Affiliated Practice
AUGUST 2014
Hospital Looking To Buy Your Practice? Beware of the Antitrust Angle. Evolving Healthcare Provider Risk in the ACA Era
Bundled Payment Attracts ProvidersBut Will They Sign Medicare ACOs Can Learn Lessons From Earlier Demo Project
Affiliated Practice Published by Montdor Medical Media, LLC
Montdor Medical Media, LLC
Co-Publishers and Managing Editors Iris and Michael Goldberg Contributing Writers Iris Goldberg Michael Goldberg Beth Christian Ron Gillaspie Melanie Evans Bob Herman Andrew Kitchenman Beth Fitzgerald Sabriya Rice Beth Kutscher Joseph Conn Layout and Design - Nick Justus Cover - by Joe Wilder. Affiliated Practice is published monthly by Montdor Medical Media, LLC., PO Box 257 Livingston NJ 07039 Tel: 973.994.0068
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C O N T E N T S 4
Hospital Looking to Buy Your Practice? Beware of the Antitrust Angle.
6
Evolving Healthcare Provider Risk in the ACA Era
9
Bundled payment attracts providers—but will they sign?
10
Medicare ACOs can learn lessons from earlier demo project
11
Sharp HealthCare ACO drops out of Medicare’s Pioneer program
12
Healthcare Groups in NJ Embrace Trend Toward More Accountability
14
Aetna, medical group reach Medicare health partnership
16
Providers still skittish of CMS’ renal ACO initiative
18
Rutgers health care study highlights struggle for wellness in low-income communities as state prepares Medicaid ACO rollout
19
Duke LifePoint finalizes agreement to acquire Conemaugh
20
Practice-management system vendors launch trade group
22
Arizona deal combines orthopedic, neurology practices
22
Ascension Health plans joint-venture with Dignity, Tenet to run Ariz. hospitals
2 AFFILIATED PRACTICE
Affiliated Practice
Hospital Looking to Buy Your Practice? Beware of the Antitrust Angle. If you have been operating your medical practice for a period of time, you may have been contacted by your local hospital with an expression of interest in acquiring your medical practice or entering into another arrangement where your practice and its revenues will be more closely affiliated with the hospital or a hospital affiliate. Hospitals are seeking to more closely align with physicians as a result of market pressures and the implementation of efficiencies and evidence-based medicine protocols required by the Affordable Care Act. In some instances, the hospital will request that the physician or physician group enter into a professional services agreement (‘PSA’). Under a PSA, the physician group will provide services to the hospital while maintaining its existing medical practice. Typically, the hospital will request that the physician or physician group assign their right to bill and collect for professional medical services to the hospital or hospital affiliate, with the physician or physician group paid for its professional services out of the revenues collected for their professional services. In other circumstances, the hospital is interested in acquiring the assets of the practice and directly employing the physicians in either a captive professional corporation or directly by the licensed hospital. In most instances involving the alignment with, or acquisition of, a physician practice by a hospital or a hospital affiliate, both the physician and the hospital are focused on the financial and operational terms of the deal. An issue that can often be overlooked is whether or not the potential alignment or acquisition of the physician practice creates any issues under the federal antitrust laws. In a recent federal court case decided in Idaho, the court found that the acquisition of a primary care practice by a hospital would have an anticompetitive effect upon both the prices charged to third party payors and the ability of a competitor hospital to obtain referrals. As a result, the court found that the acquisition violated the antitrust laws, and the acquisition of the physician group now has to be undone (absent a reversal of the lower court decision on appeal). Saint Alphonsus Medical Center ñ Nampa, Inc. v. St. Lukeís Health System, 214 U.S. Dist. LEXIS 9264 (D. Idaho 2014). (‘St. Luke’s’). Clearly, the expense of being involved as a party to costly antitrust litigation and the unwinding of a PSA arrangement or practice acquisition are both items that a practice will want to avoid. The facts of the St. Luke’s case involved the acquisition by St. Luke’s of the furniture, fixtures and equipment of the Salzer Medical Group, a 40 physician medical practice located in Nampa, Idaho. Of the 40 physicians employed by the group practice, 16 provided adult primary care services and 8 provided pediatric services. The hospital and the medical practice entered into a PSA. Under the PSA, the physicians would provide medical services in Nampa on behalf of St. Luke’s. Most of the services were to be provided in clinics operated by St. Luke’s. In return, St. Luke’s agreed to compensate the medical group and its physicians for performing medical services on behalf of the hospital pursuant to the PSA. St. Luke’s would conduct all managed care contracting and billing for the physician group, and also hired all of the nonphysician employees who had previously worked for the physician group. Following the affiliation, it was estimated that St. Luke’s and Salzer Medical Group would control 80% of the primary care physician market in Nampa, Idaho. This caused concern for both the nearby competitor hospitals (Saint Alphonsus and Treasure Valley) and for third party payors. They were concerned that the concentrated market power which would be held by the hospital and the physician group following the acquisition would lead St. Luke’s to negotiate higher fees with health insurers, leading to both higher health insurance premiums and claims payments. The competitor hospitals were also concerned that if the acquisition took place, St. Luke’s would put pressure on the group practice physicians to steer patients away from the competitor hospitals for procedures such as CT scans and MRIs and would send them to St. Luke’s instead, which would result in both a drop in referrals of patients to the competitor hospitals and the potential layoff of a significant number of staff members. As a result of these concerns, the competitors of St. Luke’s which operated hospitals in Nampa filed a lawsuit seeking to enjoin the acquisition from taking place. The Federal Trade Commission and the State of Idaho were also parties to the litigation. St. Luke’s relied heavily on its goal of advancing the objectives of the Affordable Care Act in its defense of the lawsuit (the ‘ACA defense).’ At first, the federal district court denied the motion for a preliminary injunction and allowed the acquisition to proceed while the matter went to trial. However, at the conclusion of the trial, the court held that the acquisition was, in fact, anticompetitive and ordered divestiture of the affiliation between St. Luke’s and the physician practice. While the court praised St. Luke’s for its efforts in implementing the goals of the Affordable Care Act, it ultimately concluded that the ACA defense advanced by St. Luke’s did not serve as a justification for the antitrust violations alleged by the plaintiffs. The court found that that the acquisition was intended by St. Luke’s and the physician practice to improve patient outcomes, and the court was convinced that it would have that effect if left intact. As is the case here in New Jersey, the court noted that the quality of patient care in Idaho is outstanding, but that the cost of such care is substantially above the national average. The court also found that St. Luke’s had exhibited ‘foresight and vision’ in purchasing independent physician groups to assemble a team committed to practicing integrated medicine in a system where compensation depends on patient outcomes. However,
4 AFFILIATED PRACTICE
