: The Existential Threat of Greed in US Health Care.

In it, Dr. Berwick contends:

“Profit may have its place in motivating innovation and higher quality in health care, as in any industry. But kleptocapitalist behaviors that raise prices, salaries, market power, and government payment to extreme levels hurt patients and families, vulnerable institutions, governmental programs, small and large businesses, and workforce morale. Those behaviors, mostly legal but nonetheless wrong, have now accumulated to a level that poses an existential threat to a sustainable, equitable, and compassionate health care system.”

The problem Dr. Berwick identifies has a human cost:

“A total of 41% of US adults, 100 million people, bear medical debts. One of every 8 individuals owes more than $10 000. In Massachusetts, 46% of adults say they skip needed care because of costs. As of 2021, 58% of all debt collections in the US are for medical bills.10 Health insurance premiums in Massachusetts have gone up more than 200% in 2 decades and now cost more annually per family than a car. People of lower income must choose high-deductible plans; they cannot afford more complete coverage. In no other developed nation on earth is deep medical debt as present a threat as in the US.”

Dr. Berwick suggests some solutions that require leadership from healthcare professionals, some of whom are participants in the paean to excess profit that he identifies, including:

– “First, health care professionals in all disciplines need to become noisier about the conflict between unchecked greed and the duty to heal.”

– “Second, health care professionals should insist that their guilds and trade organizations demote the pursuit of higher payment among their priorities.”

– “Third, health care leaders and professionals should lobby Congress to pass legislation to rein in greed.”

– “Fourth, health care professionals should insist that their organizations invest actively in improving the true social influences on health.”

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Oregon Becomes First US State To Guarantee Its Residents Access To Affordable Healthcare

January 20, 2023

In the November 2022 general election, Oregon voters narrowly approved Oregon Measure 111, the Right to Healthcare Amendment. The measure amended the state constitution, adding a guarantee of access to affordable healthcare for all Oregon residents. According to Ballotpedia, last accessed Jan. 20, 2023:

“Ballot title

“The ballot title was as follows:[7]
“Amends Constitution: State must ensure affordable healthcare access, balanced against requirement to fund schools, other essential services
“Result of ‘Yes’ Vote: ‘Yes’ vote requires state to ensure affordable healthcare access. State must balance healthcare funding against funding for schools, other essential services; courts must respect balance.
“Result of ‘No’ Vote: ‘No’ vote retains current law. The constitution does not require the state to ensure access to affordable health care; state provides some healthcare access.[8]

“Ballot summary
“The ballot summary was as follows:[7]
“Amends Constitution. Current state law outlines the general requirements for health insurance policies and provides health care for low income and disabled residents who meet eligibility requirements. Amends the Oregon Constitution to establish health care as a fundamental right; obligates the state to provide Oregon residents ‘access to cost-effective, clinically appropriate and affordable health care.’ Amendment requires the state to balance that obligation against the public interest in funding public schools and other essential public services. If the state is sued to enforce the amendment, the court may not order a remedy that interferes with the state’s requirement to balance healthcare funding against funding for public schools and other essential public services.[8] ”

As Oregon Public Broadcasting reported on Nov. 15, 2022, last accessed Jan. 20, 2023:
“Measure 111 makes Oregon the first state in the nation with a constitutional obligation to provide access to affordable health care to all its residents, similar to the constitutional guarantee of a public K-12 education.

“The measure is a win for Democrats in the Legislature, who referred it to the voters over opposition from their Republican colleagues.

“The language of the measure states: “It is the obligation of the state to ensure that every resident of Oregon has access to cost-effective, clinically appropriate and affordable health care as a fundamental right.”

“But Measure 111 does not spell out what the state must do to meet its new constitutional obligation, or define what access to affordable health care means. It will be up to the Legislature to shape what health care access for all looks like and how to pay for it. The Legislature will be back in session starting in January.”

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Massive Savings Possible In US Health System

October 21, 2021

The management consulting firm McKinsey & Company has issued a new report estimating that administrative changes and efficiencies could save the US health system more than a quarter trillion dollars.

