Here’s where we are:
Physician income has not kept pace with inflation and administrative costs prompting 70% to leave private practice. Half are now employed by hospitals and another 20% by private equity-backed practice managers. Both trends began before the pandemic in response to tougher financial conditions for physicians across all specialties. While hospitals held their own at the sector level, physicians lost ground. Per CMS’ NHE analysis, from 2000 to 2021:
- Spending in hospitals increased from 30.4% of total spending to 31.4%
- Spending for prescription drugs was essentially unchanged from 8.95% to8.88%
- Public health spending. increased slightly from 3.2% of total spending to 4.4%.
- But spending for physician services shrank from 21.1% to 15.6%.
In tandem with the erosion of finances for medical practices, investments in medical practices by private equity grew. Per Pitchbook, there have been 874 practice acquisitions by PE/Venture backed sponsors in the last 12 years with 20 in the first half of this year alone. Most of these are small ($7.53 million/transaction) and most involve a tuck-in to an existing PE backed platform (i.e., Privia, Sheridan, et al). Rightfully, physicians point out that while hospitals and drug companies have protected their piece of the health care pie successfully for 20 years while physicians have lost ground.
Physicians are not happy and burnout is pervasive. The employment of physicians in hospital and private equity settings has not made life happier for physicians. Per Medscape’s most recent assessment, burnout increased to 53% in 2022–up from 47% in 2021 and 26% since 2018. More than one in five physicians (22%) reported experiencing depression—up from 15% since 2018. They’re anxious about the future and increasingly sensitive to compensation comparisons with professions that require less training and earn more. They’re suspicious of consultants, lawyers and bankers whose experience is limited but fees inexplicably high They’re incensed by executive compensation in hospitals, drug companies, and health insurer settings they deem overpaid and overhyped. And they resent execs in for-profit and private equity companies who achieve astronomical wealth via their stock-option packages earned on the backs of the physicians they control.
The realities are these:
Physicians lack a strong voice. The American Medical Association’s membership includes less than a third of active-practice physicians. It is increasingly under-fire for under-representing primary and preventive health providers in its government-authorized monopoly on coding, its lobbying efforts against scope of practice expansion for APNs and pharmacists, its opposition to medical training innovations that could significantly improve the readiness and effectiveness of the physician workforce and more. The AMA’s influence is strong on a shrinking number of issues and increasingly resonate out of touch on issues that resonate with voters and lawmakers (expanded scope of practice for nurses and pharmacists, price and outcome transparency, et al).
Physicians operate in a buyers’ market but behave like it’s a sellers’ market. Physicians are trained to think of themselves as the hub of a system in which what they say determines what everyone else does…including patients. They are conditioned in medical school, residency and practice to be self-centered and resist efforts via data, clinical practice redesign or even “value-based incentives” to change their behaviors. They despise the notions of price transparency, cost effectiveness and outcome-based comparisons to their peers while calling for more accountability from hospitals, insurers and drug companies. They discount notions of consumerism and self-care and believe report cards over-rate patient experiences since medical practice is uniquely complicated.
Most live in a buyers’ market mentality unwilling/unable to see the sellers’ market healthcare has become. Otherwise, price transparency would be prevalent, operating hours and support services more conducive to the needs of patients and digital investments to maintain connectivity significant…but most don’t.
The U.S. economy will be testy for the 12 months: bringing down inflation will require interest rate hikes. Unemployment will increase slightly, wage inflation will slow, and the 2024 election cycle will draw unwelcome attention to healthcare spending and its affordability as root causes of growing financial insecurity in American households. Given this backdrop, the profession of medicine faces a tipping point: become an integral part of the system’s solution or a vestige of its past. That solution should address medicine’s role in…
- Addressing affordability for households and patients and the direct role it plays.
- Integrating generative AI into more accurate diagnostics and more accessible, efficient treatment methods.
- Embracing transparency about medical services pricing, costs, outcomes, business relationships and conflicts of interest.
- Creating care plans around individualized social determinants of health and distinctions in populations.
- Streamlining medical training toward competency-based lifelong learning, data-driven technology support, a team-based delivery and ‘whole person’ orientation to individuals.
- Accepting full accountability for their effectiveness in reducing unnecessary costs and spending, increasing equitable access and engaging consumers in self-care.