the court ultimately concluded that the acquisition resulted in an anticompetitive effect. The court found that ìit appears highly likely that health care costs will rise as a combined entity obtains a dominant market position that will enable it to (1) negotiate higher reimbursement rates from health insurance plans that will be passed onto the consumer, and (2) raise rates for ancillary services (like x-rays) to the higher hospital billing rate, since the acquired physicians would be encouraged to shift their referrals for such services to the hospital. ‘The court concluded that even though St. Luke’s was to be applauded for its efforts to improve the delivery of health care in the Treasure Valley, ‘there are other ways to achieve the same effect that do not run afoul of the antitrust laws and do not run such a risk of increased costs.’ Generally, most physician practice affiliations or acquisitions do not require review and approval by the Federal Trade Commission prior to the transaction being consummated. While New Jersey has its own antitrust laws, New Jersey normally follows federal antitrust law interpretation and analysis in reviewing antitrust questions. Therefore, it is likely that any New Jersey lawsuit alleging antitrust claims would be initiated in federal court. However, if a federal court (or state court) in New Jersey were to review a similar set of facts as those considered by the Idaho federal court in the St. Luke’s case, it is likely that a similar antitrust analysis and result would be reached. If you are approached by a hospital or hospital affiliate which has expressed an interest in acquiring your practice or in entering into a professional services agreement with your practice, you should ask the hospital if they have conducted an analysis of the proposed transaction under the federal antitrust laws to ensure that the proposed acquisition or affiliation would not have an anticompetitive effect. Whether or not the transaction would be viewed as anticompetitive may be based on a number of factors, such as the physician or physician group’s medical specialty or specialties; the size of the relevant geographic market; the percentage of market share that the affiliating hospital and physician group will control in the relevant market and specialty or specialties following the affiliation or acquisition; the number of competing physicians in the relevant specialty or specialties who will remain either as independent practitioners in the community or in affiliations with competitor hospitals following the acquisition; payor mix; the population density of the relevant market, and other factors such as ease of transportation to alternate providers. By asking the right questions, you can hopefully avoid the unfortunate circumstances that the Idaho physicians and St. Luke’s found themselves in when they were ordered by the court to undo their transaction. By Beth Christian of Giordano, Halleran and Ciesla, 732-741-3900
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AUGUST 2014
5
Evolving Healthcare Provider Risk in the ACA Era By Ron Gillaspie With the Affordable Care Act (ACA) enacted and underway, the healthcare provider landscape is evolving at an unprecedented rate. Providers are feeling pressured to align themselves with Accountable Care Organizations (ACO), a new healthcare delivery and payment model formulated to mitigate increasing medical costs while improving quality of care. The success of the ACO model is at the heart of the Affordable Care Act. The Centers for Medicare and Medicaid Services (CMS), one of the main forces behind the ACA, have clearly expressed their goal of controlling aggregate costs for all beneficiaries, along with decreasing service volume and measurably improving the quality of care. An ACO is a legal structure through which healthcare providers must deliver the full spectrum or continuum of care to a designated population. ACO’s are being formed by hospitals, hospital systems with affiliated physicians, and by multi-specialty physician groups. To qualify for participation in the Medicaid Shared Savings program (MSSP), an ACO must apply to CMS, submitting a full description of the methods by which the ACO will deliver quality care, along with detail on how it will lower costs to the population it will serve. An ACO must have the analytical and IT capabilities necessary to receive and report performance data, along with the ability to distribute shared savings and to repay losses and manage and monitor its operations. The CMS ACO model provides for participation in the MSSP. An ACO will have two initial choices under the MSSP Program, with the first option a three-year commitment with the first two years on a shared savings basis and the 3rd year on a shared savings and shared loss basis. The second choice will be for 3 full years on a shared savings and shared loss basis. The ultimate goal of the Medicare CMS ACO approach will be to have all ACOís functioning under a fully capitated basis. The private health insurance market has simultaneously been experimenting with the ACO model, with hundreds already functioning throughout the U.S. The rapid changes and evolving ACO landscape are creating a host of new risks to the provider world, some of which are insurable, and some outside of the scope of current insurance protection. The goal of all providers and ACOís should be to understand the scope of the new and developing risks, and to take the necessary steps to mitigate their exposure through risk management techniques and risk transfer (insurance) tools. It is essential that a provider take the necessary steps to align with ACO(s) that are highly qualified and adequately financed to take on the management of the ACO operations, including qualified leaders, cutting edge analytical tools and IT systems, the ability to integrate EMR systems, and a philosophy of measurably improved healthcare outcomes while controlling and reducing costs. The success of an ACO in the shared savings model will be a function of the successful implementation of all of these variables. Evolving Provider and ACO Risk and Insurance Solutions Medical Malpractice The cost containment goal within the ACO model can inherently impact the perceived perspective by patients that medical decisions may be affected by the prioritization of providers to realize shared savings through reduced care/lower costs. The ACA requisite that care must be measurably improved may balance the tension that naturally exists between cost containment and medical liability, but will take time to be fully understood. The potential vicarious medical malpractice liability expansion is real, largely due to the model mandating the full continuance of care required by the ACO. Providers will now have to participate under a team approach, with the Care Organization responsible for full care across all specialties. The possibility of vicarious liability allegations cuts in all directions, ACO to provider, provider to ACO and provider to provider. Cyber Breach/HIPAA Integrated Electronic Medical Records (EMR) will be a fundamental ingredient in the success of all ACO’s, necessary for improving the quality of care for the patient population and also to proof results. EMR has been an evolving risk to providers, with new expectations of immediate knowledge of patient data and the ability to make quicker and more accurate decisions. EMR under the ACO model will drastically increase cyber, breach and HIPAA exposures to providers due to the extensive patient information sharing that will be necessary across all providers in the Organization. It will be critical that the ACO and its providers have cutting edge data security and the proper breach insurance in place. Regulatory Liability The essence of the new ACA/ACO model runs against the grain of traditional anti-trust, STARK and self-referral rules, with the new ACO entities now incentivized to provide full continuum of care for the patient population. A full understanding of the changing rules and the implementation of the necessary steps toward compliance are critical to the success of the ACO/provider. It is essential that an ACO be structured in a compliant fashion so that it is not in violation of anti-trust laws. All new ACO’s should have CMS, in conjunction with DOJ and FTC, review its eligibility for the MSSP shared savings program. This is necessary to balance the efficiencies of providing care to a large patient population.
