Sutherland insights healthcare news flash june 02, 2014

HEALTHCARE NEWS FLASH June 02, 2014

Table of Contents Sales & Marketing ................................................................................................................. 3 Finance ................................................................................................................................. 6 Technology .......................................................................................................................... 10 Strategy .............................................................................................................................. 15

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Sales & Marketing ValleyCare Health System, Stanford Hospital & Clinics to Affiliate May 30, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-transactions-and-valuation/valleycare-healthsystem-stanford-hospital-clinics-to-affiliate.html ValleyCare Health System, based in Pleasanton, Calif., has signed a letter of intent to affiliate with Stanford (Calif.) Hospital & Clinics, according to a San Francisco Business Times report.

Under the tentative agreement, ValleyCare would become a subsidiary of Stanford Hospital, according to the report. ValleyCare would retain its medical staff, although its physician organization would become part of Stanford’s University Healthcare Alliance.

ValleyCare has been experiencing financial problems in recent years. In 2012, ValleyCare posted a $2.1 million operating loss, a year after it posted a $4.7 million operating loss. In March, ValleyCare named Scott Gregerson its new CEO. Mr. Gregerson took over for Marcy Feit, who resigned from her position in early February. The health system began the process of finding a potential affiliation partner in April.

East Orange General Hospital, Prospect Medical Holdings Reach Partnership Agreement May 30, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-transactions-and-valuation/east-orangegeneral-hospital-prospect-medical-holdings-reach-partnership-agreement.html East Orange (N.J.) General Hospital and Prospect Medical Holdings, a for-profit hospital operator based in Santa Ana, Calif., have signed a definitive partnership agreement.

Under the agreement, Prospect will assume ownership of the hospital and make a total of $84 million in binding operational and capital commitments, including $52 million of capital expenditures over five years. Prospect has also agreed to assume the hospital’s debt, provide working capital funding, maintain East Orange General as an acute-care facility and retain the hospital’s employee and physician base, according to a news release. Additionally, Prospect’s commitments include establishing a $10 million community health improvement initiative.

“We are excited at the opportunity to build upon East Orange General Hospital’s long history of providing access to essential healthcare services,” Sam Lee, chairman and CEO of Prospect, said in the release. “We are committed to strengthening the existing programs that the East Orange and Essex County communities have come to rely on over so many years, and to introducing new services and a new delivery model that will help meet residents’ future healthcare needs. We look forward to the opportunity to help ensure the future of this vital community healthcare provider.”

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Prospect and East Orange General originally signed a letter of intent to pursue a strategic partnership this past March. The deal will now move through the required review and approval process by the state Department of Health and Senior Services as well as the state attorney general’s office.

Pioneers Memorial, El Centro Regional Consider Affiliation May 28, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-transactions-and-valuation/pioneers-memorialel-centro-regional-consider-affiliation.html Pioneers Memorial Healthcare District in Brawley, Calif., and El Centro (Calif.) Regional Medical Center have approved a memorandum of understanding to consider a possible affiliation, according to an Imperial Valley Press report.

The hospital boards did not agree to a merger or affiliation but simply to collaborate to evaluate the benefits of an affiliation. The MOU states their shared vision includes “a collaborative partnership of physicians and the organization, recognized nationally and by the community as the leader in quality healthcare and customer service,” according to the report.

This past March, the Press reported a potential transaction between ECRMC and San Diego-based Scripps Health might include Pioneers Memorial Hospital. Physician members of the ECRMC Medical Executive Committee agreed including both hospitals in the possible affiliation would lower costs related to insurance and supplies, and result in more available resources, according to the report.

ECRMC and Scripps entered into an exclusive negotiating agreement last fall. In May 2013, the El Centro City Council voted unanimously to seek an affiliation partner for ECRMC to improve quality of care by enhancing services and increasing access points, as well as eliminating future liability for the city.

