Sutherland insights healthcare news flash may 15, 2014

HEALTHCARE NEWS FLASH May 15, 2014

Table of Contents Sales & Marketing ................................................................................................................. 3 Finance ................................................................................................................................. 6 Technology .......................................................................................................................... 10 Strategy .............................................................................................................................. 14

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Sales & Marketing North Shore-LIJ to Add Phelps Memorial Hospital Center May 13, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-transactions-and-valuation/north-shore-lij-toadd-phelps-memorial-hospital-center.html North Shore-LIJ Health System in Great Neck, N.Y., and Phelps Memorial Hospital Center in Sleepy Hollow, N.Y., have ratified a letter of intent that would bring Phelps into the North Shore-LIJ network.

Financial terms of the deal were not disclosed. Executives will now conduct due diligence and hope to sign a definitive agreement by this summer.

The 238-bed Phelps would become North Shore-LIJ’s 18th hospital and its first in Westchester County. Phelps has 1,600 employees and manages more than 8,000 inpatient admissions annually.

Phelps was one of four hospitals within Stellaris Health Network, which disbanded last year. The hospitals re-evaluated the system and decided to find different strategic partners. White Plains (N.Y.) Hospital signed a letter of intent this past February to affiliate with Montefiore Health System in Bronx, N.Y., while Lawrence Hospital Center in Bronxville, N.Y., is seeking to join NewYorkPresbyterian Hospital in Manhattan.

Centura Health to Manage Middle Park Medical Center May 09, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-transactions-and-valuation/centura-health-tomanage-middle-park-medical-center.html Centura Health in Englewood, Colo., and Middle Park Medical Center in Kremmling, Colo., have signed a management agreement.

Effective June 1, Centura will provide a yet-to-be-named CEO to oversee all management and leadership operations of the 25-bed critical access hospital. MPMC’s board of directors will still retain governance, ownership and authority over the hospital.

Financial details of the transaction were not disclosed. Bernie Murphy, president of the Kremmling Memorial Hospital District board, which oversees MPMC, said in a statement: “By strategically partnering with Centura Health, we are able to bring our community the resources it needs to deliver optimal healthcare value. The management agreement will strengthen MPMC’s system of care and the Centura Health network to ensure we keep care local for generations to come.”

Centura, which is sponsored by Englewood, Colo.-based Catholic Health Initiatives and Altamonte Springs, Fla.-based Adventist Health System, controls 15 acute-care hospitals and is affiliated with another nine.

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Lawrence General Expands Affiliation With Beth Israel Deaconess May 08, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-transactions-and-valuation/lawrence-generalexpands-affiliation-with-beth-israel-deaconess.html Lawrence (Mass.) General Hospital, a 189-bed independent community hospital, has expanded its clinical affiliation with Beth Israel Deaconess Medical Center in Boston.

As part of the deal, LGH will join Beth Israel Deaconess Care Organization, which is BIDMC’s accountable care organization. The move will build on LGH’s affiliation with BIDMC, which has been in place in 2011 and focuses on cardiovascular, bariatric surgery, gynecologic oncology and intensive/critical care services.

LGH will still retain full governance and autonomy of its operations. The deal only furthers the hospital’s ability to partner with BIDMC for population health in the area. The Massachusetts Health Policy Commission must approve the affiliation.

California Hospital Association, SEIU Reach Collaborative Deal May 07, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/workforce-labor-management/california-hospitalassociation-seiu-reach-collaborative-deal.html The California Hospital Association and the state’s largest hospital worker union, SEIU-United Healthcare Workers West, have formed a strategic relationship and aim to create a new model of hospital-labor relations.

The agreement will establish a $100 million joint advocacy committee to drive healthcare system improvements, specifically to stabilize the state’s healthcare safety net through increasing Medicaid payments, according to the news release.

Also as a result of the agreement, SEIU-UHW will no longer pursue its two ballot initiatives. One initiative, the Fair Healthcare Pricing Act of 2014, would have prohibited hospitals from setting prices more than 25 percent higher than the actual cost of care. The other, the Charitable Hospital Executive Compensation Act of 2014, would have capped the pay of nonprofit hospital executives at $450,000. Now, through the collaboration, both sides will work to establish legislation, regulations or voluntary compliance that would address the issues from both ballot measures.