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A broad regulatory policy will be essential for ACO’s and providers to adequately protect against the changing and ever more complex regulatory exposures. Directors and Officers Liability (D&O)/Employment Practices Liability (EPL)/Fiduciary Liability The exposure to the Directors and Officers of an ACO can result from a number of unique scenarios. Discovery under medical malpractice cases could reach into the corporate boardroom, with plaintiffs trying to proof widespread institutional policies that may impede appropriate treatment due to physician compensation formulas and withheld resource utilization. The ACO Board and management will also be held responsible for the success or failure of the execution of the business plan. This will include compliance with the approved ACO structure, failure to protect the ACO through correct risk taking options, integrated information system and profit/loss dissemination, adequate accounting and protection against prior liabilities of merged practices and proper contract negotiations. From an employment practices liability standpoint, beyond the normal exposures that exist, the ACO will need to be weary of wrongful economic credentialing or discrimination. Managed Care Errors and Omission Policies will be necessary to address credentialing, network management and utilization review (all non-direct patient care) exposures. Provider Stop Loss Policies, originated in the HMO era, will become a financial tool to transfer risk to an insurance carrier for the large financial risk that will be present under the MSSP model. The risk will grow substantially under the full capitation model. This same risk will also apply as the ACO model is applied to the private marketplace. In summary, the ACO era is fully upon us with new and evolving provider risks that must be carefully addressed through proper indemnification contracts and well constructed insurance programs. The blurring of lines between insurers and providers has never been more dynamic, with health insurers buying hospital systems and healthcare providers effectively becoming insurers. It is imperative that providers and ACO’s have a full understanding of their risks and the tools that are available to effectively mitigate and transfer these evolving exposures. Ron Gillaspie CIC, ExecVP/COO Boynton & Boynton Insurance Agency 732 747 0800 / rgillaspie@boyntonandboynton.com
AUGUST 2014
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Bundled payment attracts providers—but will they sign? By Melanie Evans The fast-rising number of healthcare providers joining a trial run of bundled Medicare payments signals widespread thirst to explore risk-based reimbursement models, but the success of the initiative will depend on how many take the leap. Roughly 4,100 providers will join 2,400 hospitals, nursing homes and medical groups as candidates for Medicare's Bundled Payment for Care Improvement initiative, the CMS Innovation Center said Thursday. At this stage, providers vet their performance under the possible bundled payments to see whether they can stomach the risk. Not all of the candidates will agree to actually enter into bundled-payment contracts. In the first crop, 86 did not and 236 went ahead. “I think the attrition rate is going to be important,” said Francois de Brantes, executive director of the Health Care Incentives Improvement Institute. A large percentage backing out should raise questions about what prompted the exit “so that ultimately we can try to stimulate the right type of market answer to those issues,” he said.
The next wave of candidates was originally supposed to decide before the end of the year. The CMS, however, notified them Thursday that the agency is pushing back the release of Medicare spending data that's needed to assess bundled-payment options, said Brian Fuller, director of post-acute care for consulting firm Avalere Health. As a result, according to the CMS letter, candidates will have up to four additional months to decide whether to join the program. They can enter into contracts in January as scheduled but can wait until April 2015, and they can expand contracts through October 2015. A CMS spokesman said the agency could not immediately comment on the delay. Organizations that lack clinical depth to prevent hospital readmissions—a major source of expenses—won't proceed, said Rick Grindrod, CEO of National Post-Acute Healthcare, a year-old company that contracts with payers and providers to develop riskbased contracts and is working with 150 providers among the new cohort of candidates. “The strength of the case-management team is essential to implementing this effectively,” said Rich Roth, vice president of strategic innovation for San Francisco-based Dignity Health. The not-for-profit health system is seeking to expand its participation in the program from two hospitals included in the first wave to nearly all its 37 hospitals. De Brantes said the surge in interest suggests growing comfort among providers with reimbursement that comes with heightened financial risk. The Medicare initiative's four models give providers the opportunity to test bundled payments on a limited scale, unlike contracts that require a more global budget, he said. “There is a pent-up demand; this is a manifestation of that pent-up demand,” he said. The initiative, launched in January 2013, is one attempt under the Patient Protection and Affordable Care Act to test incentives for providers to more closely control costs. Broadly speaking, the program “bundles” payments for multiple services connected to some or all of 48 episodes of care. Participating providers profit when their spending on that care falls below Medicare's savings target. With some exceptions, they must beat Medicare costs by 2% to 3.5% before they're rewarded. Hospitals and doctors can test any of four bundles that include some or all medical expenses for care provided throughout a hospital stay; one to three months after patients leave; or both. CMS officials said in a statement that they were pleased with the growing list of candidates and expect to see some eventually agree to enter into contracts: “Through the Bundled Payments for Care Improvement initiative, CMS is taking another step forward in identifying models that will provide better quality of care and improved health for Medicare beneficiaries, at lower costs for our nation's taxpayers.” AUGUST 2014
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Medicare ACOs can learn lessons from earlier demo project By Melanie Evans
The precursor to Medicare's large and growing accountable care program ran five years and ended the month after the Affordable Care Act became law. The results, summarized in a new report, have proved prescient and may inform policy changes the CMS is expected to issue soon. The final analysis of that experiment neatly summarizes data from other papers, all of which show Medicare saved a little money without compromising quality, albeit on a limited set of measures. Policymakers widely cite the Medicare Physician Group Practice Demonstration, which ended in March 2010, as the forerunner to Medicare's accountable care initiatives under Obamacare. Financial success varied widely across 10 medical groups in the demonstration. One saved an average of $818 per person, per year, while another saw per person, per year spending increase an average of $323, according to the analysis conducted for the CMS by not-for-profit research firm RTI International. “We did find savings, which was one of the goals, but they were modest,” said Gregory Pope, a program director for RTI International who co-authored the report. “Not huge, but not trivial.” On average, the 10 medical groups reduced Medicare spending by 2% per person, per year ($171) during the demonstration, which split the savings between the doctors ($102) and Medicare ($69, or 0.8% less than the program would have spent otherwise). The results look familiar when compared with the early performance of more than 100 Medicare ACOs launched in 2012 under the healthcare reform law's shared-savings program. Their efforts also yielded mixed results and minimal overall savings. Meanwhile, the demonstration program, like its ACO offspring, required participants to meet quality targets before they received bonuses. The quality targets seek to dissuade doctors and hospitals from cutting costs at the expense of good medical care. And quality overall improved under the demonstration. Researchers found that to be the case even among those that saved the most. “It did not seem like the source of the cost savings was a decline in quality,” Pope said. (The quality results the CMS has published so far for ACOs in the shared-savings program are limited and mixed.) Medical groups in the early demonstration focused their cost-saving efforts on the most expensive place to treat patients (the hospital) and the most expensive patients (complex, chronically ill and vulnerable). It worked. Spending for hospitalized patients dropped an average of $228 per patient, per year. Spending for patients at high risk of costly care declined $1,922 per patient, per year. “It's not surprising,” Pope said. “That's kind of where the money is: people who are using services and are at risk of adverse health events and expenditures and high utilization.” Researchers identified four strategies that, though not directly linked to savings, were widely adopted across the 10 demonstration medical groups: encouraging patients to do more to manage their medical care and health; establishing programs for doctors and nurses to more closely monitor and manage patients' care; using better coordination among hospitals, clinics and nursing homes as patients travel from one to another; and encouraging greater use of providers other than doctors. IT played key part Information technology also played a significant role. Even though one participant entered without an electronic health-record system and all but a few of the others lacked fully developed systems, the use of information technology was widespread, the report said. Medical groups developed and used patient registries and automated clinical alerts within their EHRs to track patients and monitor the quality of care. The analysis of the group-practice demonstration reinforces that modifications to the shared-savings program could allow those strategies to flourish, said Stephen Shortell, director of the University of California at Berkeley Center for Healthcare Organizational and Innovation Research. Medicare officials have been vocal in their desire to see the model continue to expand and are expected to soon release proposed rules amending the program. For example, Shortell said, the CMS may do more to let providers and patients know who will be getting care under an ACO so doctors can do more to educate and encourage patients, known within the industry as patient engagement. “That is huge,” he said. “It's just beginning to occur systematically across the country.” As it stands, Medicare notifies doctors which patients were included at the end of the year, when performance is evaluated. Shortell said Medicare might also raise the financial incentives for investment in care coordination and the use of providers who are not doctors. Success, however, will depend on development of multiple strategies. “There's no silver bullet here.”