AtlantiCare, Geisinger Health System Sign Definitive Agreement May 27, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-transactions-and-valuation/atlanticaregeisinger-health-system-sign-definitive-agreement.html AtlantiCare in Atlantic City, N.J., has signed a definitive agreement to become a member of Geisinger Health System in Danville, Pa. Under the agreement, AtlantiCare will retain its brand name and local autonomy, according to a news release. The partnership will focus on the implementation of evidence-based medicine, enhancing clinical services, optimizing the use of electronic health records and clinical informatics, implementing population health management and moving toward value-based payment models.

Financial terms of the deal were not disclosed.

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“It is an especially challenging time in healthcare; however, we stand at the brink of making significant enhancements that will benefit patients for generations to come,” Geisinger President and CEO Glenn Steele, Jr., MD, PhD, said in the release. “Today’s announcement is good news for the people we serve, and we look forward to making a positive difference in southern New Jersey.”

Geisinger and AtlantiCare originally signed a letter of intent this past November to partner. The proposed integration now moves on to the regulatory approval phase, which is expected to take 9 to 12 months.

Affiliation Talks Begin Between Saratoga Hospital, Glens Falls Hospital May 15, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-transactions-and-valuation/merger-talks-beginbetween-saratoga-hospital-glens-falls-hospital.html Executives at Saratoga Hospital in Saratoga Springs, N.Y., and Glens Falls (N.Y.) Hospital have entered into discussions about a possible collaboration.

Full details about a collaboration or type of transaction were not disclosed. Executives expect negotiations to last throughout the year before any agreements are signed.

“In today’s healthcare environment, hospitals must continually find better, smarter approaches to serve our patients and our communities,” Angelo Calbone, president and CEO of Saratoga Hospital, said in a news release. “Strategic partnerships could prove the most effective way to align our strengths and make sure our communities continue to benefit from the latest advances in care.”

Glens Falls Hospital has been mired with financial troubles during the past couple years. Most recently, in October, the hospital initiated a second round of layoffs to close its budget gap. Dianne Shugrue, president and CEO of the hospital, said the hospital now has a profitable outlook for this year.

In February, Glens Falls Hospital also signed a deal to become a member of Adirondack Health Institute in Queensbury, N.Y., a local collaboration focused on coordinated healthcare and social services in the Adirondack region of New York.

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Finance Medicare RAC Activity in Q1 2014: 10 Statistics May 30, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/finance/medicare-rac-activity-in-q1-2014-10statistics.html The American Hospital Association has released the results of its quarterly RacTrac survey for the first quarter of 2014.

The survey measures Medicare recovery auditor, or RAC, activity. AHA created the web-based survey because of the lack of data from CMS concerning the impact RACs have on providers, according to the RACTrac website.

Here are 10 key statistics from the most recent survey, based on responses from 1,165 hospitals.

1. Of the medical records reviewed by RACs during the first quarter, the hospitals surveyed reported 57 percent didn’t contain an overpayment, according to the RAC. 2. Nearly 60 percent of hospitals reported experiencing short-stay medical necessity denials.

3. Additionally, 59 percent of hospitals received denials for inpatient coding.

4.

Sixty-six percent of short-stay denials for medical necessity were because the care was provided in the wrong setting.

5.

Hospitals reported appealing 50 percent of their RAC denials.

6. Hospitals reported a 66 percent success rate in the appeals process.

7.

Fifty-five percent of hospitals filing a RAC appeal during the first quarter appealed short-stay medically unnecessary denials.

8. Of the participating hospitals’ appealed claims, 63 percent are still in the appeals process.

9. Sixty-nine percent of hospitals spent more than $10,000 managing the RAC process during the first quarter.

10. Additionally, 48 percent of hospitals surveyed reported spending more than $25,000 managing the RAC process.

OIG: Improper Evaluation, Management Payments Cost Medicare $6.7B May 29, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/finance/oig-improper-evaluation-managementpayments-cost-medicare-6-7b.html Medicare inappropriately paid $6.7 billion for evaluation and management services claims in 2010 that weren’t coded correctly or lacked documentation, according to an HHS Office of Inspector General report.