“CHA has been involved for several years in national efforts to address the complexities in hospital pricing and to reform the payment structure of the Medicaid program,” said C. Duane Dauner, president and CEO of CHA, in the release. “We are pleased that SEIU-UHW will join us in finding workable solutions.”

The agreement also creates a “code of conduct that will govern conversations between union representatives and hospital employees,” the release states.

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At least one other union is not pleased with the CHA-SEIU collaboration. “The type of ‘strategic collaboration’ announced…between SEIU and the California Hospital Association is an act of treason to California’s healthcare workers and patients,” said Sal Rosselli, president of the National Union of Healthcare Workers, in a statement. “This agreement will undermine the rights of workers and will eliminate the union’s watchdog role on behalf of patients…Moving forward, SEIU will quietly collect dues, but will do little to raise questions.”

UnitedHealth ranks least trustworthy among hospitals May 07, 2014 | Fierce Health Payer http://www.fiercehealthpayer.com/story/united-healthcare-ranks-lowest-insurance-trusthospitals/2014-05-07 As hospitals accumulate more financial risk, the level of trust with insurers is key. However, hospital executives have little faith in health insurance companies, according to a 2014 ReviveHealth National Payer Survey.

The survey, which included responses from 203 hospital and health system leaders between Jan. 21 and March 5, examined if hospitals had agreeable relationships with their insurers. A low level of trust stems from many factors--the length of time it takes to get paid, narrow networks, changing provider contracts and tiering, the study found.

The survey asked three questions to determine hospitals’ level of agreement with the following statements--this organization makes every effort to honor its commitments; this organization is accurate and honest in representing itself and its intentions; this organization balances its interests with ours and doesn’t routinely take advantage of us.

The findings were dismal. On a scale of 1 to 100, with 100 the top score, payers scored an average of 53.2. For the statement “this organization balances its interests with ours and doesn’t routinely take advantage of us,” UnitedHealthcare came in dead last, scoring 36.4. It’s 40.7 overall score was the lowest of any insurer.

What’s more, when asked which insurer hospitals considered the least trustworthy, execs ranked UnitedHealth last once again.

Not all hope is lost. When asked which insurer is the most trustworthy, Blues plans ranked the highest, with 66 percent of hospital respondents saying it’s the insurer they trust the most. Similarly, Cigna sat above the average score with 63.1.

“The trust factor is huge when it comes to hospitals and health plans being able to play nice in the new world order of risk-sharing and improved health outcomes,” ReviveHealth CEO Brandon Edwards said in a statement during last year’s survey, FierceHealthPayer previously reported.

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Finance PPACA Medical Loss Ratio Provision Yields $3B in Consumer Benefits: Commonwealth Fund Report May 13, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/finance/ppaca-medical-loss-ratio-provision-yields-3b-inconsumer-benefits-commonwealth-fund-report.html During its first two years, the Patient Protection and Affordable Care Act’s medical loss ratio provision produced more than $3 billion in consumer benefits, in the form of reduced overhead and rebates, according to a report from The Commonwealth Fund.

Commonwealth Fund researchers analyzed data from CMS and found health insurers paid out approximately $1.5 billion in rebates to consumers in 2011 and 2012 for failing to comply with the PPACA medical loss ratio provision. Additionally, insurers reduced administrative costs and profits by $1.75 billion, in part to reduce the rebates they might be required to distribute.

The medical loss ratio shows the percentage of premium dollars an insurer spends on medical care and quality improvement expenses, minus what the company spends on overhead (profits, administrative costs and sales expenses). To cut the cost of insurance to consumers and the government, since 2011, the PPACA has required health insurers to maintain a minimum medical loss ratio of 80 percent in the individual and small group markets and 85 percent in the large group market. Health insurers that spend less than those percentages on quality improvement and medical care must pay the difference in the form of rebates to their members.

For the first year the medical loss ratio provision was in effect, insurers that failed to maintain the minimum ratio paid out more than $1 billion in rebates. That amount dropped to $513 million in the second year, indicating greater compliance. Insurers also reduced overhead costs by $350 million the first year and $1.4 billion the second. However, spending on quality improvement remained low, at less than 1 percent of premium revenues for both years.

Additionally, during the same time period, there was a “modest contraction” in the number of active insurers with 1,000 or more members in a market segment, but a “substantial number” of insurers remained actively competing, according to the report. Between 2011 and 2012, the number of health insurers in the individual and small-group markets declined 11 percent and 6 percent, respectively. It’s also important to note that the number of insurers has declined steadily for more than a decade as the industry consolidates, according to the report.