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Sharp HealthCare ACO drops out of Medicare’s Pioneer program By Bob Herman Another Medicare Pioneer accountable care organization has exited the program, renewing questions about its long-term sustainability. Sharp HealthCare, a five-hospital system in San Diego, said in its third-quarter financial statement (PDF) that it dropped out of the Pioneer ACO program. Sharp notified the CMS and its Center for Medicare and Medicaid Innovation on June 20. Twenty-two Pioneer ACOs remain from the original 32. Last summer, nine other Pioneers said they were leaving. Several of them switched to Medicare's less financially risky Shared Savings Program. Medicare ACOs can learn lessons from earlier demo project Sharp's ACO, which covers 28,000 Medicare beneficiaries, is transitioning those patients to other care-management programs. The limited liability company that encapsulates the ACO will also be unwound. The Pioneer ACO Model, developed and administered by the CMS Innovation Center, has been one of the government's most widely watched efforts to reform healthcare payment and delivery under the mantle of the Patient Protection and Affordable Care Act. The Innovation Center chose 32 organizations across the country to participate because they were deemed ahead of the curve on the infrastructure and experience required to coordinate care and manage financial risk. Under the contracts, they could be on the hook to return Medicare dollars to the feds if they don't meet quality benchmarks and reduce costs. That risk turned out to be too lofty for Sharp, which has concluded the program's payment methodology is flawed. “Because the Pioneer financial model is based on national financial trend factors that are not adjusted for specific conditions that an ACO is facing in a particular region (e.g., San Diego), the model was financially detrimental to Sharp ACO despite favorable underlying utilization and quality performance,” Sharp's disclosure states. Alison Fleury, CEO of Sharp's ACO, said the system essentially broke even in the first two performance years—2012 and 2013—as it reduced readmission rates and utilization while improving its performance on quality metrics. But she said the organization was at a “significant risk of writing a check” back to Medicare this year. Two main factors came into play. The CMS' financial benchmarking model for the Pioneer program is based on national measures and does not incorporate regional payment rates. For example, Pioneers don't receive higher or lower Medicare payments based on the area wage index, which the government calculates every year. Fleury said that from 2012 through 2014, San Diego's area wage index went up 8.2%—but the Pioneer methodology does not account for that, leaving systems without those enhanced regional payments. Sharp was negatively affected by the way the Pioneer program calculates Medicare disproportionate-share hospital (PDF) payments to reflect the financial burden of large numbers of Medicaid patients, Fleury said. California hospitals have seen much higher rates of Medicaid patients thanks to expanded eligibility under the Affordable Care Act. With Sharp's exit, the attention shifts to the 22 Pioneers still enrolled. John Gorman, founder of healthcare consulting firm Gorman Health Group, thinks more will drop out. And he attributes the skepticism to the CMS' payment benchmarking. “What's driving all these health systems nuts is it's CMS' own methodology that's causing them to lose under this demonstration,” Gorman said. “It's not their lack of performance.” Fleury said the CMS understands the problems and she expects the agency to make changes to the model for 2015 that would incorporate regional benchmarks and address some of the other concerns. The agency did not comment by deadline. “I'm hopeful they'll get it to a benchmark that does make it sustainable,” Fleury said. In the first nine months of Sharp's fiscal year, ended June 30, the system's operating surplus increased 2.2% to $178.4 million. Sharp's total surplus, which factors in investment income, rose more than 25% to $264.9 million. Revenue inched upward to about $1.99 billion, giving Sharp a 9% operating margin—the same as the nine-month period in 2013.
