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The Keckley Report

American College of Physicians (ACP) Urges Limits on Private Investments in Healthcare

By September 14, 2021March 1st, 2023No Comments

In its September 7 issue of the Annals of Internal Medicine, the American College of Physicians issued a strongly worded position paper recommending regulatory actions to limit the role of private investments in healthcare. It takes clear aim at hospitals and physician practices. Key excerpts:

“ACP believes that more research is needed to assess the influence of for-profit companies and corporatization in the health care market.” It urges tighter accounting for hospital tax exemptions and community benefits, and “uniform fair pricing, billing and collection policies.” It also recommends additional research on the influence of private equity on medical practices they acquire relative to their clinical decision making, prices and patient access.

It’s a bold statement for the organization which serves 161,000 internists—second only to the American Medical Association.


ACP’s concern about private investing in healthcare echo’s a popular theme in healthcare these days, especially among proponents of Medicare for All and a significant majority of consumers who believe the corporatization of healthcare has put profit above patients.

In its 2020-2021 Annual Report, ACP calls out its efforts to improve access to care for patients, caregiver heroics in managing the pandemic and the significance of primary care in the system’s future…but nothing about financing the system or its concern about the contaminating role of private investments.

Here’s reality:

The Financial Climate is Opportune for Private Investments in Healthcare

Financial investors like Bain, Goldman Sachs, TA, Vestar and 200 others along with strategic investors like Optum, Amazon and CVS see healthcare as an untapped market for shareholder value creation. Its resilience on the heels of the pandemic coupled with strong corporate earnings and the friendly monetary policy of the Fed have bolstered private equity’s dry powder to $703 billion, including $179.6 billion raised in the first half of this year. In healthcare services, hot spots for deals are in mental health, clinical analytics, home-based services, managed health plans and primary care where some funds are paying up to 14 times adjusted EBITDA and borrowing up to 8 times the target’s EBITDA to finance their deals. Specifically, the provider deal landscape in the past couple of years has seen significant PE investments in Autism (i.e. Centria Healthcare, Hopebridge) and cash centric practices like Dental/Orthodontics (Smile Doctors, Access Dental, Midwest Dental), and Physical therapy (Spine & Sport PT, Phoenix Rehabilitation), just to name a few. And several primary care public (or soon to be) organizations whose professional kin are members of ACP, like–Oak Street, Village MD, Iora + OneMed, ChenMed, Privia, Cano Health and others- are reporting on strong growth by adding more clinicians in their target markets.

Improved Reimbursement from Medicare and Medicaid is Unlikely

In last week’s Keckley Report, we examined the 2021 Medicare Trustee’s (date) Report that said the Part A Hospital Insurance Fund would face a growing 6% shortfall in 2026 and beyond. Part B for physicians and others is in slightly better shape but shortfalls are certain according to the same report. Budget hawks in Congress who are debating the $3.5 Reconciliation Bill this week are forcing proponents of more healthcare funding for dentistry, public health and rural hospitals to find offsets that are politically hard to pull-off though seemingly justified like lower drug prices.

ACP’s concern about the corporatization of healthcare is understandable and the regulatory guardrails it proposes merit discussion. But private investments in healthcare are certain to play a bigger role. For some, it’s a bitter pill to swallow; for all, it’s reality.


P.S. On August 26-27, Chief Strategy Officers from 8 of the country’s most prominent health systems gathered in Jackson Hole, WY to discuss the future for value-based care in the U.S. system. The CSO Roundtable- sponsored by Lumeris- provided useful insights about alternative payment model fatigue, Medicare Advantage and more. Further insights on the proceedings can be found here.