How value-based and alternative payment models figure into this is anyone’s guess. Some physician organizations (AAPG, NAACO, et al) are all-in for expansion of these while others note their lackluster results to date. And physician calls for a replacement to RVU-based conversion-factor will grow louder as Congress revisits MACRA and how Medicare pays physicians. These are important and require urgent attention, but they do not elevate the profession to its rightful place at the center of system transformation.
I hold the profession of medicine in high regard. I respect and trust my physicians—Ben, Ben and Blake are trusted friends in my personal journey to health. But their profession as a whole appears stuck in the past and unable to play a central role in the health system transformation. Until and unless new physician leaders with fresh thinking about the entire system step up, the profession’s role will continue to erode. Playing the victim card and blame game against Medicare, hospitals, insurers, drug companies and everyone else they deem unworthy will not solve the health system’s problems.
I believe conditions are right for physicians to seize the moral high ground and lead the needed reset of the health system but most aren’t ready.
PS: I participated in the Large Clinic Conference hosted by Sullivan Cotter in Salt Lake City last week: the issues outlined in this post are front and center to these practices. All want a stronger voice in their organizations and a seat at the table as healthcare systemness circa 2030 and beyond is created.
In the Quotables and citations that follow below, there’s further evidence of the fault line facing the health system and robust debate about the roles hospitals, insurers and physicians play. Please take 5 minutes to scan these, and link to items for a deeper dive. Resources:
CMS Office of the Actuary Releases 2022-2031 National Health Expenditure Projections CMS June 14, 2023 www.cms.gov/newsroom/press-releases/cms-office-actuary-releases-2022-2031-national-health-expenditure-projections
National Health Expenditure Projections, 2022–31: Growth to Stabilize Once The COVID-19 Public Health Emergency Ends Health Affairs June 14, 2023 www.healthaffairs.org
2023 Medscape Physician Burnout & Depression Report January 27, 2023 www.medscape.com
Re: physician payment methodology: “More than 3 decades have passed since Congress enacted and the Centers for Medicare & Medicaid Services (CMS) implemented the Resource-Based Relative Value Scale (RBRVS) as the basis for the Medicare physician payment system…
The physician payment system needs repair. The growing gap between practice costs and payment rates, exacerbated by the COVID-19 pandemic, resurgent inflation, and commercial payers’ decreasing and distorting RBRVS values, has stretched many practices to their limits and likely accelerated market consolidation. The blame occasionally laid at the feet of the RUC, however, is misplaced. Medicare payment rates have lagged inflation for 2 decades, and the blame falls squarely on Congress. Although practice costs surged 47% since 2001 and hospitals received approximately 70% increases in Medicare inpatient rates, cumulative updates for physicians’ rates totaling 9% substantially lagged inflation. Congressional Medicare budget neutrality rules further penalize physicians by reducing payment rates across the board each year in response to changes in expenditures from other new or revised codes…
Physician payment, however, requires broader reform. After letting the Medicare conversion factor decrease from $38.26 in 2001 to $33.89 in 2023, Congress must create the same predictable, annual, inflation-based updates for physicians that hospitals, skilled nursing facilities, and hospices already receive. CMS and commercial payers must collaborate to implement many of the proven, physician-designed alternative payment models that offer practices flexibility to innovate and improve quality while reducing cost. Those who employ physicians must focus on supporting physicians’ work and eliminating burnout—and stop misusing RVUs to obsessively push productivity while ignoring the experiences of both physicians and patients. Addressing these larger challenges is critical to continuing progress toward a health care system with the capacity to expand access, innovate, and advance quality and value for the health of the nation.”
Jack S. Resneck Jr, MD President, American Medical Association Medicare Physician Payment in Need of Major Repair JAMA June 22 2023; doi: 10.1001/jama.2023.8460
Re: Medicare Physician Fee Schedule changes needed: “The MPFS is conceptually and ethically flawed. It rewards time even if inefficient, of poor quality, or without benefiting patients’ health. Worse, the MPFS not only encourages but also institutionalizes unprofessional and unethical practices of physicians by accepting their inaccurate work descriptions and time estimates to set the physicians’ own reimbursement levels. These are not inescapable flaws. By spending a few million dollars for CMS to sever its dependence on the RUC’s estimates of time and intensity, CMS would likely save billions of dollars resulting from a more accurate and ethical Medicare fee schedule. This change is long overdue”
Robert Berenson, The Urban Institute, Ezekiel J. Emanuel, MD, PhD, Medical Ethics and Health Policy, University of Pennsylvania “The Medicare Physician Fee Schedule and Unethical Behavior” JAMA June 22, 2023 doi:10.1001/jama.2023.6154
Re: corporatization impact on medicine: “The corporatization of health care has changed the practice of medicine, causing many physicians to feel alienated from their work…. But in recent years, despite the esteem associated with their profession, many physicians have found themselves subjected to practices more commonly associated with manual laborers in auto plants and Amazon warehouses, like having their productivity tracked on an hourly basis and being pressured by management to work faster….