AUGUST 2014
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Healthcare Groups in NJ Embrace Trend Toward More Accountability Andrew Kitchenman Eight applicants seek to join Medicaid demonstration project slated to start in late 2014 A state pilot program aimed at improving accountability and coordination of healthcare provided to Medicaid recipients has attracted eight applicants from across the state – a sign of the potential that healthcare providers see for the program. The Medicaid Accountable Care Organization demonstration project will provide incentives for organizations that reduce costs while still improving their patients’ health. By realigning incentives, the project aims to attain those healthcare goals while also reducing the frequency of costly visits to hospitals and doctors’ offices. The New Jersey project is unique compared to other ACO programs around the country because it includes all Medicaid patients within a geographic area, rather than just those whose healthcare is managed by certain insurers. In addition, the ACOs in New Jersey must include all of the hospitals that serve people who live with the ACO’s ZIP codes, as well as 75 percent of the primary-care providers and at least four mental-health providers. While established regional coalitions of healthcare providers – the Camden Coalition of Healthcare Providers, the Trenton Health Team and potentially the Greater Newark Healthcare Coalition – were expected to apply for the three-year project, five other groups joined them. “Last year it was looking like two, maybe three, so to have eight applicants is a big win for New Jersey and a big win for better care in Medicaid,” said Jeff Brown, executive director of the Affiliated Accountable Care Organizations, a project of the nonprofit New Jersey Health Care Quality Institute that aims to serve as a trade group for the ACOs. In addition to the Camden, Trenton and Newark coalitions, the applicants include Coastal Healthcare Coalition Inc., including Atlantic City and Ventnor; the Health Cumberland Initiative Inc., including Bridgeton, Millville, Vineland and rural areas in Cumberland County; the Healthy Gloucester Initiative Inc., including Paulsboro, Woodbury and Woodbury Heights; New Brunswick Health Partners, including New Brunswick and sections of Franklin Township; and Passaic County Comprehensive Accountable Care Organization Inc., including sections of Paterson. Coastal Healthcare Coalition’s Vincent Papaccio said the coalition chose to focus on Atlantic City and Ventnor because the narrowly defined geographic area would allow its partners to better target their resources and measure their success. Papaccio is senior vice president and chief operating officer of Reliance Medical Group, a private medical practice and coalition partner. While the Coastal Healthcare Coalition partners are already doing chronic disease management and coordinating patient care, joining the Medicaid ACO will allow them to share data and prevent patients with chronic health problems from slipping through the cracks by shifting from one provider to another, Papaccio said. “With shared information, we’re hoping that there’s shared effort,” said Papaccio, adding that if the coalition can identify and help patients who use healthcare services the most to manage their conditions, it will significantly reduce costs and improve patient health. First Meeting in August The coalition will have its first board meeting in August and plans to form its community advisory group this fall, noting that behavioral health, pain management and community groups must participate for the ACO to be successful. “The (healthcare) system still seems to be high-cost and still broken,” Papaccio said, but he added that is hopeful that, by collaborating, the ACO partners won’t repeat past mistakes and learn from one another. Brown said his organization has been working with the eight ACOs to complete their applications, adding that the strength of the applications was a testament to the work done by the groups, as well as to the support of the Nicholson Foundation, which has provided funding to the Affiliated Accountable Care Organizations. Brown added that while all of the ACOs will feature collaborations among providers, each organization reflects the unique features of its community. “New Jersey was a good opportunity for testing the success of these collaborations” because of the range of participants, Brown said. He said he was pleased that the organizations seeking to participate run the gamut from dense urban areas to sprawling rural sections of the state. Rutgers Center for State Health Policy Director Joel Cantor noted that several of the ACO applicants cover geographic areas similar to those studied in a paper he co-wrote last year. That study found that there was wide variation in how residents in
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different areas use hospitals, and that significant savings could be realized if areas with more intense hospital use changed their usage patterns to match the areas with less intense use. The range of applicants encouraged Cantor, who is an NJ Spotlight columnist. “There’s tremendous diversity among the applicants,” including geography, socioeconomic characteristics and density, Cantor noted. “The possibility of learning from the demonstration is that much greater.” The Rutgers center has been hired as part of the project to help measure whether savings occur, as well as to provide some measurements of the quality of care, although the ACOs themselves are primarily responsible for tracking healthcare quality. The center also will assist the state in assessing “gain sharing” plans – how the ACO organizations will divide payments they will receive if they save money while meeting the healthcare quality goals. In addition, the center will help the state write annual reports evaluating the three-year project. Outreach Deemed Essential One element that several of the new applicants must work on is engaging with community mental or behavioral health and social-service providers, which will be essential to providing the coordinated care that many Medicaid recipients need. Brown said these organizations can learn from the Camden, Trenton and Newark groups, which have already actively engaged with local organizations. Another major project for all of the applicants will be to sign contracts with the five Medicaid managed care organizations, the insurers who manage care for Medicaid recipients.
“The governor has trumpeted the potential to improve care and save money” through the project, Brown noted. Brown suggested that insurers have a stake in the anticipated cost savings. “I’m confident that the managed care companies are going to engage with ACOs in the near future and work with them collaboratively,” he said. State Department of Human Services spokeswoman Nicole Brossoie said in an email that the state expects to certify applicants in the late fall and that the demonstration project will start later in the year. AACO representatives are recommending that the project start on January 1, 2015, which would coincide with the start of many managed care organization contracts. New Brunswick Health Partners Executive Director Dr. Alfred F. Tallia said the organization sees significant opportunities to improve healthcare quality and contain costs through the ACO, which includes longtime rivals Robert Wood Johnson University Hospital and Saint Peter’s University Hospital, as well as Rutgers University’s Robert Wood Johnson Medical School. “We’re pretty lucky that we have university resources,” which will support behavioral health in the ACO, said Tallia, who also leads Robert Wood Johnson Partners, which includes providers in a partnership between RWJUH and Rutgers. Negotiations with insurers will occur once the state has certified New Brunswick Health Partners’ participation in the project, Tallia said. “We’re anticipating that we’ll be able to have a good outcome in terms of those negotiations,” Tallia added, noting that Horizon NJ Health has signaled interest in participating in the ACO. Tallia also credited the AACO with making his organization’s application possible. AUGUST 2014
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The Cumberland and Gloucester organizations are both partnerships between Inspira Health Network, which operates the hospitals in the areas covered by the organizations, and CompleteCare Health Network, which operates the federally qualified health centers in the area. “We applied because we believe that the current system needs to have some strong revisions in terms of encouraging cooperation among the many people who provide care and engage patients in an a higher degree of responsibility in their own well-being,” said A. James Boote, Inspira vice president of ambulatory services and the executive director of the Cumberland and Gloucester groups. Boote emphasized that most of the factors that affect patients’ health aren’t under the direct control of healthcare providers, so the ACOs must engage in a wide range of partnerships. He cited as an example a patient with a respiratory condition that is worsened by hot summer weather and seasonal allergies, who may benefit from having a window-unit air conditioner installed in a bedroom. He noted that Cumberland has a large number of agricultural workers who haven’t lived in the area long enough to develop a relationship with a doctor, which presents a challenge to providers in that area. St. Joseph’s Healthcare System in Paterson is the key partner in the Passaic County Comprehensive Accountable Care Organization Inc. Organization President Harold Tepper also serves as St. Joseph’s vice president for physician practices and ambulatory services. Tepper said in an emailed response to questions that St. Joseph’s believes in the ACO concept and is eager to increase care coordination for the Medicaid population. He described his organization as being in its early stages.