“On balance, federal regulation of MLRs appears to be producing significant consumer benefits without causing any substantial harm to the insurance market,” the report concludes.

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Study: Medicare Spent $8.5B on Unnecessary Care May 13, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/finance/study-medicare-spent-8-5b-on-unnecessarycare.html In 2009, Medicare spent as much as $8.5 billion (2.7 percent of total spending) on services deemed to have little or no clinical value, according to a JAMA Internal Medicine study.

Based on evidence-based lists of services that provide minimal clinical benefits, researchers identified 26 low-value services. These services fell into the following categories: low-value cancer screening, low-value diagnostic and preventive testing, low-value preoperative testing, low-value imaging, low-value cardiovascular testing and procedures, and other low-value surgical procedures.

After analyzing 2009 Medicare claims, the researchers found between 25 percent and 42 percent of beneficiaries received low-value services, accounting for 0.6 percent to 2.7 percent of total program spending, depending on the sensitivity and specificity of the measures used in the study.

“Despite their imperfections, claims-based measures of low-value care could be useful for tracking overuse and evaluating programs to reduce it,” the study’s authors wrote. “However, many direct claims-based measures of overuse may be insufficiently accurate to support targeted coverage or payment policies that have a meaningful effect on use without resulting in unintended consequences. Broarder payment reforms, such as global or bundled payment models, could allow greater provider discretion in defining and identifying low-value services while incentivizing their elimination.”

Healthcare Spending Grew 7.1% in March May 09, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/finance/healthcare-spending-grew-7-1-in-march.html National health spending grew 7.1 percent year-over-year in March, the highest annual rate recorded since February 2005, according to a report from the Altarum Institute Center for Sustainable Health Spending.

In March, health spending also grew 3.6 percent faster than the gross domestic product, and the health spending share of the GDP reached an all-time high of 17.9 percent. Total health spending increased to a seasonally adjusted annual rate of $3.07 trillion in March, compared with $3.05 trillion in February. Hospital spending was $989 billion and represented 32 percent of total health spending.

The acceleration in spending growth was driven by both the improving economy and expanded health insurance coverage under the Patient Protection and Affordable Care Act, according to the report.

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Meanwhile, healthcare prices in March grew 1.1 percent year-over-year, just one-tenth above the all-time lowest growth rate. Hospital prices grew 1.3 percent year-over-year, on par with the February rate. This suggests that the increase in healthcare spending growth has been driven by greater utilization rather than higher prices, according to Altarum.

For-profit hospitals optimistic after Q1 May 09, 2014 | Healthcare Payer News http://www.healthcarepayernews.com/content/profit-hospitals-optimistic-after-q1 Increased admissions drove revenue gains for Tenet Healthcare Corporation and Community Health Systems in the first quarter of 2014 compared to 2013. Both for-profit hospital firms appear confident midway through Q2.

Despite being adversely impacted by a $25 million revenue decline related to Medicare sequestration, a $22 million EBITDA decline related to the loss of an uncapped health plan contract in Arizona, and a $12 million decline in California Provider Fee Program revenue recognition, Tenet saw an increase in revenue for the first quarter of 2014 compared to 2013.

Earlier in the week, Tenet reported an Adjusted EBITDA for the first quarter of 2014, which ended on March 31, of $387 million, an increase of $113 million, or 41 percent, as compared to $274 million in the first quarter of 2013.

Trevor Fetter, president and CEO of Tenet, said the company’s hospitals saw an improvement in their admissions trend in the first quarter of the year, with a 0.3 percent increase in adjusted admissions and a 0.9 percent admissions decline on a pro forma basis, in part because of the newly insured patient populations under the Affordable Care Act (ACA).

“The strengthening volume trend was particularly pronounced in the states that expanded their Medicaid programs. In these four states, our Medicaid admissions grew by 17 percent and uninsured plus charity admissions declined by 33 percent. We leveraged this top line contribution through solid cost control to approach the top quartile of our Adjusted EBITDA Outlook range,” he said. “Our EBITDA and volume growth would have been even stronger had it not been for the adverse impact of challenging weather events in many of our markets.”