Throughout the medical system, the insistence on revenue and profits has accelerated…As the focus on revenue and the adoption of business metrics has grown more pervasive, young people embarking on careers in medicine are beginning to wonder if they are the beneficiaries of capitalism or just another exploited class. In 2021, the average medical student graduated with more than $200,000 in debt. In the past, one privilege conferred on physicians who made these sacrifices was the freedom to control their working conditions in independent practices. But today, 70 percent of doctors work as salaried employees of large hospital systems or corporate entities, taking orders from administrators and executives who do not always share their values or priorities.”
Eyal Pres The Moral Crisis of America’s Doctors NY Times June 15, 2023 www.nytimes.com/2023/06/15/magazine/doctors-moral-crises.html
Re: ACHP’s “MA for Tomorrow” Plan:: “Medicare Advantage (MA) has passed the tipping point, delivering coverage and care to more than half of the senior population in the US. The Congressional Budget Office projects more than 60%of people 65 years and older will be in the program by 2030. As enrollment soars and interest in value-based health care grows, it is imperative policymakers modernize the program that is expected to cost $7.5 trillion over the next decade.
Rather than taking the standard Washington posture of declaring victory or defending the status quo, our provider-aligned, nonprofit member plans spent nearly two years developing a detailed vision for MA for Tomorrow. The policy proposals being released at a Capitol Hill briefing on June 12 are concrete reforms from executives with decades of experience and a track record of achieving the highest quality ratings in the program.
MA for Tomorrow is built on five pillars: (1) Raising the Bar on Quality; (2) Improving Consumer Navigation; (3) Achieving Risk Adjustment for Care, not Codes; (4) Modernizing Network Composition; and (5) Transforming Benchmarks. Taken together, the policies foster greater competition, reduce provider burden, push quality standards higher, enhance the shopping experience and curb improper payments.”
Ceci Connelly, Michael Bagel, Association of Community Health Plans “MA for Tomorrow: Moving Beyond the Status Quo to Advance Concrete Policy Changes for the Future of Medicare Advantage” The Health Care Blog
Re: health insurer reform: “In a country where the healthcare industry is driven by profit, it’s no surprise that health insurance companies lead the charge and prioritize their bottom line over the well-being of the very patients they claim to serve. The result? A system rife with inefficiencies, soaring costs, and compromised care.
It thus makes sense that according to an AP-NORC Center for Public Affairs poll, just 12% of the American public believes the healthcare system operates “extremely” or “very” well.
The system is broken, and I believe our health insurance system is largely to blame.
In its first-quarter 2023 earnings announcement, Cigna showed an uptick in key financial metrics and showcased a 6% year-over-year increase in total revenue (a whopping $46.5 billion) — all while hospitals and providers grapple with inflation, staffing woes, and reimbursement challenges. Yet, Cigna is not alone; UnitedHealthcare posted a $20.1 billion profit in 2022, and Aetna had a boom year of its own.”