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E/M services are performed by physicians and nonphysician practitioners to assess and manage patients’ health. Medicare paid a total of $32.3 billion for these services in 2010, accounting for almost 30 percent of Medicare Part B payments that year. The OIG conducted a medical record review of a random sample of Part B claims for E/M services from 2010 and found 42 percent of the claims were incorrectly coded, meaning they billed at levels either higher or lower than warranted.

Additionally, 19 percent of the claims lacked documentation. Furthermore, the OIG found claims from high-coding physicians — those who consistently billed higher level codes, which yield higher payment amounts — were more likely to be incorrectly coded or lack documentation, compared with claims from other physicians.

Therefore, the OIG recommended CMS educate physicians on coding and documentation requirements for E/M services. The OIG also recommended continuing the encourage contractors to review E/M services claims from high-coding physicians and following up on claims for E/M services that were paid for inappropriately.

CMS agreed with the first recommendation. However, the agency didn’t agree with the OIG’s second recommendation, stating it has already directed a medical review contractor to review claims billed by high-coding physicians and the first phase of these reviews led to a negative return on investment, according to the report. Based on additional reviews, CMS plans to consider the effectiveness of reviewing claims from high-coding physicians compared with other efforts, such as comparative billing reports.

CMS partially agreed with the OIG’s third recommendation. “CMS will analyze each overpayment to determine which claims exceed its recovery threshold and can be collected consistent with its policies and procedures,” the report states. “For the overpayments identified in this report that will not be collected, CMS could send an educational notice to physicians that billed for these claims.”

Study: Policymakers Could Cut $100B From Health Spending Through Transparency Interventions May 27, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/finance/study-policymakers-could-cut-100b-from-healthspending-through-transparency-interventions.html Increased healthcare price transparency could potentially play a considerable role in payment reform and help contain costs, according to an analysis released by the nonprofit West Health Policy Center.

In the study, researchers from the former Center for Studying Health System Change (which has merged with Mathematica Policy Research) concluded policymakers could reduce U.S. healthcare spending by approximately $100 billion during the next decade if they enacted the following three interventions.

1. Require all private health plans to offer a price transparency tool to their members. This policy intervention would involve private health insurers providing their members with data on out-of-pocket and total prices specific to the provider, the service and the patient’s plan and benefit design. Enacting this requirement by 2019 could reduce spending by $18 billion over 10 years, according to the study.

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2. Require electronic health records to provide price data to physicians ordering imaging and laboratory services. This policy change would encourage physicians to consider price data when making patient recommendations. Additionally, it would complement the federal government’s effort to encourage the expanded use of EHRs. The estimated cost savings would be $27 billion during the course of a decade.

3. Report hospital-specific prices through state all-payer claims databases. Providing the prices health insurers have negotiated with particular hospitals would make it easier to identify high-price providers and assess the level of competition in hospital care markets. This policy intervention would reduce spending by approximately $61 billion over 10 years, according to the study.

Study: Consumers unfairly penalized by medical debt May 22, 2014 | Fierce Health Finance http://www.fiercehealthfinance.com/story/study-consumers-unfairly-penalized-medicaldebt/2014-05-22 Consumers paying off medical debt could be better off if credit bureaus treated it differently than the other bills they service, the Washington Post reported.

Those with medical debt who had lower credit scores paid it off at generally the same rate as those with higher scores, according to a survey of credit histories and scores of 5 million anonymous Americans by the Consumer Financial Protection Bureau (CFPB). And even if that debt was placed in collections--which damages credit scores-- the consumers were likely to pay off all debt anyway.

“This tells us that having a medical debt in collections is less relevant to a consumer’s creditworthiness than having an unpaid cellphone bill or overdue rent,” CFPB Director Richard Cordray said during a press conference to discuss the study, according to the Post.

Consumers are often the victim of adverse--and undisclosed--reports to their credit scores if their insurer and provider dispute whether to cover and pay for a portion of their care, the study noted.

Consumers with medical debt could improve their credit scores by as much as 22 points if the major credit bureaus treated that debt differently, according to the Post.

