Last week was notable for healthcare because current events thrust it into the limelight…
Hospitals and emergency responders in Maine: Media attention to Gaza and the Speaker-less U.S. House of Representatives was temporarily suspended as the deaths of 18 in the U.S.’ 36h mass shooting in Lewiston, Maine took center stage. The immediate overload on Lewiston’s Central Maine Medical Center and Mass General where the 13 injured were treated (including 4 still hospitalized) drew media attention—largely gone by Friday when the shooter’s death by suicide was confirmed.
The New Speaker of the House: The GOP House of Representatives elected Mike Johnson, the 4-term Representative from Shreveport to the post vacant since October 3. Johnson is no stranger to partisan positions on healthcare issues. As Chairman of the conservative-leaning Republican Steering Committee from 2019-2021, he led the group’s platform to dismantle the Affordable Care Act and supports a national restriction on abortions despite Senate GOP Leader McConnell’s preference it be left to states to decide. With the prospect of a government shutdown November 17 due to inaction on the FY2024 federal budget, the 52-year-old lawyer faces delicate maneuvering around $106 billion proposed for Israel, the Ukraine, Taiwan and border security alongside appropriations for the health system that consumes 28% of entire federal outlays.
Health organizational business strategy announcements: Friction between physicians and hospital officials in Asheville (Mission) and Minnesota (Allina) attracted national coverage and brought attention to staffing, cultural and financial circumstances in these prominent organizations. —and on the heels of the Kaiser Permanente strike settlement. The divorce from Mass General by Dana Farber in Boston and announcements by GNC, Best Buy, Optum (re-branding NaviHealth) and Sanofi hit last week’s news cycle.
And indirectly, the 3Q 2023 GDP report by the Department of Commerce raised eyebrows: it was up 4.9%–far higher than expected prompting speculation that the Federal Open Market Committee (FOMC) will raise interest rates (again) at its meeting this week or next month. That means borrowing costs for struggling hospitals, nursing homes and consumers needing loans will go up along with household medical debt.
As news cycles go, this one was standard fare for healthcare: with the exception of business plan announcements by organizations or as elements of tragedies like Lewiston, Gaza or a pandemic, the business of the health system—how it operates is largely uncovered and often subject to misinformation or disinformation.
That’s the problem: it’s background noise to most voters who can be stoked to action over a single issue when prompted by special interests (i.e., Abortion rights, surprise billing, price transparency et al) but remain inattentive and marginally informed about the bigger role it plays in our communities and country and where it’s heading long-term. The narrative common to most boils down to these:
- The U.S. health system is good, but it’s complicated. ‘How good’ depends on your insurance and your health—both are key.
- The U.S. health system is expensive and profitable. It pays its executives well and its frontline workers unfairly.
- The delivery system focuses on the sick and injured; prevention and public health matter less.
- Hospitals and physicians are vital to the system; health insurers keep their costs down.
- The U.S. system pays lip service to “customer service” and ‘engaged consumers.” It is spin not supported by actions.
- The U.S. system needs to change dramatically.
In the next 3 weeks, attention will be on the federal budget: healthcare will be in the background unless temporarily an element of a mass tragedy. Each trade group will tout its accomplishments to regulators and pimp their advocacy punch list. Each company will gin-out news releases and commentary about the future of the system will default to think tanks and focused on a single issue of interest.
That’s the problem. In this era of social media, polarization, and mass transparency, these old ways of communicating no longer work. Left unattended, they undermine the value proposition on which the U.S. system is based.
PS: I look forward to moderating the 4th Annual Chief Strategy Officer Roundtable sponsored by Lumeris in Austin TX this week where 12 health system CSOs will discuss the future. Last week, investors heard the auto industry’s top brass admit they misread the electric vehicle market and each company announced changes to their longer-term strategies. We’ll have a similar discussion this week about the U.S. health system—moving beyond NOW to assumptions about FAR (8-10 years) and NEAR (3-5 years). Stay tuned.
Re: Maine Mass shooting: “Some people are going to say ‘This is a mental health issue,’ others are going to say, ‘It’s a gun issue,’ but there’s no reason it can’t be both. For instance, some people are going to look at this tragedy and say, ‘We don’t have enough guns in America.’ That alone proves some of us are mentally ill.”