CHS expresses optimism Meanwhile this week, Community Health Systems, based in Franklin, Tenn., announced that their first quarter of the year Adjusted EBITDA was $485 million compared with $495 million for the same period in 2013, representing a 2 percent decrease.

According to a CHS press release, the decrease in revenue this quarter compared to last year was due to the fact that CHS just completed its acquisition of Health Management Associates, Inc. (HMA) this past January. Excluding the acquisition, integration and legal expenses related to the HMA acquisition, Adjusted EBITDA was $541 million for the three months ending on March 31, 2014.

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“We are pleased with our accomplishments for the first quarter of 2014 during what has been a challenging, yet significant period for Community Health Systems,” said Wayne T. Smith, chairman and chief executive officer of CHS. “This is the first quarter that we have reported our combined operations with HMA, and we have been fully engaged in the integration of these additional hospitals. Overall, our results for the quarter were affected by the severe winter weather in several key markets and lower flu volumes compared with the previous year. However, we have started to see some positive trends in our operations related to the implementation of the Affordable Care Act.” The consolidated operating results for the first quarter of 2014 also reflect a 24.7 percent increase in total admissions and a 28.4 percent increase in total adjusted admissions compared with the same period in 2013, according to the press release.

“With the completion of the HMA acquisition, we are excited about the long-term benefits for Community Health Systems and our shareholders,” Smith said. “We have a significant opportunity to leverage our assets and apply our disciplined approach to providing quality healthcare in more local communities across the United States. We have already identified areas for operating improvements and believe we are making measurable progress toward achieving the synergies we have previously estimated.”

NewYork-Presbyterian’s Revenue Up 9% May 02, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/finance/newyork-presbyterian-s-revenue-up-9.html In 2013, total revenue, operating income and total profit were all up at NewYork-Presbyterian Hospital, based in Manhattan.

Operating income totaled $202.2 million, a 4.5 percent increase from 2012. Total revenue soared almost 9 percent to $4.26 billion, giving NewYork-Presbyterian a 4.7 percent operating margin. In 2013, about 55 percent of NewYork-Presbyterian’s patient revenue came from commercial payers.

Medicare and Medicaid represented 21 percent and 17 percent, respectively, while the remaining 7 percent were from self-pay and uninsured patients.

The massive academic medical center also recorded more than $153.9 million investment income, pushing its total profit in 2013 to $356 million, compared with $348.7 million in 2012. Total assets equaled $7.37 billion by the end of 2013.

Last July, NewYork-Presbyterian completed its acquisition of New York Downtown Hospital, located in Lower Manhattan, as its sixth hospital campus. The 180-bed hospital was renamed NewYorkPresbyterian/Lower Manhattan Hospital. NewYork-Presbyterian has roughly 2,600 beds across its six campuses.

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Technology 4 Flawed State-Based Exchanges Cost $474M in Federal Funds May 12, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/finance/4-flawed-state-based-exchanges-cost-474m-infederal-funds.html The federal government spent a total of $474 million on the development of four state-based health insurance exchanges that floundered because of technical problems, according to a Politico report.

Massachusetts spent $57 million on the Massachusetts Health Connector, which has been plagued by technical issues. As of mid-March, the state was still working on its exchange and had about 84,000 residents on temporary health insurance plans. Last week, the state officials announced plans to replace the flawed exchange site with new, off-the-shelf enrollment software, with HealthCare.gov as a backup option in case the switch to the replacement software takes too long.

The state is seeking an additional $121 million in funding for the repair effort, according to the report.

Meanwhile, Maryland spent $118 million in federal funding on its state-based exchange, which crashed not long after it launched last fall. As of March 28, only 49,293 people had enrolled in private health plans through the exchange, far short of the 150,000 people Maryland had hoped to sign up by March 31. The exchange’s board of directors has decided to replace the technology behind the glitch-ridden Maryland Health Benefit Exchange.

The federal government also granted $248 million in funding for Oregon’s health insurance exchange, Cover Oregon, which was plagued with technical problems. Last month, the board overseeing Oregon’s health insurance exchange voted Friday to abandon the glitch-ridden state-run exchange site in favor of relying on HealthCare.gov for the 2015 open enrollment period.

Nevada’s similarly glitch-ridden exchange cost the federal government $51 million. The future of the state’s exchange is still uncertain, according to Politico.