“Financial Profit in Medicine: A Position Paper from the American College of Physicians”; September 7, 2021; Annals of Internal Medicine

Atul Gupta et al “Does Private Equity Investment in Healthcare Benefit Patients? Evidence from Nursing Homes”; February 2021; National Bureau of Economic Research

Offodile et al “Private Equity Investments in Health Care: An Overview of Hospital and Health System Leveraged Buyouts, 2003–17”; May 2021 Health Affairs

“Global M&A Industry Trends: 2021 Mid-year Update”; PWC

Coronavirus News

Covid Hospitalizations 11 times Higher Among Unvaccinated

Per the CDC’s latest MMWR released Friday:

  • Of 37,948 hospitalizations in 13 jurisdictions studied between April and July, 2,976 patients— or about 8% — were vaccinated.

  • Of 6,748 deaths, 616 — or about 9% — were fully vaccinated.

  • In an analysis of over 600,000 cases in 13 states, average weekly age-standardized incidence rate ratios (IRRs) for cases in June to July among those not fully vaccinated were more than 4.5-fold higher, hospitalizations were 10 times higher, and deaths were 11 times higher than those vaccinated.

  • Six states— Alabama, Arkansas, Florida, Georgia, Mississippi, and Texas—have more than 90% of intensive care unit beds occupied. Deaths have risen to levels not seen since March, before the vaccine was widely available.

“Monitoring Incidence of COVID-19 Cases, Hospitalizations, and Deaths, by Vaccination Status — 13 U.S. Jurisdictions, April 4–July 17, 2021”; September 10, 2021; CDC

White House Announces More Stringent Vaccine Guidelines

Last Thursday, President Biden announced stringent new vaccine rules for federal workers, large employers and health care staff. Key elements:

  • 80 million employees at large firms (100+ workers) will be required to vaccinate or produce weekly negative tests or pay fines if non-compliant.

  • The federal government will also spend $2 billion to make rapid tests more available. (Walmart, Amazon and Kroger — sell at cost for the next three months).

  • 2.5 million federal workers and contractors will be required to vaccinate, with no option for tests.

  • 17 million health care workers will be subject to mandates at employers that participate in Medicare and Medicaid.

  • Large entertainment venues to require proof of vaccination or testing for entry.

Related: CNBC/Change Research surveyed 1,775 adults from Aug. 30 to Sept. 2 about Americans’ views on Covid vaccines: among the 29% of U.S. voters who are unvaccinated, 83% say they do not plan to get the lifesaving shots. Of the unvaccinated respondents, 84% said their decision against immunization wouldn’t change if the vaccines had no side effects and 87% said they still wouldn’t get the shots if their employer mandated them. Just 5% and 4% of respondents, respectively, said those things would make them “much more likely” to change their minds, the survey shows. Pressure from family members made little difference, with just 2% saying that would make them much more likely to get the shots.

Related: As of September 9, the U.S. vaccination rate (at least one dose) is lower than the other G7 countries: France (72.99%), Italy (72.18%) United Kingdom (70.92%) Germany (65.74%) Japan (62.16%) United States (62.94%)

“CNBC poll shows very little will persuade unvaccinated Americans to get Covid shots”; September 10, 2021; CNBC

“Share of Population that has Received at least One Dose”; September 11, 2021; Our World in Data


Study: Use of Antipsychotic Drugs in Nursing Homes is Underreported

In its investigative report, the New York Times reported that at least 21% of nursing home residents (225,000) are on antipsychotic drugs and that “the government and the industry are obscuring the true rate of antipsychotic drug use on vulnerable residents.” Medicare currently estimates 15% incidence rate but undercounts diagnoses of schizophrenia in the nursing home population which has increased 70% since 2012. “Today, one in nine residents has received a schizophrenia diagnosis. In the general population, the disorder, which has strong genetic roots, afflicts roughly one in 150 people.”

“Antipsychotic drugs — which for decades have faced criticism as “chemical straitjackets” — are dangerous for older people with dementia, nearly doubling their chance of death from heart problems, infections, falls and other ailments. But understaffed nursing homes have often used the sedatives, so they don’t have to hire more staff to handle residents.”