- Adam Brown, MD, MBA J Why Do We Tolerate Our Health Insurance Problem? June 20, 2023 @ERDocBrown
Re: inflation: “At first glance the world economy appears to have escaped from a tight spot. In the United States annual inflation has fallen to 4%, having approached double digits last year. A recession is nowhere in sight and the Federal Reserve has felt able to take a break from raising interest rates. After a gruesome 2022, stock markets have been celebrating: the S&P 500 index of American firms has risen by 14% so far this year, propelled by a resurgence in tech stocks. Only in Britain does inflation seem to be worryingly entrenched…Rarely has America’s economy escaped unscathed as the Fed has raised rates. By one reckoning, the unemployment rate would have to rise to 6.5% for inflation to come down to the Fed’s target, the equivalent of another 5m people being out of work. Rising interest rates imperil financial stability in the euro area’s most indebted member countries, notably Italy. “
Investors must prepare for sustained higher inflation The Economist June 22, 2023 https://www.economist.com/leaders/2023/06/22/investors-must-prepare-for-sustained-higher-inflation
Re: Benefis’ breaks even at Medicare rates: “Benefis is one of the very few health systems in the nation to breakeven on Medicare. We achieved Medicare breakeven in 2012 and have maintained it each year since…The 2024 BHS efforts to maintain a viable operating margin will continue to include cost reduction…The for-profit Great Falls Clinic has been owned by Surgery Partners in Nashville TN since 2019 (NASDAQ: SGRY)…The biggest investor in Surgery Partner is private equity via Bain Capital. Surgery Partners in their quest to grow and grow profits for their investors, is significantly expanding the Great Falls Clinic and Hospital…Choice and competition are good in any industry, including in healthcare of course. However, Surgery Partners expansion in Great Falls will impact BHS in several important areas….While Surgery Partners expansions into Great Falls do not change BHS’ overall strategies, they do/will impact our workforce and financial goals and make both more difficult to achieve.”
John Goodnow, CEO, Benefis Health System, Great Falls MT July 2023 CEO Report www.benefis.org
Study: Physician Owned Hospitals have lower prices than competitors: Researchers examined whether Physician Owned Hospitals (POHs) have different prices than their competitors in the same markets for 8 of CMS’ designated shoppable services as of January, 2023: spinal injection, physical therapy–therapeutic exercise, magnetic resonance imaging scan of lower spinal canal, computed tomography scan of abdomen and pelvis, comprehensive metabolic panel, blood test-clotting time, and emergency department visit levels 3 and 4. The final sample included 156 POHs and 1116 non-POHs located in 78 HRRs. Findings:
- POHs were smaller (mean 55.0 vs 162.0), more profitable (mean profit margin, 15.2% vs 7.1%), and more likely to be for-profit (154 POHs [99%] vs 268 non-POHs [24%]), nonteaching (138 POHs [88%] vs 805 non-POHs [72%]), noncritical access (154 POHs [99%] vs 850 non-POHs [76%]), and located in metropolitan areas (147 POHs [94%] vs 707 non-POHs [63%]) than private non-POHs in the same market.
- POHs served fewer Medicaid patients (mean 3.0%vs 7.1%and provided less charity care (mean 1.3% vs 3.2%.
- Nationwide median commercial negotiated prices and cash prices were lower for POHs by 4% to 33% and 5% to 36%, respectively, for 7 of 8 services.
- Median commercial negotiated prices and cash prices among POHs were 33.7% and 32.7% lower than those of non-POHs, respectively, for the same procedure in the same HRR. Hospital plan–level regression results indicated that POH status was associated with 17.5% and 46.7% lower negotiated prices and cash prices, respectively, for the same procedure and in the same HRR.
Wang et al Comparison of Commercial Negotiated Price and Cash Price Between Physician-Owned Hospitals and Other Hospitals in the Same Hospital Referral Region JAMA Network Open June 23, 2023;6(6):e2319980. doi:10.1001/jamanetworkopen.2023.19980
AHRQ Study: Trends in system affiliations of hospitals 2018-2021: Background: the latest version of the AHRQ Compendium identified 635 health systems – with the term ‘health system’ defined to include at least one non-federal general acute care hospital and at least one “connected” group of 50+ physicians providing comprehensive care. Excerpts:
Health Systems Controlled a Larger Share of Health Care Resources In 2021 Than In 2018 “Larger percentages of providers were affiliated with vertically integrated health care systems in 2021 than in 2018, with three-quarters of hospitals and half of all physicians in one of the 635 identified systems. The percentage of acute care hospitals owned or affiliated grew from 72 to 76% over this period, and the percentage of acute care hospital beds increased from 91 to 93%. Physicians, too, became more likely to affiliate with health systems. Among all specialties, 52% of physicians were affiliated in 2021, compared to 51% in 2018. Among primary care physicians, the change was from 49 to 51%
Consolidation Has Driven Increasing Variation in System Size “Although the total number of health care systems changed very little between 2018 and 2021, from 637 to 635, the total count’s stability conceals a considerable churn. Of the 637 systems identified in 2018, 572 were also identified in 2021, meaning that just over 10% of systems lost system designation after 2018 and were replaced by different systems (Exhibit 2). By far, the most common reason systems dropped out of the Compendium was that they merged with or were acquired by another system. Forty-nine systems from 2018 were not in the Compendium in 2021 due to a merger or acquisition, a full 75 percent of those systems that were identified in 2018 but not in 2021.