Stephen Colbert Late Night CBS October 26, 2023. Stephen Colbert Calls Out Mike Johnson’s First Fail – The New York Times (nytimes.com)
Re: food insecurity: “An estimated 87.2% of U.S. households where food secure throughout the entire year in 2022, with access at all times to enough food for an active, healthy life for all household members. The remaining households (12.8%, statistically significantly higher than the 10.2% in 2021 and the 10.5% in 2020) were food insecure at least some time during the year, including 5.1% with very low food security (statistically significantly higher than the 3.8% in 2021 and the 3.9% in 2020) …Children and adults were food insecure at times during 2022 in 8.8% of U.S. households with children, up from 6.2% in 2021 and 7.6 % in 2020. In 2022, very low food security among children was 1.0%, statistically significantly higher than the 0.7%in 2021. From 2021 to 2022, there were statistically significant increases in food insecurity and very low food security for nearly all subgroups of households described in this report. In 2022, the typical food-secure household spent 15% more on food than the typical food-insecure household of the same size and household composition. About 55% of food-insecure households participated in one or more of the three largest Federal nutrition assistance programs from the U.S. Department of Agriculture: The Supplemental Nutrition Assistance Program (SNAP); the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); and the National School Lunch Program during the month prior to the 2022 survey.”
Household Food Security in the United States in 2022 USDA October 2023 https://www.ers.usda.gov/webdocs/publications/107703/
Re: healthy eating: “If you’re eating like a typical American, you’re probably going to die prematurely. This year more than 678,000 Americans will die from diseases or conditions associated with what they eat. These include common conditions such as high blood pressure, high blood sugar (type 2 diabetes), and high cholesterol. Collectively, we’ll spend more than four trillion dollars on health care, 20% on diseases linked to unhealthy diet choices, according to one study. It’s been estimated that we lose at least 13 years by eating a typical U.S. diet.
This may not come as a shock when you consider that each year the average American consumes a total 264 pounds of beef, veal, pork, and chicken; 123 pounds of sugar and caloric sweeteners, including some 39 gallons of soda pop; 16 gallons of milk; and more than 40 pounds of cheese, some of which tops our annual 46 slices of pizza. Seventy percent of our calories come from processed foods, containing thousands of artificial food additives, many of them known to cause cancer. “
This American diet could add 10 years to your life Dan Buetner National Geographic December 6, 2022 https://www.nationalgeographic.com/magazine/article/dan-buettner-blue-zones-america-diet
Re: Medicaid expansion: “There are just 10 states that have not adopted ACA-funded Medicaid expansion. But if they did, roughly 2.3 million more people would be insured…Most of the holdouts are in the South and the Midwest. More than half a million Floridians would be eligible for the government program, dropping the state’s uninsured rate by a quarter. Alabama and Mississippi would see uninsured rates decline by close to 40%
But what is most notable is who could be covered under an expanded program. Uninsured rates among Black women of reproductive age could be halved, and 20% more young adults would be eligible. That said, state spending would increase by roughly $1.5 billion, and federal spending by more than $20 billion.”
Urban Institute www.urban.org
Re: insurance simplification, regulation: “Health care simplification does not necessarily resonate in the same way as rallying cries for universal coverage or lower health care prices, but simplifying the system would address a problem that is frustrating for patients and is a barrier to accessible and affordable care.
The regulatory structure largely already exists to require explanations of benefits that make sense to consumers, clinician directories that are accurate, and rights to appeal when claims are denied. What is missing is effective enforcement of these requirements and support for consumers (especially those with serious and chronic health conditions) to comprehend and navigate the complex labyrinth the US health insurance system has become.”
Larry Levitt, Drew Altman “Complexity in the US Health Care System Is the Enemy of Access and Affordability” October 26, 2023 JAMA Health Forum. 2023;4(10):e234430. doi:10.1001/jamahealthforum.2023.4430
KFF Drug price comparison: Ozempic: List Price of Weight Loss Drug Ozempic, U.S. vs Peer Nations
- S.: $936
- Japan: $169
- Canada: $147
- Switzerland: $144
- Germany: $103
- Netherlands: $103
- Sweden: $96
- United Kingdom: $93
- Australia: $87
- France: $83
Note: List prices in $USD based on web searches as of August 15, 2023. Prices are for one-month supply of Ozempic 1mg.
KFF Health System Tracker, August 2023
Rock Health: tech investment slowdown: “In 2021, U.S. health tech ventures drew almost $30 billion across 737 deals… Since then, however, funding has steadily contracted: Investors poured just $15.3 billion into U.S. health tech startups in 2022, and $8.6 billion across the first three quarters of 2023.
But looking ahead to next year, venture groups are less interested in rapid growth and more keen on startups that can demonstrate savings and efficiency.”
Rock Health www.rockhealth.com
Re: investments in health tech: “Healthcare and technology are further intersecting, redefining the future of medicine from imaging software to telemedicine. In Q2 investors poured $900 million into the digital health vertical across 73 deals while healthcare IT attracted $1 billion across 62 deals…The craze for a new class of weight loss drugs has driven more demand for obesity treatment startups and telemedicine prescribers.”