Thomas et al. “Phony Diagnoses Hide High Rates of Drugging at Nursing Homes” New York Times September 11, 2021; New York Times

Study: Telehealth Visits Level at 20%

A new study by the Center for Connected Medicine conducted in concert with KLAS Research suggests that telehealth visits might be leveling off at 20% of all appointments. Nonetheless, organizations anticipate expansion of telehealth services especially in chronic care management, behavioral health and urgent care.

“The Intersection of Value and Telehealth: Survey Findings on Adoption and Utilization”; September 2021; Center for Connected Medicine


Administration Releases Funding for Covid Relief Targeted to Smaller and Rural Health Providers

Last week, the Biden administration announced release of more than $25.5 billion in to cover financial losses from the Covid-19 pandemic: $8.5 billion for providers who serve patients in rural areas and are covered by federal programs such as Medicaid and Medicare and $17 billion is for providers who can document revenue loss and expenses associated with the pandemic insured between July 2020 and March 2021. About $7 billion remains in the fund to cover claims for the uninsured patients with Covid-19.

Background: Congress appropriated $100 billion of the $178 billion Provider Relief Fund through the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 (Pub. L. 116-136) based on providers’ lost revenues/expenses resulting from the pandemic. Revenue-based general disbursements totaled $76.5 billion, allocated in relation to patient care revenues; hospitals generally received 2% of their annual net patient care revenue. Safety-net hospital disbursements totaled $13.1 billion, with funds allocated in relation to uncompensated care costs, hospital profitability, and Medicare Disproportionate Patient Percentage. High-impact hospital disbursements totaled $20.8 billion, allocated primarily in relation to inpatient COVID-19 cases treated between January 1 and June 10, 2020. About 10% of this funding was allocated with attention to hospitals’ uncompensated care costs and Disproportionate Patient Percentage. Disbursements to rural providers totaled $11.1 billion, with critical access hospitals, sole community hospitals, Medicare-dependent hospitals, and other designated rural providers eligible was disbursed in relation to operating expenses, with qualifying hospitals receiving a “lump sum” allotment as well. The share of discharged Medicare beneficiaries from rural areas was also considered for certain hospitals.

Stephanie Armour “Biden Administration Releasing Billions in Covid-19 Relief for Hospitals, Health Groups”; September 10, 2021; Wall Street Journal

Related study:

Researchers analyzed $37.4 billion in relief distributed through early June 2020, $69.4 billion in relief distributed through early October 2020, and $69.5 billion distributed through early February 2021, representing just under half of the known provider relief disbursements. Findings:

  • Mean total relief funding per hospital was $25.7 million, of which $7.1 million was high-impact funding.

  • Compared with hospitals in the lowest tertile of relief per bed (first tertile), hospitals in the highest tertile tended to have moderately lower operating margins (standardized mean difference: 0.55), more public ownership, and less for-profit ownership (SMD: 0.77 for hospital ownership structure). Hospitals in the highest tertile of relief per bed had somewhat higher wage indices (SMD: 0.38) and disproportionate share percentages (SMD: 0.29). They also had higher Medicaid net patient care revenue per bed (SMD: 0.59), higher net commercial revenue per bed (SMD: 0.37), and higher overall revenue per bed (SMD: 0.50).

Buxbaum et al “Equity and The Uneven Distribution of Federal COVID-19 Relief Funds to US Hospitals”; September 2021; Health Affairs

White House Issues Executive Order to Lower Drug Prices 44-57%

Last week, the White House released Executive Order 14036 “Comprehensive Plan for Addressing High Drug Prices: A Report in Response to the Executive Order on Competition in the American Economy”. Highlights:

The Report identifies three guiding principles for the Drug Pricing Plan: 1) Make drug prices more affordable and equitable for all consumers and throughout the health care system vis a drug price negotiation with manufacturers, 2) Improve and promote competition throughout the prescription drug industry via market changes that strengthen supply chains, promote biosimilars and generics, and increase transparency and 3) Foster scientific innovation to promote better health care and improve health via public and private research to discover of valuable and accessible new treatments et al.