Despite the trouble those states have encountered with their exchange sites, most state-based Patient Protection and Affordable Care Act exchanges have been successful, with several (Vermont, Connecticut and the District of Columbia) exceeding projected 2014 enrollment by March 1, according to a report from the Robert Wood Johnson Foundation and the Urban Institute.

Healthcare data analytics landscape changing rapidly May 07, 2014 | Fierce Health IT http://www.fiercehealthit.com/story/healthcare-data-analytics-landscape-changingrapidly/2014-05-07 Nearly half of healthcare organizations responding to a new survey say they are experiencing a positive return on investment in data analytics and reporting technology.

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The survey, by TCS Healthcare Technologies in conjunction with the Case Management Society of America and the American Board of Quality Assurance and Utilization Review Physicians, found the landscape changing quickly from similar measures taken in 2008 and 2010.

Forty-six percent reported positive ROI, compared with 14 percent who reported a negative return, according to an announcement.

Thirty percent of respondents reported stratifying healthcare information to promote populationbased screening, or to identify candidates for case management. Meanwhile, just 25 percent reported using predictive modeling applications, while 35 percent reported doing so two years ago.

Excel (39 percent), Crystal Reports (20 percent) and Access (17 percent) remain the most widely used applications.

Users cited the importance of dashboard and visualization capabilities, naming among their priorities the ability to manipulate reports and data presented and to view trends for individual patients and for large sets of data.

Applications for population health management that integrate claims and clinical data are key to the success of accountable care organizations, an IDC Health Insights report found recently, saying many organizations have found that relying on EHR information alone isn’t enough.

While tools that help organizations with case management have been touted for their ability to improve care, as New Jersey-based primary-care practice Vanguard Medical Group experienced, it’s not all about the technology. A Kaiser Permanente study found readmission-prediction software wasn’t accurate enough for it to replace manual review of cases.

EHR incentive payouts climb to $23B May 07, 2014 | Healthcare IT News http://www.healthcareitnews.com/news/ehr-incentive-payouts-climb-23b Eligible hospitals and providers have received a whopping $23 billion in electronic health record incentive payments from the Centers for Medicare and Medicaid Services, CMS officials reported this week.

EHR payouts currently stand at $22.9 billion to date, reported Elisabeth Myers, policy and outreach lead at the CMS Office of eHealth Standards and Services at the May 6 Health IT Policy Committee.

Some 94 percent of all U.S. hospitals are participating in the meaningful use program, Myers said, and of those participating, 90.7 percent have received incentives.

More than 370,000 Medicare and Medicaid eligible providers have earned an EHR incentive payment so far, with 64,000 new participants attesting to meaningful use for the 2013 reporting year, she said.

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In addition, 225 eligible professionals attested for the 2014 reporting year. Sixty-one of them are new participants. So far this year, 50 providers have attested to Stage 2 along with 30 eligible hospitals. Eight of those hospitals are new participants to the MU program and four of them attested to Stage 2 this year.

Myers’ CMS report came on the heels of new findings from the American Hospital Association, released this week via a supplemental 2013 data survey on Hospital EHR and Stage 2 functionality.

The survey found hospital adoption of EHRs has increased five-fold since 2008.

Most hospitals had a high adoption rate of Stage 2 functionalities, said Jennifer King, acting director of the Office of Economic Analysis, Evaluation and Modeling at the Office of the National Coordinator for Health Information Technology.

The survey asked hospitals about their adoption of the 16 Stage 2 core objectives. “Most hospitals have adopted most objectives,” King said. “Most hospitals need only one or two more objectives to achieve Stage 2 core.”

King said the CMS survey revealed critical access hospitals and small rural hospitals are lagging behind in their adoption of Stage 2 objectives.

“It is too early to tell if Stage 2 is successful,” Myers said, when asked by a HIT Policy Committee member if the numbers reflect lagging success on Stage 2.

Health agency inks $71M EHR contract May 07, 2014 | Healthcare IT News http://www.healthcareitnews.com/news/health-agency-inks-71m-ehr-contract The Defense Health Agency has put a foot forward with revamping its clinical information systems after it inked a bridged contract with a Reston, Va.-based technology and defense company.

Leidos, previously the Science Applications International Corporation, landed the $70.7 million contract from DHA in which it will support the Armed Forces Health Longitudinal Technology Application and Composite Health Care System with logistics, data mapping, beta site support, remote monitoring and enterprise scheduling support.