“These point differences may not matter as much to consumers who have very high credit scores because they may still be able to qualify for loans and the rate they pay may not be affected,” Cordray said. “But for consumers with lower scores, these differences can be more significant. They may cause consumers to be denied a loan altogether or they could cost tens of thousands of dollars over the life of a home mortgage.”

Medical debt and how healthcare organizations collect it has become a growing issue as cost-shifting to patients continues to grow. The Healthcare Financial Management Association earlier this year released guidelines for how to better manage the process, including clearer and more proactive communications with patients and credit bureaus.

Congress is mulling a bill that would quarantine medical debt from consumer scores--a practice that hospitals support--but it has stalled in committee for the past year, the Post reported.

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Study: Care costs continue slower growth in 2014 May 21, 2014 | The Washington Post http://www.washingtonpost.com/business/study-care-costs-continue-slower-growth-in2014/2014/05/21/2cfe324a-e114-11e3-9442-54189bf1a809_story.html Health care spending for a family with a common employer-sponsored health plan has more than doubled over the past decade, according to research from the benefits consultant Milliman Inc. A typical American family of four will spend an average of $9,695 on health care this year, according to actuarial projections in the 2014 Milliman Medical Index, which was released Wednesday. That counts their contribution toward insurance premiums, payments at the doctor’s office or pharmacy and even bottles of aspirin purchased at the drugstore. That compares with $4,443 spent in 2004 and is up 6 percent from last year.

Milliman actuaries make their projections for a family with preferred provider organization, or PPO, coverage through a big employer. That’s a common form of insurance that involves large networks of doctors and other care providers.

That annual cost increase may not be readily apparent to most families. It’s spread out over the year, and the biggest part is the premium, or cost of coverage. That usually comes out of an employee’s paycheck before taxes.

The actual cost that an individual family racks up will vary heavily depending on things like how much care they use, the coverage they have, the age of the family members and how much their employer contributes to the premium.

The total cost of health care for the family, counting the employer’s premium contribution, will reach $23,215 this year, Milliman projected. That represents an increase of only 5.4 percent from 2013, which is the slowest year-over-year growth in the 14-year history of the medical index.

That rate is still well above the broader rate of inflation.

Employers typically pay most of the premium for an employer-sponsored health plan. But Milliman’s annual report found that employees and their families are paying a bigger share of the overall bill, as they have been for the past few years.

Companies that offer coverage to their workers have been raising co-payments made at the doctor’s office and other out-of-pocket costs for workers. That lowers the premium, or coverage cost, and it exposes employees more to the cost of care. Some benefits experts feel that the best way to control health care cost growth is to make employees more aware of the expense.

Milliman actuaries also found that the health care overhaul, which aims to cover millions of uninsured people, had little impact on the cost projection for their typical family, and they don’t know yet whether that will change. The law focuses mostly on the individual health insurance market and coverage for small-business employers.

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Technology Big Data in Healthcare: Using Health IT Innovation to Accelerate Value May 31, 2014 | Fierce Healthcare http://www.fiercehealthcare.com/story/big-data-healthcare-using-health-it-innovationaccelerate-value/2014-05-31 The healthcare industry is in the midst of a big data revolution, starting with the increasing supply of patient information. As we transition to more data-driven healthcare, the ability to access, share and optimize patient data will become even more critical to our ability as an industry to deliver highquality care—let alone reduce costs for both patient and provider.

But the goal of creating a more complete view of the patient record continues to require access to multiple clinical systems for patient data and associated documents—information that remains, despite our best efforts with widespread EMR adoption, locked away in numerous systems and document repositories, in multiple formats, without easy access or facility for electronic sharing. And the industry will be faced with even more patient data moving forward.

Technology, though—as we started to discuss in last month’s blog—isn’t enough to improve healthcare outcomes, or lower costs. The way the industry manages and optimizes all patient information will have to undergo fundamental changes before providers and organizations alike can distinguish between valuable data and information overload.