As noted in a Viewpoint article published in JAMA on October 20:

“The analysis dissected profit and loss statements of individual health care organizations, estimated spending on specific processes, and compared administrative spending in health care with that of other industries. The conclusion of the report is that an estimated $265 billion, or approximately 28% of annual administrative spending, could be saved without compromising quality or access by implementing about 30 interventions that could be carried out in the next 3 years.² This set of interventions works within the structure of today’s US health care system in order to preserve its market nature (eg, multipayer, multiclinician, multi–health care center) and the associated benefits (eg, world-leading innovation in care delivery).”

According to the article:

“The starting point is 5 functional areas that account for approximately 94% of administrative spending (see eTable in the Supplement). The largest of these is industry-agnostic corporate functions: general administration, human resources, nonclinical information technology, general sales and marketing, and finance. This functional area accounts for an estimated $375 billion of spending annually. The second-largest category is the financial transactions ecosystem, which includes claims processing, revenue cycle management, and prior authorization, accounting for an estimated $200 billion annually. The rest is made up of industry-specific operational functions, such as insurance underwriting (an estimated $135 billion annually), administrative clinical support operations such as case management (an estimated $105 billion annually), and customer and patient services such as call centers (an estimated $80 billion annually).

“For each of these functional focus areas, known interventions that could reduce spending without harming patient care were considered. This meant using a financial and operational perspective for the analysis, but also acknowledging that these interventions could and likely will have broader benefits on other outcomes, such as access, quality, patient experience, physician satisfaction, and equity.”

The report from McKinsey & Co., entitled “Administrative simplification: How to save a quarter-trillion dollars in US healthcare,” is available from the McKinsey website. The publication is a free download however registration is required.

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Health Care in the US Compared to Other High-Income Countries

August 6, 2021

On August 4, the Commonwealth Fund issued a new report entitled Mirror, Mirror 2021: Reflecting Poorly / Health Care in the US Compared to Other High-Income Countries.

The report compares health care systems in eleven nations: the United States, Canada, Switzerland, France, Sweden, New Zealand, Germany, the United Kingdom, Australia, the Netherlands, and Norway.

The report’s key findings: “The top-performing countries overall are Norway, the Netherlands, and Australia. The United States ranks last overall, despite spending far more of its gross domestic product on health care. The U.S. ranks last on access to care, administrative efficiency, equity, and health care outcomes, but second on measures of care process.”

The authors conclude: “Four features distinguish top performing countries from the United States: 1) they provide for universal coverage and remove cost barriers; 2) they invest in primary care systems to ensure that high-value services are equitably available in all communities to all people; 3) they reduce administrative burdens that divert time, efforts, and spending from health improvement efforts; and 4) they invest in social services, especially for children and working-age adults.”

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Medical Debt in Collections in the US

August 6, 2021

On July 20, JAMA published an article on medical debt in collections in the US entitled “Medical Debt in the US, 2009-2020.”

The researchers found: “In this retrospective analysis of credit reports for a nationally representative 10% panel of individuals, an estimated 17.8% of individuals in the US had medical debt in collections in June 2020 (reflecting care provided prior to the COVID-19 pandemic). Medical debt was highest among individuals who lived in the South and in zip codes in the lowest income deciles and became more concentrated in lower-income communities in states that did not expand Medicaid.”

Additionally, “The analysis shows that Medicaid expansion was associated with reductions in medical debt in collections.”

The researchers also observed that “During the last decade, medical debt has become the largest source of debt in collections. The reductions in nonmedical debt in collections between 2009 and 2020 occurred simultaneously with the economic recovery from the Great Recession, consistent with the well-documented association between unemployment and loan delinquency.¹⁴ In contrast, total medical debt in collections decreased by a more modest amount. As a result, as of June 2020 individuals had $39 more in mean medical debt in collections than they had in mean debt in collections from all other sources combined ($429 vs $390), including credit cards, utilities, and phone bills.”

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Health Systems Facts is a project of the Real Reporting Foundation. We provide reliable statistics and other data from authoritative sources regarding health systems in the US and sixteen other nations.

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Page last updated May 14, 2023 by Doug McVay, Editor.