Pitchbook “Get a pulse on healthtech’s most active investors” October 29, 2023 https://pitchbook.com/news/articles/the-top-10-vc-investors-in-healthtech
CB Insights: Digital Health investments in Q32023: “Digital health dealmaking slowed down significantly in Q3’23. Deals dropped by a third to reach their lowest count in nearly a decade. Meanwhile, funding fell by 14% QoQ to hit $3B — its lowest level since 2016…Despite the drops, median early-stage deal size has remained relatively steady in 2023 so far. Additionally, Q3’23 saw $100M+ mega-round count tick up to 6…The size of early-stage digital health deals remains stable relative to mid- and late-stage deals in Q3’23. 100M+ digital health mega-rounds account for their largest share of quarterly funding since Q2’22.”
State of Digital Health Q3’23 Report CB Insights October 24, 2023 https://www.cbinsights.com/research/report/digital-health-trends-q3
Study: Insurer price variation unrelated to costs: Indiana U researchers analyzed Humana prices for 7 procedures based on 2022 claims data: “Over half of the US population receives health insurance from private insurers, and prices are negotiated rather than set administratively (e.g., Medicare). This negotiation process contributes to a landscape in which private insurance prices are both higher than Medicare rates and highly variable.1 The private market lacked meaningful price transparency for patients and purchasers until the recent implementation of Hospital Price Transparency and Transparency in Coverage (TiC) rules.
Future work may examine the underlying causes of price variation in health care, as it is unclear whether prices are meaningfully associated with value as in nearly every market, or whether prices reflect imbalances in market power and negotiation leverage. If price variation reflects clinical or perceived quality variation, purchasers and policymakers need to find balance between receiving higher-quality care and spending financial resources elsewhere. However, if price variation is driven by consolidation or anticompetitive contracting, then regulators should design policies that ensure competitive health care markets. The factors determining price variation are likely in the middle of these 2 possibilities.”
Chartock et al Transparency in Coverage Data and Variation in Prices for Common Health Care Services JAMA Health Forum October 27, 2023;4(10):e233663. doi:10.1001/jamahealthforum.2023.3663
Hospitals, Health Systems
Sullivan Cotter: Executive Compensation up 4.1%: Per Sullivan Cotter’s survey of 3000 including comp for 42, 160 individuals: organizations year-over-year changes in median base salaries for health care leaders (i.e., salary, merit, across-the-board, market adjustments).
- This year’s 4.1% increase for all health care executives is slightly lower than the 2022 increase (4.3%).
- While 2023 salaries increased, incentive awards moderated. Incentive plan payouts were lower for 2022 performance compared to 2021, reflecting a more challenging operating environment and sustained financial headwinds…While health system executives’ base salaries increased by 4.8%, median TCC levels increased by 3.5%. Median annual incentive payouts for 2022 were moderately below target, compared to payouts that were moderately above target last year. The data showed no significant shifts in annual incentive plan prevalence or award opportunity levels.
- Given the increasing complexity of health systems and the focus on integration, health system executive salary increases (4.8% at median) outpaced subsidiary hospital executive salary increases (3.9% at median), continuing a trend observed over the past several years. Health system positions that noted higher increases in pay (roles with median base salary increases of 5.0% or higher) tended to be those focusing on strategy/planning, technology, financial sustainability and risk, integration, and workforce strategy:
Sullivan Cotter October 23 Health Care Management and Executive Compensation Survey report.
Boston Globe: Dana Farber-Mass General Split: “Dana-Farber Cancer Institute is one of the country’s crown jewels of cancer care, providing effective treatment and groundbreaking research. That’s why its decision to end its quarter-century affiliation with Brigham and Women’s Hospital to build a freestanding cancer center in partnership with Beth Israel Lahey Health deserves careful scrutiny from state regulators.
The most important question is what the new affiliation will mean for patient care…Secondarily, what would the new partnership mean for health care costs? Mass General Brigham and Dana-Farber both have some of the highest health care costs in the state, and the effects of the proposed change on costs are unclear…While the PPS exemption is a federal issue, state regulators can and should examine all issues related to pricing and provide an independent analysis on whether the switch would increase or lower costs…
Still, with a large amount of money and prestige at play, expect a serious fight between the state’s biggest health care system, Mass General Brigham, and its quickly expanding rival, Beth Israel Lahey Health, as the Dana-Farber deal is scrutinized over whether the move will help or harm both patients and costs. State regulators must play an independent role to ensure that the winners in the end are the patients who need high-quality cancer care.”