Mergers and acquisitions also explain a large fraction of newly identified systems in 2021; 9 systems, or 15% of new systems, formed from a merger or acquisition. The other key pathway for new systems involved individual acute care hospitals integrating with more physicians such that they met the threshold to be included in the Compendium in 2021; 32 systems (51% of new systems) reached system status in 2021 by individual hospitals increasing their numbers of affiliated physicians.
These two trends, mergers and acquisitions and physician affiliation, have driven an increase in the variation of system size. The median system looked remarkably similar in terms of size in 2021 as it did in 2018, with two hospitals and just over 400 hospital beds. The median physician count increased, but the median primary care physician count remained steady. However, when we look at the tail ends of the size distribution, we find that the largest systems (captured by the 95th percentile) were larger, and the smallest systems (captured by the (captured by the 5th percentile) were smaller in 2021 than in 2018. “
Study: hospital consolidation via system affiliation reduces inpatient pediatric hospital choices: Researchers sought to characterize whether hospital consolidation, as measured by newly reported membership in a health system, is associated with the loss of inpatient pediatric services. Findings:
“The study team examined 5104 unique hospitals representing 46,841 hospital-years. Provision of inpatient pediatric services declined over time, from 2023 of 4876 in 2011 (41.5%) to 1485 of 4551 in 2020 (32.6%). The primary analysis included 1088 unique hospitals and 3862 hospital-years with 235 hospitals joining a system during the study period (21.6%). Joining a hospital system was associated with a loss of inpatient pediatric services within 5 years (adjusted odds ratio, 1.57; 95% CI, 1.26-1.96; P < .001). In the sensitivity analyses varying the follow-up period, this association remained statistically significant at 4 years but not at shorter follow-up lengths, although all point estimates were similar. In the proportional hazards analysis, the association between joining a health system and loss of inpatient pediatric services was not significant (adjusted hazard ratio, 1.23; 95% CI, 0.95-1.61; P = .13), although the point estimate was qualitatively consistent with the primary analysis.”
Joseph et al “Association Between Hospital Consolidation and Loss of Pediatric Inpatient Services “JAMA Pediatrics June 20, 2023. doi:10.1001/jamapediatrics.2023.1747
Study: Hospital Value-based Purchasing Program methodology issues: Researchers evaluated the relative importance of the 4 quality domains in Medicare’s Hospital Value-Based Purchasing (HVBP) program from the perspective of Medicare beneficiaries. In this online survey of 1025 Medicare beneficiaries in March 2022. Findings:
“A hospital’s performance on clinical outcomes was most highly valued by beneficiaries (49%), followed by safety (22%), patient experience (21%), and efficiency (8%). Nearly twice as many hospitals would see a payment reduction when using beneficiary value weights than would see an increase (1830 vs 922 hospitals); however, the average net decrease was smaller −$4,697 than the comparable increase$35 358 [$9906 to $97 348]). Hospitals seeing a net reduction with beneficiary value weights were more likely to be smaller, lower volume, nonteaching, and non–safety-net hospitals located in more deprived areas that served fewer complex patients.”
Trenaman et al “Medicare Beneficiaries’ Perspectives on the Quality of Hospital Care and Their Implications for Value-Based Payment ”JAMA Network Open June 21, 2023;6(6):e2319047. doi:10.1001/jamanetworkopen.2023.19047
The Economy, Consumer Spending
Consumer spending: spending, opinions about US economy offers mixed view:
Morning Consult: In May, consumers across all income groups increased their total spending. However, the highest earners had the largest increase, with a 15% increase in total spending month over month, whereas the average low-income consumer only increased their spending by 1%. Earlier this year, news of tech layoffs, banking instability and market volatility may have prompted high-income earners to pull back on spending. As these events have come to pass, high-income earners have rebounded their spending in full force. Job prospects are also improving for this group, as the share who experienced a loss of pay and income fell from May to June, as highlighted in June’s Morning Consult/ Axios Inequality Index.