Liedos “has the operational infrastructure and knowledge required for successful performance and the necessary skillsets to complete this effort,” wrote DHA officials.

The only catch? The funds aren’t yet available, so the contract is contingent upon government funding in the near future. Leidos’ contract will be good for up to 11 months.

According to the Defense Health Program’s 2015 fiscal year budget estimates, the integrated electronic health record and Department of Defense Healthcare Management Systems modernization will cost nearly $1.57 billion over the course of five years, $18 million of the pie dedicated to the iEHR development.

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Original estimates for the iEHR were between $4 billion and $6 billion. In September 2012, however, the Interagency Program Office doubled its previous estimates, pegging the final price tag somewhere between $8 billion and $12 billion. Ultimately, both estimates proved to be grossly inaccurate, as costs climbed to a whopping $28 billion early last year, with no iEHR to show for it.

Just this January, lawmakers on Capitol Hill took aim at the DoD and VA for their dilatory pace in developing the iEHR between the two agencies. “The actions of the Departments of Defense and Veterans Affairs in developing an electronic health record continue to be of concern to the Committees,” House lawmakers wrote in a preliminary appropriations bill. “The Committees want to be very clear with both Departments: An interoperable record between the two Departments is the chief end-goal for Congress.”

U.S. home health tech market to hit $5.8 billion by 2018 May 05, 2014 | Fierce Health IT http://www.fiercehealthit.com/story/us-home-health-tech-market-hit-58-billion-2018/2014-0505 Driven by federal mandates and financial stimulus built into the HITECH Act, the U.S. home health technology market will double to reach $5.8 billion by 2018, according to a new report published by IHS. Both devices and services are starting to converge giving consumers more comprehensive solutions, according to report author Roeen Roashan, an IHS analyst for consumer medical devices and digital health.

“As they become more comprehensive, the gap between clinical care and home health becomes more narrow, which is necessary to provide patient centered care,” Roashan recently told Forbes.

Pushing the trend is the idea that it is less expensive to manage patient populations at home rather than at a hospital. To that end, patient-centered care will naturally move toward telemedicine, according to Jay Sanders, M.D., former president of the American Telemedicine Association.

“What the present technology affords the physician is an ability to better evaluate their patient in the patient setting, not in the doctor setting,” Sanders said in a recent interview with EHRIntelligence.

There are hurdles, however, including reimbursement issues, state regulations, and licensing that prevents physicians from practicing across state lines. Nonetheless, CMS announced changes to Medicare’s 2014 physician fee schedule to expand coverage for telehealth services and 64 organizations and business have affiliated with the TELEhealth for MEDIcare (TELE-MED) Act of 2013, which would allow Medicare providers to use telehealth technology to treat patients across state lines without obtaining multiple medical licenses.

The home, including remote patient monitoring, is the area of biggest impact and opportunity in the telehealth market, driving interest from major device makers and startups alike, according to a Frost & Sullivan report published in February based on a survey from the American Telemedicine Association’s 2013 annual meeting.

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Strategy Report: PPACA Will Have Small Impact on Employment May 09, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/finance/report-ppaca-will-have-small-impact-onemployment.html This past February, the Congressional Budget Office released a report predicting the Patient Protection and Affordable Care Act will reduce the total number of hours worked by employees nationwide by 1.5 percent to 2 percent from 2017 to 2024.

According to the CBO, that decline will occur primarily because workers will choose to supply less labor because of the new incentives and the financial benefits for some. Overall, the report projects the reduced hours will equate to a decline in the number of full-time-equivalent workers of about 2 million by 2017, rising to 2.5 million in 2024.

This prediction led conservative policymakers to label the law a “job killer,” according to a report from The Washington Post. However, despite concerns that the PPACA will harm the economy, a new report from the Urban Institute concludes the healthcare reform law won’t have a significant effect on the job market. Additionally, the report emphasizes any effect on unemployment will result from people voluntarily choosing to work less, rather than employers eliminating jobs.

“The [PPACA] is no different from any social program that provides benefits linked to income,” says report co-author Bowen Garrett, PhD, an economist and senior fellow in the Urban Institute’s Health Policy Center. “What our study did is take a look at the most relevant and direct evidence on how big this type of effect could be. Our review of the evidence suggests this type of employment effect of the [PPACA] will be small.”