More specifically, the industry will have to leverage big data solutions that integrate fragmented healthcare information with existing patient health records to make data more meaningfully usable and enable providers to gain the actionable knowledge from it needed to make better clinical decisions. And access to all patient data will have to be streamlined across the continuum of care to support these efforts. To put it more bluntly, we will have to divine intelligence from patient data and visualize it to prevent “digital landfills” that render it useless.

Recent advances in value-added solutions are allowing for just that—information to be easily collected and analyzed from multiple sources, and integrated into existing clinical systems for use at the point of care and sharing across the continuum.

Financial concerns and clinical outcomes fueling big data demand Financial concerns are driving the demand for big data solutions, conceivably more than any other influence. What we know for sure is that the current trajectory of healthcare spending in the U.S. is simply unsustainable. Spiraling healthcare expenditures are expected to double, according to IDC Health Insights, to $4.5 trillion by 2019—which continues take its toll on the U.S. economy by way of increased healthcare costs and health insurance premiums.

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One notion behind this trend is overutilization. As a result, many payers are shifting from fee-forservice to value-based reimbursement, which will prioritize patient outcomes and place greater emphasis on quality and preventative care as opposed to treatment volume. Under these reimbursement models, providers will have greater incentive to compile and exchange patient information in an effort to speed care delivery and reduce costs, but doing so will require access to comprehensive patient health records.

Clinical trends to improve patient outcomes are also paramount in big data’s upsurge in enabling data-driven healthcare. Providers have traditionally been trained to care for the ‘patient in front of them,’ utilizing their own judgment to make treatment decisions. However, the shift to value-based reimbursement changes this paradigm. This movement is creating an outcomes-based scenario where providers will have to embrace the trend of evidence-based medical practice, systematically reviewing clinical information to make treatment decisions based on all available patient data.

Providers now will also have to think in terms of entire populations of patients, especially those with specific conditions or diseases—including those who may be ‘at-risk.’ Big data will drive the new disciplines of population health management and analytics, which will enable healthcare organizations to identify and segment patients with certain diseases to provide them with preventative care. Aggregating these data sets will further fuel evidence-based medicine since access to more information and larger datasets will provide more robust evidence to treat patients, allowing for precise, personalized care to be delivered more quickly and cost effectively.

From meaningful use to “meaningful use” Healthcare has typically always lagged behind in the use of big data when compared to other sectors, mainly over the chief issue of patient confidentiality. In recent years, however, we have begun to catch up, and first adopters of big data solutions are achieving positive results.

But we still face a critical need to accelerate big data innovation in healthcare, and its implementation, in order to capture the full value of what patient data can provide us. To do so, we need to disrupt the current state of the data management in industry to shift from meaningful use of EMR technology to more literal “meaningful use” of patient information to improve patient outcomes and lower costs. But this transformation to data-driven healthcare will require equal parts of record integration, interoperability, usability and infrastructure. Then and only then will healthcare delivery be able to advance to a point where we can solve the problem of rising healthcare costs and decreasing quality.

The days of looking at big data as a technology rather than a tool to enable better healthcare delivery are long gone—especially when you factor in that the need to remove the usability constraints from EMRs and other clinical systems.

Solutions such as this bring us a step closer to truly appreciating the scope of evidence-based medicine, population health management and analytics can play in healthcare delivery, and they will allow us to determine the connection points between data to identify trends and improve patient outcomes, and drive down costs.

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Big data solutions will provide the mechanism needed to generate more meaningful knowledge that can positively impact patient outcomes. Clinicians will also become empowered to deliver better care and use access to all information known about a patient to help turn expensive patient encounters into more affordable ones, both for the patient and the healthcare organization.

However, healthcare organizations will have to continue to work together to create and share more comprehensive patient records so that the needs to the patient can be met as they journey across the continuum of ca

Colorado HIE Selects Sandlot Solutions May 30, 2014 | Health Data Management http://www.healthdatamanagement.com/news/Colorado-HIE-Selects-Sandlot-Solutions-481521.html The Colorado Regional Health Information Organization (CORHIO), Denver, has selected Dallas-based Sandlot Solutions to extend health information exchange and clinical interoperability capabilities for community-based healthcare organizations, including hospitals, large independent physician associations (IPAs), payers, and accountable care organizations.