McKinsey: “Most consumers—even historically big spenders—are pulling back. Real spending growth has been slowing since early 2022, with both high- and low-income groups holding their spending largely flat relative to the previous year (on a real basis, not accounting for inflation). Notably, for the first time in more than two years, high-income consumers’ spending growth was negative. In fact, they’ve reduced their spending more aggressively than lower-income groups have.” Per McKinsey, a 22% of the population has an optimistic view of the economy vs.33% who are pessimistic:
|% Pressimistic||% Mixed||% Optimistic|
|% Change LTM||NC||-5||+5|
What’s Driving Increases in Consumer Spending — Even as Core Inflation Remains Stubborn Morning Consult June 23, 2023 https://pro.morningconsult.com/analysis/consumer-spending-core-inflation-may-2023
A monthly update on the state of the US consumer: June 2023 McKinsey June 22, 2023 www.mckinsey.com/industries/consumer-packaged-goods/our-insights/a-monthly-update-on-the-state-of-the-us-consumer
Fidelity study: retiree health costs will be $157,000 in retirement: Highlights of Fidelity’s 22nd annual Retiree Health Care Cost Estimate released last Wednesday:
- A 65-year-old retiring this year can expect to spend an average of $157,500 in health care and medical expenses throughout retirement— the same as last year, due to expected limits to retiree out of pocket costs for prescription drugs starting in 2025.
- The 2023 estimate is flat from 2022 ($157,500 for a single retiree, or $315,000 for a couple), and has nearly doubled from the $80,000 for a single retiree estimated in 2002.
- “Research has shown many Americans consistently underestimate just how much they may spend on health care in retirement; in fact, a 2022 survey found they expect a couple to spend just $41,000 on health care once they retire, far below Fidelity’s estimate of $157,500 for the average 65-year-old retiring this year. “
Fidelity® Releases 2023 Retiree Health Care Cost Estimate: For the First Time in Nearly a Decade, Retirees See Relief as Estimate Stays Flat Year-Over-Year June 21, 2023 https://newsroom.fidelity.com/pressreleases/fidelity–releases-2023-retiree-health-care-cost-estimate–for-the-first-time-in-nearly-a-decade
Highlights: Truist’ Health investor summit: From last week’s conference in NYC:
Benefits Consultants panel reported “their employer clients are seeing medical cost trend for 2024 in the range of up 6-8% (vs up 4-6% for 2023), which is one of the highest projections in the past 10 years or so. This medical cost trend was broken down as 2-4% from general inflation, ~2% from incremental medical inflation (typically outpaces general inflation), and 1.5-2% related to utilization. Expected pharmacy trend for 2024 at up 8-10% continues to outstrip general medical costs at up 5-7%.
“Our PE panelists highlights high quality management from top to bottom, a differentiated approach, being on the right side of change with regulatory tailwinds, a defensible TAM, strong unit economics, long term visibility, and strategic platform play as key qualities to be a successful public company…”
Top 10 Takeaways from 2023 Truist Securities Healthcare Disrupters & Digital Health Summit June 22, 2023 https://truist.bluematrix.com/sellside
Public Health, Social Determinants of Health
Study: US mortality rate decline: Woolf examined life expectancy estimates in 2022 from the United Nations, the Human Mortality Database, and the US Mortality Database, and calculated changes in growth rates, US global position (rank), and state-level trends. Results:
“Increases in US life expectancy slowed from 1950 to 1954 (0.21 years/annum) and 1955 to 1973 (0.10 years/annum), accelerated from 1974 to 1982 (0.34 years/annum), and progressively deteriorated from 1983 to 2009 (0.15 years/annum), 2010 to 2019 (0.06 years/annum), and 2020 to 2021 (–0.97 years/annum). Other countries experienced faster growth in each phase except 1974 to 1982. During 1933 to 2021, 56 countries on 6 continents surpassed US life expectancy. Growth in US life expectancy was slowest in Midwest and South-Central states.”
Steven H. Woolf “ Falling Behind: The Growing Gap in Life Expectancy Between the United States and Other Countries, 1933–2021” Am J Public Health. June 1, 2023:e1–e11. https://doi.org/10.2105/AJPH.2023.307310)
Study: Health related 501c4 dominate social welfare organizations: Researchers analyzed Form 990s annual filings by US social welfare organizations (501c4s) for calendar year 2021. Findings:
Of the 12,576 social welfare organizations with Form 990 filings in 2021, 318 (2.5%) were in the health care system. In total, these health care organizations generated revenues of $88.9 billion and profits of $3.2 billion. This represented 70.1% of revenues and 48.8% of profits for all 12,576 organizations combined.