First of all, Dr. Garrett and his co-author write the PPACA isn’t the first “means-tested” public policy to link the receipt and level of benefits to income — the Supplemental Nutrition Assistance Program, Temporary Assistance to Needy Families, the Housing Choice Voucher Program and the Earned Income Tax Credit all share this feature, according to the report. Most of these programs can decrease their recipients’ work effort by providing resources and benefits that decrease in conjunction with greater income.

“The potential for the ACA to lead to fewer people working is a feature of almost all means-tested programs. In this regard, there is nothing special about the [PPACA],” the report states. “Given this, there is no reason to single out the [PPACA] for special scrutiny, as has been done by some policymakers and advocates.”

Second, the analysts looked at recent studies of the effects of subsidized health insurance on employment. One notable study, for instance, examined Oregon’s expansion of Medicaid in 2008 to adults with incomes below the federal poverty level. In that study, enrollment in Medicaid was associated with “very small and statistically insignificant changes in employment and earnings” — a 1.6 percentage point, or 3 percent, lower probability of working and a $195, or 3 percent, decline in annual earnings. Other studies of state Medicaid expansions show similarly minor effects, according to the report.

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Furthermore, the report notes Massachusetts’ 2006 healthcare overhaul — which included many of the same provisions as the PPACA — has had “no statistically or economically significant effect on employment” in the state. “The Massachusetts reform is the best, most similar thing we have to get evidence from,” says Dr. Garrett. “Because we find basically no effect in Massachusetts, the effect for the [PPACA] is also likely to be small.”

Overall, the report concludes “ the best and most direct evidence to date suggests that the labor market consequences of the [PPACA] are likely to be small.”

Analysis: Double-Digit Premium Hikes Likely for Many Exchange Markets May 09, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/finance/analysis-double-digit-premium-hikes-likely-formany-exchange-markets.html Double-digit increases in health insurance premiums are likely in most health insurance exchange markets, according to a report from healthcare business advisory company Avalere Health.

Last week, HHS released data showing more than 8 million people have signed up for health plans through the Patient Protection and Affordable Care Act exchanges, surpassing the Congressional Budget Office’s initial projection of 7 million for the first year. Although enough young, healthy people (28 percent of the enrollee population) signed up for coverage through the exchanges to prevent age distribution from driving premium increases, “secular increases in the cost of medical care and in utilization of services and new medical technology make it likely that exchange plans will need to increase their prices,” according to Avalere’s analysis.

“While the exchange markets are likely to remain competitive, and the demographic mix of enrollees has been within tolerance limits, these factors will not compensate for increases in costs in health markets,” the report states. “Premium increases will vary geographically, and will depend in part on the competitiveness of provider markets.”

Last month, Kasier Health News reported health insurers were looking to raise rates next year for health plans offered through the exchanges. Dave Axene and Elaine Corrough, fellows of the Society of Actuaries, have offered a less drastic estimate than Avalere, saying health insurers will likely increase rates by 6 percent to 8.5 percent on average. Although rates will vary widely across the country, Ms. Corrough and Mr. Axene predicted medium-sized single-digit rate increases, based on medical inflation and the exchange enrollee population.

Insurers offering plans through the federal exchange must file initial rate requests by late May or June.

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Report: Hospital M&A Deal Volume Dropped in 2013 May 08, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-transactions-and-valuation/report-hospital-m-adeal-volume-dropped-in-2013.html The hospital sector saw merger and acquisition deal volume decline 21.5 percent year-over-year to 84 acquisitions in 2013, according to a report from Irving Levin Associates.

However, in the U.S. market, the number of hospitals and hospital beds involved in transactions hit a five-year high, despite the drop in the number of deals. This increase was driven by two megamergers: Community Health Systems in Franklin, Tenn., and Health Management Associates in Naples, Fla., and then Tenet Healthcare Corp. in Dallas and Vanguard Health Systems in Nashville, Tenn.

In another report released last month, Irving Levin Associates noted hospital merger and acquisition volume declined 42.9 percent year-over-year to 12 deals in the first quarter of 2014. That’s down from 7 in the fourth quarter of 2013 and 21 in the first quarter of last year.

Humana, WellCare, Molina report strong Medicaid growth May 07, 2014 | Fierce Health Payer http://www.fiercehealthpayer.com/story/humana-wellcare-molina-report-strong-medicaidgrowth/2014-05-07 Humana’s first-quarter profit of $368 million beat analyst expectations but still dropped 22 percent from last year’s first quarter of $473 million, partly due to marketing expenses and investments related to new products.