Aetna, medical group reach Medicare health partnership By Beth Fitzgerald The collaboration between Summit and Aetna’s Medicare Advantage program is similar to an accountable care organization and uses shared data, financial incentives and collaborative care management to improve the health of the population. It is expected to cover about 1,000 of Aetna’s Medicare Advantage members in Summit’s Union, Morris, Essex and Somerset county region. With the Summit deal, Aetna said 16,000 of its New Jersey Medicare Advantage plan members, or about a quarter of its 66,000 Medicare Advantage population, are now served by this collaborative care model. “By working together, Aetna and Summit Medical Group are committed to improving health care for Medicare Advantage patients, and helping to ensure that their health care needs are identified and coordinated,” said Walter C. Wengel, III, Aetna New Jersey vice president. The Medicare collaboration is one of Aetna’s numerous value-based, patient-centered programs across the state that seek to give health care providers financial incentives to coordinate care in ways that both improve population health and avoid unnecessary spending. In New Jersey, Aetna said about 135,000 of its members are now enrolled in these value-based collaborative arrangements, and that its goal is to reach 215,000, or nearly 20 percent of its New Jersey membership, by year-end. Aetna said nationwide 1.5 million of its members are served by these new care-delivery programs. “Summit Medical Group has demonstrated significant experience in providing high quality, coordinated care and we are excited to partner with Aetna in this collaboration model,” said Dr. Jeff LeBenger, chief executive of Summit Medical Group. “We look forward to caring for the Aetna Medicare members who will benefit from the enhanced level of care and service available through this agreement.” Aetna said it’s not unusual for Medicare members to have complex health care needs that go undetected. Under the collaboration, Aetna nurses will work with Summit physicians to share information and resources in order to improve care and to reach out directly to patients. Aetna said a study of its Medicare collaboration found that it significantly reduced hospital admissions and readmissions, increased preventive care and reduced health care costs. “The careful tracking of quality metrics is a critical part of why collaborative agreements, such as Medicare provider collaborations and ACOs, are successful at improving patient care and are fundamental to the incentive structure,” said John Lawrence, president for Aetna in New Jersey. He said the Medicare collaboration includes a shared savings model that rewards Summit physicians for meeting certain quality and efficiency measures, including: preventive care and screenings, better management of chronic conditions such as diabetes and heart failure and reductions in avoidable hospital readmission and ER visits. Summit is New Jersey’s largest privately held multispecialty medical practice, with more than 325 practitioners in 76 specialties and 1,600 employees. Summit has a 42-acre health care campus in Berkeley Heights and 43 other practice locations in central and northern New Jersey.
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Providers still skittish of CMS’ renal ACO initiative By Sabriya Rice
With just a few months before its launch, some providers are expressing frustration with a CMS initiative aimed at testing innovative payment and care-delivery models specifically geared toward patients with end-stage renal disease. Too many questions remain about key details and the framework offers too little potential for success. The treatment of end-stage renal disease, or ESRD, cost Medicare $34 billion in 2011, about 6% of all Medicare spending. Hemodialysis for ESRD costs the program about $88,000 a year per patient. The CMS Innovation Center conceived the new Comprehensive End-Stage Renal Disease Care initiative, or CEC, in February 2013 to investigate new payment and delivery models that would rein in those costs while encouraging higher quality, better coordinated and more patient-centered care for these more than 500,000 beneficiaries. Introducing a model similar to the accountable care organizations aimed at improving the efficiency and quality of care for the general Medicare population, the CMS is establishing ESRD seamless care organizations, or ESCOs, for kidney failure patients. Related Content Q&A: DaVita CMO Dr. Allen Nissenson on renal care and Medicare ACOs The initiative drew early criticism from kidney researchers, who supported the idea but questioned why the ESCO model wouldn't also target patients in earlier stages of the disease to slow its progression. They also expressed reservations about how the CMS would calibrate the quality targets. Questions about the details of the program persist more than a year and a half later, even though the CMS is expected to begin testing accepted models in January 2015. “The economics are not great, the quality targets are not known and they haven't told us what interventions are going to be dictated by the waivers,” said Robert Sepucha, vice president of corporate affairs for Fresenius Medical Care, a dialysis service provider that has submitted about six applications to the program. The quality metrics applied to this patient population have to be specific, he said, because they tend to have multiple chronic diseases and face difficult and costly treatments. Another fear is that the program's waivers won't give providers enough leeway to try new interventions that are prohibited under traditional Medicare reimbursement, Sepucha said. For example, offering financially strapped patients free transportation to a dialysis clinic is considered essentially a kickback to the patient. If an approach is denied “We'll have to scratch our heads and go back to the drawing board,” Sepucha said. In response to such criticisms, the CMS says similar models, such as the Pioneer ACO payment model and the Comprehensive Primary Care Initiative, were able to successfully ramp up their care-management activities well before the quality metrics were finalized. The CMS also says the agency has already published a set of preliminary CEC measures. The list includes metrics for quality of life, disease management (like extremity amputation), mortality rates and care coordination (like readmission and hospitalization ratios). The CMS expects to release details on the quality measurement strategy for the initiative in late fall of this year. Participants can expect “substantial overlap” between the preliminary and final list when it is released in the late fall, the CMS said. “The problem is very few of the quality measures have been field-tested, and some are tested in the general population but not the dialysis population,” says Dr. Edward Jones, chairman of Kidney Care Partners, a coalition of patient advocates, dialysis professionals, care providers and manufacturers. “They've been put out by technical expert panels of CMS, with little input from the community,” he said. The CMS has not disclosed the number of applications it has received from providers vying to operate as ESCOs, but some observers suspect the numbers are low. In response to stakeholder feedback, the CMS extended the application date this past spring. ESCOs that include a large dialysis organization were given through June 23, while those with small dialysis organizations have until Sept. 15. “It's not likely going to be the large number of applications they were hoping for,” said Jones, who is also a practicing nephrologist in the Philadelphia area. Members of the coalition also expressed concern over a two-sided risk model, in which larger organizations who participate would not only suffer losses if targets are not reached, but would also have to pay back the federal agency for money lost. Many support the CMS efforts, “but it has to be done the right way,” Jones said. Other payment and delivery experiments the CMS has launched under the Patient Protection and Affordable Care Act have yielded mixed results so far. Last January, the first results for Medicare's shared-savings program for ACOs showed uneven progress among hospitals and physicians. The Innovation Center's Pioneer ACO Model, meanwhile, saw nine of 32 organizations exit the program after its first year. Several of them switched to the less financially risky shared-savings program.