CORHIO began facilitating inpatient data exchange in 2010; to support the shift from fee-for-service to value-based payment models, CORHIO will now leverage additional technology capabilities through Sandlot Solutions to deliver increased connectivity at the community level–particularly for ambulatory facilities.

CORHIO participants also will have access to enhanced services through Sandlot, including Sandlot Metrix, an analytics platform that provides real-time prompts and alerts within the physician’s workflow at the point of care, and Sandlot Care Assist, a care coordination and population health management engine.

Aetna, Baptist Health System and HealthTexas Link Up for Accountable Care May 27, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/accountable-care-organizations/aetna-baptist-healthsystem-and-healthtexas-link-up-for-accountable-care.html San Antonio-based Baptist Health System, HealthTexas Medical Group and Aetna recently announced an accountable care collaboration and the introduction of the Aetna Whole HealthSM product in the San Antonio area.

Aetna Whole HealthSM is a collection of benefits plans that will provide Aetna members access to coordinated care from physicians and facilities in the Baptist Health System and the HealthTexas Medical Group. The plans are designed for employers with employees who live or work in several counties in Texas, including Bexar, Guadalupe, Comal and Kendall.

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“It’s a very exciting and new opportunity for both Baptist Health System and HealthTexas to work together and with Aetna,” says Graham Reeve, president and CEO of Baptist Health System. Through the new collaboration, employers in San Antonio will have access to a network of physicians and facilities with “better price and better quality” moving forward, he adds.

Through the new accountable care organization, Baptist Health System and HealthTexas Medical Group will provide healthcare services to Aetna members through a combined five hospitals, 42 primary care offices and more than 900 physicians in the San Antonio area.

Through the collaboration, Baptist Health System and HealthTexas will transition from a fee-forservice model to a pay-for-performance model. Under the fee-for-service model, “the sicker the patient gets, the more physicians get financially, and that is misaligned,” says Richard Reyna, MD, President of HealthTexas Medical Group of San Antonio.

Under the new arrangement, the goal is to set up a system that incentivizes everyone within our organizations to be on the same page and focused on keeping patients healthy, says Dr. Reyna.

Baptist Health System and HealthTexas will be rewarded for meeting quality, efficiency and patient satisfaction measures. Quality measures that are care-driven and “relate to keeping a population healthy” will be used, adds Dr. Reyna.

Under the new model, patient, payer and provider incentives are aligned and that is extremely important, says Mike Nelson, market president of Aetna in south Texas.

“Through this accountable care arrangement, Aetna, Baptist Health System and HealthTexas are working together and have aligned incentives to bring to the market a better, lower cost and more coordinated care experience to our members,” he adds.

CDC: Only 18% of office-based docs may meet Meaningful Use May 25, 2014 | Fierce EMR http://www.fierceemr.com/story/cdc-only-18-office-based-docs-may-meet-meaningful-use/201405-25 The number of office-based physicians using electronic health records continues to rise, but only 18 percent of them may be eligible for Meaningful Use incentives, according to the Centers for Disease Control and Prevention’s latest National Health Statistics Report.

In 2012, 71.8 percent of office-based physicians were using any type of EHR system, according to the report, up from 34.5 percent in 2007. Almost one-fourth, 23.5 percent, had a system with features meeting the criteria of being “fully functional” in 2012, up from 3.8 percent in 2007.

There was also a difference in adoption of a fully functional system between physicians in practices of 11 or more doctors compared to solo practitioners; the gap between the two jumped from 10.4 percent in 2007 to 30.6 percent in 2012.

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Perhaps most significantly, the list of features for even fully functional EHRs overlap with some but not all features needed for Meaningful Use. The report also warned that its 18 percent estimate may be a “maximum estimate” in that “some physicians counted in this measure may have an EHR system that does not support the remaining requirements necessary for payment.”