Editorial The big question looming over Dana-Farber shift: What’s the best way to treat cancer? Boston Globe October 29, 2023
Report: Physician recruiting: Per the report by the Association for Advancing Physician and Provider Recruitment (AAPPR), the trade group that represents 150 in-house recruiters:
- “For the first time in 4 years, the number of physician searches to replace departing physicians declined from 48% in 2021 to 44% in 2022, suggesting more physicians stayed with their organizations in 2022 rather than sought new opportunities.”
- Recruitment departments’ budgets increased in 2022 after declining for several years during and after the pandemic. With budget increases, departments started to rely more heavily on search agencies, with nearly 75% of organizations extending their capacity by using a search firm in 2022, most likely for their most difficult and time-consuming searches.
- The percentage of searches still open at the end of the year remained high, with 47% of physician searches and 26% of advanced practice provider (APP) searches open.
- Primary care specialties of family medicine, internal medicine and hospital medicine are the most sought-after specialties, accounting for more than a quarter of all searches. Positions least likely to be filled in 2022 included Surgery: Plastics, Geriatrics and Ophthalmology.
- Some of the longest positions to fill, defined as when a contract is signed, were in Urology (344 days to contract) and Neurosurgery (254 days to contract). When organizations consider that the time to credential and license is another 4 months on average and varies widely, it is not uncommon for organizations to be without some specialties for a year or longer.
“AAPPR Report Shows Demand for Physicians Reaching a New High as Staffing Shortage Continues” October 24, 2023 Association for Advancing Physician and Provider Recruitment: AAPPR – Association for Advancing Physician and Provider Recruitment
Poll: Patient preferences for physician practice settings: 58% of patients are aware of who owns the practice they visit. 54% have no preference between an independently owned or a corporate medical provider; 38% prefer independent practices; and 8% prefer corporate healthcare providers.
For patients who prefer independently owned providers:
- 78% appreciate the more personal relationship with their provider
- 60% trust these providers more
- 58% prefer to support locally owned businesses
- 57% say quality of care is higher
For patients who prefer corporate healthcare providers:
- 66% say they can schedule appointments faster
- 51% say doctors respond faster
- 42% say exams are faster
CMS: Direct Contracting Model Results for 2022: Per the announcement by the Centers for Medicare and Medicaid Services last Monday.
- The Global and Professional Direct Contracting Model saved Medicare $371.5 million in 2022, a more than fivefold improvement from the prior year which it attributed to growth in the number and experience of Direct Contracting participants, and to an extension of the amount of time organizations had to manage patient care.
- 99 Direct Contracting groups collectively retained $484 million in savings: vs. 53 in 2021.Of these, 75, earned shared savings. Those that assumed total risk generated more savings than those that only took only partial risk: (79% vs. 67%).
Note: CMS transitioned the Direct Contracting model to the Accountable Care Organization Reimagined to Achieve Equity and Community Health (ACO REACH) at the start of 2023 after facing pushback from progressive lawmakers about for-profit companies’ influence on the program and its effect on patient care. ACO REACH includes health equity, risk adjustment, provider governance and other requirements that were not part of the Direct Contracting model, which was developed by President Donald Trump’s administration. In August, the Center for Medicare and Medicaid Innovation increased reserve requirements and reduced enrollment minimums under ACO REACH.
USDA: Food Insecure Households: The Department of Agriculture reported that 17.3% were food insecure in 2022—5% from the 2021 and the highest since 2014. The highest cohorts were Black households with children (22%), Hispanic households. (21%) and households headed by a single mother (33%).
CDC: Health worker burnout: The share of health workers who reported feeling threatened or harassed by patients or others at work more than doubled between 2018 and 2022 to 13.4%. Workers reporting harassment were five times more likely to report anxiety, three times more likely to report depression, and six times more likely to report burnout than workers who did not. About 46% of health workers reported feeling burnout often or very often in 2022, while 86% reported feeling pretty happy or very happy and 82% said their working conditions allow them to be productive. Surveyed health workers reported an average of 4.5 poor mental health days in the past month, up from 3.3 in 2018.
PEPFAR: Funding cut off September 30: “the President’s Emergency Plan for AIDS Relief — has saved an estimated 25 million lives since President Bush founded it 20 years ago. The $6.9 billion program, which Congress has previously reauthorized every five years, has long had bipartisan support and is often cited as a powerful example of America’s moral leadership in the world.
But it faces an uncertain future. The legislation authorizing the program lapsed on Sept. 30 after some House Republicans claimed, without evidence, that the Biden administration was using it to promote abortion overseas. Those Republicans want to attach abortion-related restrictions to PEPFAR that would doom its reauthorization in the Democratic-controlled Senate.”