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Kidney Care Partners—whose members include AbbVie, the American Kidney Fund, the American Society of Nephrology and DaVita HealthCare Partners—is supporting legislation it says will lay the groundwork for the success of programs like Medicare's new ESRD initiative. The Chronic Kidney Disease Improvement in Research and Treatment Act of 2014 bill aims to address gaps in kidney disease research, drive efforts to improve education for patients, and establish an interagency committee to improve research coordination. For now, potential participants in the CEC remain skeptical. The way in which the model has been rolled out has provided little incentive, kidney-care providers say. DaVita, which along with Fresenius dominates dialysis care in the U.S., is hoping to have as many as five ESCOs accepted by the CMS. “We really believe in care coordination,” DaVita Chief Medical Officer Dr. Allen Nissenson said in a recent interview with Modern Healthcare. “We want to be held accountable for the outcomes as well as for the cost. We've asked for that.” But he also echoed Sepucha's reservations about the model. “It's sort of sad,” Nissenson said, “that the full potential probably won't be realized.” October ruling expected in Fla. Medicaid case A federal judge is expected to rule in October on a class-action lawsuit filed in 2005 against Florida health and child-welfare officials. The case claimed the state violated federal law by providing inadequate Medicaid services to children, and that care of the children had been hampered by low Medicaid payments to doctors, the Miami Herald reported last week. According to the report, if the judge rules in favor of the plaintiffs, the state might have to come up with about $227 million a year to permanently increase payment rates to pediatricians and dentists, pending any appeals. AUGUST 2014
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Rutgers health care study highlights struggle for wellness in low-income communities as state prepares Medicaid ACO rollout By Beth Fitzgerald Low-income New Jersey communities have higher rates of avoidable hospitals visits — ailments that could be managed in a doctor's office if caught earlier — according to a report released Wednesday by the Rutgers Center for State Health Policy. The study points to factors outside the health care system, like homelessness and lack of fresh, healthy food, driving high hospital use in some poor communities, while for others the key issues are health care related, such as insufficient primary medical care. The report comes as New Jersey prepares to launch later this year its new Medicaid Accountable Care Organization pilot program. The program will seek to deliver coordinated medical care in low-income communities, in an effort to improve population health while reducing wasted spending in the state’s Medicaid program, which has an annual budget of more than $10 billion. An analysis of hospital billing records and demographic data by Rutgers researchers across 13 low-income communities in New Jersey found that as an area’s per capita income rises, the number of patients who seek medical care in the hospital falls dramatically. But the Rutgers team also discovered that hospital systems in some low-income areas perform better than expected, given their per capita income and other socioeconomic disadvantages. For example, Camden performs better than expected after statistically adjusting for the city’s high level of socioeconomic disadvantage. But high rates of avoidable visits in Jersey City and Asbury Park changed little after socioeconomic adjustments, suggesting that avoidable hospitalizations reflect factors other than income, such as the lack of access to primary care doctors. “The findings show how well a hospital system can perform in the face of poverty,” said Rachel Cahill, director of health care improvement and transformation at the Nicholson Foundation, which funded the Rutgers study. “The fact that some low-income areas are performing well despite their dire situations indicates that there is great potential for improvement.”
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The report, Cahill says, has important policy implications as New Jersey rolls out the three-year Medicaid ACO pilot. Eight community-based health care coalitions throughout New Jersey have applied to the state to create Medicaid ACOs, which will assume responsibility to care for Medicaid members within their geographic territory. The Medicaid ACOs will receive a share of the money that Medicaid saves if they can deliver high quality, efficient care. “In many low-income communities, lowering avoidable hospital use and cost requires emphasis on the social determinants of health,” said the report’s lead author, Derek DeLia, associate research professor at the CSHP. “This is especially true in communities that perform better than expected after adjusting for socioeconomic factors. In these communities, interventions that give special consideration to the daily stresses and problems associated with poverty — such as unsafe neighborhoods, unstable housing, lack of transportation, or limited access to healthy foods — can play a greater role in improving health and reducing avoidable medical episodes than a purely medical care focus.” Linda Schwimmer, vice president of the New Jersey Health Care Quality Institute, said: “The results of this study are illuminating and can help guide future efforts to improve care in these communities. We know that many factors beyond the provision of health care services contribute to a person’s overall health, and many of those factors, like housing, proper nutrition (and) educational opportunity, are largely tied to the income and the overall wealth of a given community.” In addition to broader societal challenges, “many of these communities lack certain health care infrastructure — like primary care — that can exacerbate the situation. The upshot is that this report will help these communities better understand what is driving readmissions and other health care utilization, and will help developing Medicaid ACOs and other provider collaborations better target their interventions and community partnerships.” The Camden Coalition of Healthcare Providers, which has been working to improve health care to the poor in Camden for more than a decade, is among the groups that plan to become a Medicaid ACO. And DeLia said the Camden is already looking beyond health care to tackle the social factors that drive public health. “In Camden they realize that people who are in the hospital multiple times are people who have unstable housing. So they have decided they need to talk to the housing authority and get these patients connected with a stable housing situation.” And he said the other communities creating Medicaid ACOs “probably understand that it is not just medical, you’ll have to deal with housing, transportation, child care,” and a range of other factors outside the walls of the hospital that impact population health.
Duke LifePoint finalizes agreement to acquire Conemaugh By Beth Kutscher Duke LifePoint has finalized the terms of a deal that will allow it to expand into Pennsylvania, its first market in the mid-Atlantic region. The joint venture between Duke University Health System and publicly traded LifePoint Hospitals expects to close its acquisition of Conemaugh Health System, 70 miles east of Pittsburgh in Johnstown, Pa., by Sept. 1. The transaction, announced in March, includes Conemaugh's three hospitals, outpatient centers and physician groups. Duke LifePoint is in the midst of a nationwide expansion strategy, which has already taken it into Michigan's Upper Peninsula. It also owns seven hospitals in its home state of North Carolina and one in Virginia. The financial terms of the Conemaugh deal exceed $500 million, including a commitment to invest $425 million into Conemaugh's services and facilities over the next 10 years. Duke LifePoint also will fund a charitable foundation that will sponsor community programs. Conemaugh's financial report for fiscal 2014 showed the system is operating with a slim operating margin of 1.5% and has cut costs to counter declining patient volume. Under the agreement, Duke LifePoint will retain all of Conemaugh's current employees and establish a local board of trustees comprising community members, local physicians and a representative from Duke.