A previous CDC report found that of the 65.5 percent of physicians intending to participate in the Medicare and Medicaid Meaningful Use incentive programs in 2012, only 26.9 percent had an EHR system with features that could support 13 of 15 Stage 1 Meaningful Use Core Set objectives.

The report mirrors other concerns about the Meaningful Use requirements as physicians move from Stage 1 to Stage 2 of the program and predictions that many providers will drop out rather than continue to participate.

Two-thirds of Americans have ACO access May 23, 2014 | Fierce Healthcare http://www.fiercehealthcare.com/story/two-thirds-americans-have-aco-access/2014-05-22 Two-thirds of Americans live in areas served by the 500 accountable care organizations (ACOs) that now exist across the country, according to a report from Oliver Wyman consulting firm.

Overall, ACOs serve between 46 and 52 million Americans, or between 15 and 17 percent of the population, according to the report, “ACO Update: Accountable Care at a Tipping Point.” About 10 percent of Medicare beneficiaries, or 5.3 million people, receive care from ACOs, up from about 4 million in July 2013.

“ACOs need to be treated as a triggering mechanism for a revolution in American healthcare. Their reach is at least as important a factor to watch as their current enrollments,” writes Niyum Gandhi, a partner in Oliver Wyman’s Health & Life Sciences practice group and one of the firm’s ACO experts.

Because ACOs are in early development stages and are reimbursed differently than traditional feefor-service providers, they can profit from eliminating unnecessary services and focusing on preventive care, Gandhi said. However, he posed the question, When will we see the kind of competition that leads to meaningful change?

The firm classified the more than 370 Medicare ACOs as healthcare providers that participate in the Pioneer ACO program, the Medicare Shared Savings Program, a Medicaid ACO or the Physician Group Practice (PGP) Transition program, according to the report.

However, they classified the 150-plus non-Medicare ACOs by whether they had at least one sharedsavings or shared-risk arrangement with at least one commercial payer but not the Centers for Medicare & Medicaid Services. However, researchers noted that the information may be imperfect because they gathered data from press releases, news accounts and other research.

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Strategy AmSurg to Acquire Sheridan Healthcare for $2.35B May 29, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-physician-relationships/amsurg-to-acquiresheridan-healthcare-for-2-35b.html AmSurg Corp., a Nashville, Tenn.-based company that acquires, develops and operates ambulatory surgery centers in partnership with physician groups, has agreed to acquire Sheridan Healthcare, a provider of outsourced physician services based in Sunrise, Fla., in a cash and stock transaction valued at about $2.35 billion.

The transaction is expected to close in the third quarter this year. As a combined company, it will have a total addressable market of approximately $70 billion and include more than 4,600 physician relationships in 38 states.

“With the addition of Sheridan, we will be significantly diversified and differentiated — holding leadership positions in outsourced physician services for anesthesia, children’s services, emergency medicine services and radiology while retaining our standing as a leading owner of freestanding ambulatory surgery centers,” said Christopher Holden, president and CEO of AmSurg, in a news release.

Sheridan is currently owned by private equity firm Hellman & Friedman. The company will be a “significant shareholder” of the combined company post-transaction, according to the release.

In April, Sheridan had announced it hired Credit Suisse Group, Barclays and Goldman Sachs to lead an initial public offering. It has been a private company since 1999.

Insurer competition drives down premiums May 28, 2014 | Fierce Health Payer http://www.fiercehealthpayer.com/story/insurer-competition-drives-down-premiums/2014-0528 It’s been a hotly contested debate since the Affordable Care Act passed: whether an increase in competition among insurers will actually lower healthcare costs. A recent paper from the National Bureau of Economic Research set out to reach a definitive answer.

The paper’s authors used UnitedHealth, which choose not to participate in many health insurance exchanges during the first open enrollment period, as an example and simulated premium costs as if the Minneapolis-based insurer opted to sell plans on all the marketplaces, reported Insurance Network News.