However, the Louisville, Kentucky-based insurer stuck by its 2014 outlook of $7.25 to $7.75 per share, according to its earnings report released today. That outlook takes into account higher-thanexpected costs for new hepatitis C treatments as well as planned investments in clinical initiatives.

Humana also said it will add 435,000 people to Medicare Advantage plans this year. At the end of March, individual Medicare Advantage membership totaled 2,330,800, up 15.8 percent from the first quarter of 2013. Humana also saw a 76.8 percent year-over-year increase in state-based Medicaid plan membership.

Meanwhile, WellCare Health Plans saw its first-quarter profit more than double from $21.5 million in 2013 to 44.1 million this year, the Tampa, Florida-based insurer announced yesterday.

WellCare Chairman and CEO Dave Gallitano attributed the financial gains to Medicaid growth. The insurer enrolled about 60,000 Medicaid beneficiaries during the first quarter thanks to program expansions under healthcare reform. The insurer also saw overall membership grow 31 percent year over year to 3.5 million people.

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Molina Healthcare also added 133,000 new Medicaid expansion members during the first quarter of this year, the Long Beach, California-based insurer announced Thursday.

However, its 2014 first-quarter net income of $4.5 million fell way below the $29.9 million earned in the first quarter of 2013. The insurer cited the nondeductible ACA health insurer fee with lowering this year’s first quarter earnings by about $16 million.

“While we have been investing in the infrastructure--staffing, training, technology--to be ready to accommodate the growth associated with the dual eligible programs and the Affordable Care Act, we have continued to improve the administrative efficiency of our existing business,” Molina CEO Mario Molina, M.D., said in a statement.

Study: Hospital Ownership of Physician Practices Leads to Higher Prices May 06, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-physician-relationships/study-hospitalownership-of-physician-practices-leads-to-higher-prices.html A new study has painted a mixed, although somewhat negative, picture of vertical integration from the perspective of the privately insured.

Professors from Stanford (Calif.) University led the study, which is published in Health Affairs. They investigated vertical integration’s effect on hospital prices, admissions and spending for privately insured patients. The study was designed to fill a gap, as the professors said there has been little research on the consequences of vertical integration in healthcare.

Study authors found that vertical integration — in its tightest form of hospitals owning physician practices — appears to lead to statistically and economically significant increases in hospital prices and spending. This is consistent with the hypothesis that vertical integration increases hospitals’ market power.

But the professors said “the consequences of looser forms of vertical integration were more benign and potentially socially beneficial,” according to the study. These include closed physician-hospital organizations, open physician-hospital organizations and independent practice associations.

Increases in these forms of integration did not appear to increase prices or spending significantly and may even decrease hospital admission rates.

Here are some key findings from the study: •

In 2001, fully integrated organizations had a smaller market share (23 percent) than all organizations using any of the three contractual forms (36 percent). However, this relationship flipped by 2007, when the market share of fully integrated organizations was nearly 36 percent and the share of organizations using the other three forms had fallen to 23 percent.

•

Fully integrated organizations — hospitals that owned physician practices — were linked to increases in hospital prices. Study authors found a one-standard-deviation increase in the market share of hospitals that own physician practices was associated with significant increases in prices and spending of 2 to 3 percent. There was no systematic or significant effect on prices of the three forms of contractual integration.

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•

As for volume, study authors linked an increase in the market share of hospitals with physicianhospital organizations to a small but statistically significant decrease in volume. The other forms of vertical integration also had small negative associations with volume, but none were statistically significant. Further, effects on volume associated with these types of integration were so small that they did not generate a significant reduction in hospital spending.

To calculate county price, volume and spending indices for hospital services, study authors used data from Truven Analytics MarketScan for approximately 2.1 million hospital claims from people enrolled in a fee-for-service health plan in the period 2001–07.

They also used information from The American Hospital Association Annual Survey to divide vertically integrated hospitals into the following four groups: fully integrated organizations, closed physician-hospital organizations, open physician-hospital organizations and independent practice associations. Fully integrated organizations are the most tightly vertically integrated, as it is the only one of the four forms in which the hospital owns the physician practice.

The researchers concluded their study by urging more investigation and research on the benefits or harms of vertical integration, especially since they did not examine the effects these models have on the quality of care or patient outcomes.

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