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Practice-management system vendors launch trade group By Joseph Conn The Healthcare Administrative Technology Association, a not-for-profit trade group for developers of software systems used by office-based physicians to keep patient accounts and track claims, opened for business Monday. The group hopes to answer what some see as a need for an industry voice for practice-management software vendors. The organization will start with seven member firms but hopes to reach 100 to 150 members by the end of the year. “For too long, the PMS market system had not been heard,” said Tim McMullen, a lawyer and executive director for the Cooperative Exchange, an association of claims clearinghouses. “I testified at a number of NCVHS (National Committee for Vital and Health Statistics) hearings and the committee always says the one player that we don't have at this table is the practice management developers.” The association is “going to fill that void,” he said. Seven PMS developers—eMDs, HealthPac, Medinformatix, PracticeAdmin, MDSynergy, AdvancedMD and NextGen Healthcare— will be involved initially, McMullen said. Co-organizer Brad Lund, the executive director of the Healthcare Billing & Management Association, said the idea for a trade group to represent the practice-management systems sector came out of a meeting he had last year with Devin Jopp, president and CEO of the Workgroup for Electronic Data Exchange. In recent years, finger-pointing has become the norm in the healthcare information technology industry as deadlines to adopt new tech standards have either passed or pushed back. From the troubled Jan. 1, 2012 upgrade to the ASC X12 Version 5010 electronic claims processing standards to this year's rollback of the deadline for the switch to ICD-10 codes, the need for delaying the updates has been blamed at least in part on vendors of electronic health-record systems and physician practice-management systems, who, it was alleged, could not deliver their upgraded products on time. Developers of EHRs have the Electronic Health Records Association, an affiliate of the Chicago-based Healthcare Information and Management Systems Society, to answer such charges. Developers of practice-management systems, however, had no such group. Lund, said he ran the PMS association concept past health IT industry leaders such as Dr. Farzad Mostashari when he was still head of the Office of the National Coordinator for Health Information Technology, and Robert Tennant, senior policy adviser for the Medical Group Management Association, with favorable responses. Lund heads the International Society & Association Management, a Laguna Beach-based company that provides administrative services to not-for-profit organizations. “When we've had issues, for example ICD-10, we tried to reach those vendors,” Tennant said. “But there is no natural avenue” to reach them, “so, it's long overdue and a much needed voice in the industry.” At a conference last fall, Lund invited a group of PMS vendors to a side session to hear his pitch. “They had a vey strong interest,” Lund said. “It's a very competitive industry. The idea of them coming together in a very collegial way seemed to be as important as them being separate.” The leaders of each of the founding member companies have committed to calling and inviting 10 to 15 of their peers to join, Lund said.
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Ana Croxton, vice president of EDI products and services for NextGen, said she foresees the association providing both an external and an internal benefit for its members. Externally, HATA will be able to augment the testing and certification program from WEDI and EHNAC, which she expects “will cover the basics, like a Good Housekeeping seal of approval.” On the other hand, HATA can say, if you're looking at a type of practice management system for a medical specialty, like radiology, “you need to look for A, Band C.” Providing customized market information “will be a help to the industry and providers,” she said. Internally, Croxton said, “Things are changing very rapidly in the reimbursement areas and it would be nice to have our position represented,” she said. “Because so much of our product development is to meet government regulations, why not help each other?” Organizing practice-management system developers, a diverse lot, has been impractical, said Vincent Hudson, head of Jewson Enterprises, a Dunedin, Fla.,-based health IT market research and consultant. “Right now, in my database, I have something over 600 vendors,” Hudson said. They split an estimated $11 billion in revenues, he said. Almost 80% of that revenue was generated by the top 100 vendors, he said. “The rest of that is small mom and pops.” Further complicating things, he said, many of the mid-sized and larger firms distribute their practice-management systems through value-added resellers, middlemen that sell, install and support the developers' products. “The VARs are a major distribution channel for most of the vendors,” Hudson said. “There are very few vendors doing direct selling.” Ironically, the VARs formed the Association of Independent Medical Software Value Added Resellers about a decade, to get leverage with developers, Hudson said. In March, WEDI and the Electronic Healthcare Network Accreditation Commission announced they were developing a program to test and accredit practice-management systems, with HATA planning to collaborate in that effort. Helping practice-management systems developers provide input into the design of that testing program could provide developers with a rationale to join HATA, Hudson said. “The blessed hand of God will be put on them and they'll go out and say, 'We've been certified and blessed and don't buy anything else,'” Hudson said.
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Arizona deal combines orthopedic, neurology practices By Bob Herman Two Arizona physician groups have agreed to a business agreement creating one of the most expansive specialty organizations in the state. Effective Oct. 1, CORE Institute, which bills itself as the largest orthopedic group in Arizona, will employ all providers and employees of the Arizona Neurological Institute, effectively creating a neurological division, said Dr. David Jacofsky, CEO of the CORE Institute. As a result, CORE will have about 80 physicians and 120 other clinicians providing musculoskeletal, neurological and rehabilitation care. “This will better position us for the economics of healthcare going forward,” Jacofsky said. “And most importantly, it will allow us to become one of the only organizations in the country to provide an ortho-neuro-rehab continuum.” The Arizona Neurological Institute said it saw benefits to creating a more comprehensive care path for its patients. “Musculoskeletal care, rehabilitation and the neurosciences are deeply intertwined, and many conditions require the integrated approach of both specialties, making this a natural partnership,” Dr. Atul Syal, president of the Arizona Neurological Institute, said in a release. CORE has 12 locations throughout the state, Arizona Neurological has nine. The groups did not say if sites would be consolidated. Both groups also have wide-ranging affiliations with Banner Health hospitals.
Ascension Health plans joint-venture with Dignity, Tenet to run Ariz. hospitals
By Beth Kutscher Ascension Health plans to transfer part of its ownership in the Carondelet Health Network in Arizona into a three-way joint venture that includes Tenet Healthcare Corp. and Dignity Health. The three hospital groups Tuesday signed a letter of intent (PDF) to form a Tucson, Ariz.-based joint venture in which Tenet would hold a majority stake and Ascension would be a minority partner. Dignity Health also would hold an undisclosed interest in the joint venture, which would own and operate Carondelet. The partnership would also allow Carondelet's three hospitals to participate in accountable care organizations and other initiatives with Tenet and Dignity's hospitals in Southern Arizona. Carondelet will retain its Catholic identity under the joint venture. Tenet last year acquired five Phoenix-area hospitals as part of its takeover of Vanguard Health Systems. San Francisco-based Dignity has three hospitals in the Phoenix region. The Carondelet Health System includes 449-bed St. Joseph's and 429-bed St. Mary's hospitals, both in Tucson, as well as 56-bed Holy Cross Hospital in Nogales, Ariz., the Carondelet Medical Group, the Carondelet Specialist Group and ancillary businesses. Ascension did not break out revenue for the group in its most recent annual report. However, its utilization statistics (PDF) showed a 7.5% decline in acute discharges between 2012 and 2013 in Tucson and Nogales. Admissions across all of Ascension's hospitals increased 1.3% year-over-year. The three parties are conducting due diligence, they said in a news release said. They did not disclose a timeline for a definitive agreement. Ascension declined to comment. In February, the St. Louis, Mo.-based system dropped plans to sell its two-hospital Kansas City subsidiary, also known as Carondelet Health, to investor-owned HCA. The deal was abandoned after a prolonged Federal Trade Commission review.
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