“Comprehensive Plan for Addressing High Drug Prices: A Report in Response to the Executive Order on Competition in the American Economy”; Sep 9, 2021; ASPE

Related Study: International Reference Pricing would Reduce Drug Spending

Background: A 2021 study found that US prices for brand-name drugs were 344% of those in other high-income countries at manufacturer (“list”) prices, but the difference was smaller (230%) after an adjustment to approximate lower US net prices. The Elijah E. Cummings Lower Drug Costs Now Act, HR 3, allows HHS to negotiate prices with drug manufacturers on behalf of Medicare and private insurers, up to a cap of 120% of prices in 6 countries (Australia, Canada, France, Germany, Japan, and the UK) for 25 single source brand name drugs in the first year. The Congressional Budget Office (CBO) estimates that this application of international reference pricing, would save $456 billion for Medicare alone over 10 years.

Researchers analyzed the impact of the international reference pricing (IRP) policy for 50 brand-name drugs. Findings:

  • IRP would have lowered 2020 US spending on study products by 52.3% or $83.5 billion, from $159.9 billion at US net prices to $76.3 billion

  • US net-to-international discounts ranged from 44.4% to 57.3% across therapeutic classes. Spending would have been 53.7% lower at international rather than US net prices for oncology drugs, for which US manufacturer-to-net discounts are relatively small. Spending would have been 44.4% lower at international prices for insulins, for which US manufacturer-to-net discounts are substantial.

Mulcahy et al “Estimated Savings from International Reference Pricing for Prescription Drugs”; September 10, 2021; JAMA

Study: Hospital Pricing Unrelated to Market Concentration

Researchers analyzed the relationship between market concentration and hospital pricing. Findings:

  1. High-price hospitals, defined as those in the top quartile of the adjusted national price distribution, were prevalent across the concentration spectrum. Specifically, they were prevalent within all four concentration categories we examined, which include the three categories used by antitrust regulators that are delineated by HHI thresholds of 1,500 and 2,500, and an additional policy-relevant category, delineated by an HHI threshold of 4,000.

  2. The majority of these high-price hospitals are located in the bottom two categories, which are “unconcentrated” or “moderately concentrated” markets, per the Horizontal Merger Guidelines of the FTC and Department of Justice (DOJ).

The authors conclude: “For the market definitions most commonly used in existing policy proposals, we found that most high-price hospitals are located in markets with low or moderate concentration and would therefore be exempt from regulation. Policies that address high prices regardless of the underlying market structure would be more consistent with a policy goal of constraining high prices.”

Pany et al “Regulating Hospital Prices Based on Market Concentration Is Likely to Leave High-Price Hospitals Unaffected”; September 2021; Health Affairs

Study: Food Insecurity Significant in Low-Wage Healthcare Workforce

Food insecurity, or the lack of access to an adequate supply of nutritious food, is associated with poor health outcomes including diabetes, heart disease, and depression. Researchers analyzed data from 5,516 healthcare workers ages 20–64 for the period 2013 to 2018. Sample characteristics: 57.4% were health diagnosing and treating practitioners, 22.1% were health technologists and technicians, and 20.5% were health care support workers. Almost half of all health care workers (47.3%) reported being employed in hospitals; 39.4% and 13.3 percent were employed in ambulatory care facilities and nursing and residential care facilities, respectively. Findings:

  • We found that relative to health diagnosing and treating practitioners, the odds of being food insecure were 5.1 times higher for health care support workers and 2.5 times higher for health technologists and technicians.

  • Across health care occupational categories, 6.6% of health care workers reported experiencing food insecurity in the past month—lower than national rate at 10.5%. (Range: 1.7% for practitioners to 7.3% for health technologists and technicians and 19.7% for health care support workers.

  • Food insecurity rates were highest in nursing and residential care facilities for all occupational categories and among health care workers with children.

  • Health care support workers had 9.8 times greater odds of food insecurity and health technologists and technicians had 5.8 times greater odds of food insecurity compared with health care practitioners.

Srinivasan et al “Food Insecurity Among Health Care Workers in the US”; September 2021; Health Affairs