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Jonathan Gruber, a professor of economics at Massachusetts Institute of Technology and one of the authors of the NBER paper, determined exchange competition would have driven down costs.

Premiums would have been 5.4 percent lower for silver exchange plans if UnitedHealth had participated. And if all insurers sold plans on exchanges in their current markets, premiums would have fallen by 11.1 percent.

“We find that exchange premiums are responsive to competition,” the authors wrote in the NBER paper.

Based on that conclusion, the industry might see lower premiums come next open enrollment season, as UnitedHealth is reportedly considering entering several exchanges. For example, it will likely participate in the Illinois exchange, which could shake up the market that Blue Cross Blue Shield of Illinois clearly dominated, the Chicago Tribune reported.

UnitedHealth’s decision to join the Illinois exchange “absolutely could have a meaningful impact, but it all depends on what they bring to market,” Leemore Dafny, a professor at Northwestern University’s Kellogg School of Management, told the Tribune.

PwC: Hospital Deal Volume Down, Value Up in Q1 May 20, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-transactions-and-valuation/pwc-hospital-dealvolume-down-value-up-in-q1.html Hospital deal volume decreased by nearly 43 percent to 12 transactions in the first quarter of this year, according to a PwC report.

However, total hospital deal value rose from $320 million in the first quarter of 2013 to $388 this year, according to the report. That increase was largely driven by the $369 million acquisition of Bethesda, Md.-based Chindex International announced in February, according to the report. Chindex is an American company that provides services in China through a network of private primary care hospitals and affiliated ambulatory clinics.

Overall, the softened deal activity during the first quarter “doesn’t necessarily indicate a slowdown,” according to the report. “Hospitals (both for-profit and not-for-profit) across many geographies within the U.S. continue to assess strategic alternatives, specifically addressing their market position, long-term strategy and the recent large transactions which have reinforced a ‘bigger is better’ mentality within the hospital sector,” the report states.

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PwC: Fewer Hospitals Acquiring Physician Groups May 20, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-physician-relationships/pwc-fewer-hospitalsacquiring-physician-groups.html In 2011, hospitals and health systems accounted for more than half of all physician practice acquisition deals — but by 2013 they only accounted for 14 percent, according to new analysis by PwC. Physician practice management companies are ramping up their physician practice deals. In the first quarter of 2014, management companies accounted for all nine of the reported physician practice deals.

“The current trend of physician practice acquisitions by physician practice management companies is expected to continue in the near term as specialty-based physician groups look for ways to respond to reimbursement changes and higher regulatory costs of maintaining their practices,” according to a PwC news release.

Northwestern Memorial HealthCare, Cadence Health Reach Definitive Merger Agreement May 16, 2014 | Becker’s Hospital Review http://www.beckershospitalreview.com/hospital-transactions-and-valuation/northwesternmemorial-healthcare-cadence-health-reach-definitive-merger-agreement.html Northwestern Memorial HealthCare in Chicago and Cadence Health in Winfield, Ill., have approved a definitive merger agreement.

The agreement, which is still subject to regulatory approvals, would create an integrated healthcare delivery system including four hospitals, more than 4,000 physicians and more than 60 total sites of care in the Chicago area, according to a news release. Financial terms of the deal were not disclosed.

This past March, the two health systems signed a letter of intent to merge. Under the deal, Northwestern Medicine would be the parent organization of the four-hospital network. The hospitals include Northwestern Memorial Hospital, an 894-bed academic medical center that would serve as the flagship, Northwestern Lake Forest (Ill.) Hospital, Central DuPage Hospital in Winfield and Delnor Hospital in Geneva, Ill. Northwestern President and CEO Dean Harrison would serve as CEO of the combined system, while Cadence President and CEO Mike Vivoda would be regional president.

The proposed merger marks Cadence’s second attempt to find a partner. In January, Cadence and Rockford (Ill.) Health System ended merger discussions after executives said there were “differences” in strategic and operational planning. Cadence formed in 2011 after Central DuPage Health and Delnor Health System agreed to merge.

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