- The 318 health care organizations primarily consisted of advocacy groups (n = 106 [33.3%]) and health plans (n = 92 [28.9%]), followed by emergency medical services (n = 44 [13.8%]; such as Belfield Ambulance Service and Sunman Area Life Squad), dental plans (n = 43 [13.5%]), and other groups (n = 33 [10.4%]).
- Health plans, dental plans, and advocacy groups combined accounted for almost all of the revenue (98.6%) and profit (99.2%) generated by health care social welfare organizations.
- Median (IQR) profit margin was highest for advocacy groups (7.4% [−7.7% to 24.9%]). Other categories’ median profit margins were lower than 4.3%. Some organizations had substantially high profitability. Among 41 health care social welfare organizations that reported lobbying expenses between 2017 and 2020, most spending averaged less than $1 million annually, with 3 exceptions.
“Using 2021 IRS filings, we found that social welfare organizations in the US health care system generated more than two-thirds of the revenues and almost half of the profits of all social welfare organizations combined. Profitability and lobbying expenditures varied widely across the organizations….
Social welfare organizations receive substantial subsidies from federal, state, and local taxpayers. They have minimal IRS reporting requirements and oversight. They are also not subject to the Federal Election Commission’s campaign finance disclosure requirement. To improve accountability to taxpayers and help ensure compliance with tax-exemption requirements, policy makers should consider designing tests to evaluate whether an organization’s profitability violates §501(c)(4), determine whether an organization’s social welfare benefits exceed its tax-exempt benefits, and increase reporting transparency for political activities.”
Plummer et al “Financial Characteristics of Nonprofit Social Welfare Organizations in the US Health Care System “JAMA Health Forum June 23, 2023;4(6): e231507. doi:10.1001/jamahealthforum.2023.1507
Study: Child Tax Credits contributed to reduced food insecurity: Researchers analyzed the relationship between Expanded Child Tax Credit (ECTC) monthly payments with changes in adult overall health or household food security between July 2021 to December 2021. Finding:
- Before disbursement of ECTC monthly payments, 60.1% of ECTC-eligible adults reported excellent or very good health, and 87.8% reported having food security.
- Among ECTC-ineligible adults, 54.9% reported excellent or very good health and 89.1% reported food security.
- “Following disbursement of monthly payments, ECTC-eligible adults experienced a 3.0 percentage point (pp) greater adjusted increase in the probability of reporting excellent or very good health compared with ECTC-ineligible adults. Additionally, ECTC-eligible adults experienced a 1.9 pp greater adjusted increase in the probability of food security than ECTC-ineligible adults.
- In income-stratified analyses, the association between ECTC eligibility and overall health was concentrated among middle-income and upper-income households (3.7-pp increase in excellent or very good health). Conversely, the association between ECTC eligibility and food security was concentrated among low-income adults (3.9-pp increase in food security).
Rook et al “Changes in Self-Reported Adult Health and Household Food Security With the 2021 Expanded Child Tax Credit Monthly Payments” JAMA Health Forum June 24, 2023. 2023;4(6):e231672. doi:10.1001/jamahealthforum.2023.1672
Study: math, reading performance of 13-year-olds hit record low: Per results from the National Assessment of Educational Progress, the last time math performance was this low for 13-year-olds was in 1990 and reading, 2004.
The federal standardized test, known as NAEP, was given last fall, and focused on basic skills. The 13-year-olds scored an average of 256 out of 500 in reading, and 271 out of 500 in math, down from average scores of 260 in reading and 280 in math three years ago.
Related: A student survey given alongside the test turned up other interesting results that will keep educators buzzing. The percentage of 13-year-olds enrolled in algebra has declined to 24 % from 34% in 2012. In some districts and states, notably California, there has been a push to equalize math education by placing fewer eighth graders into advanced math.
The percentage of 13-year-olds who reported reading for fun has also declined. Last fall, 31 % said they “never or hardly ever” read for fun, compared to 22% in 2012.
Dana Goldstein “What the New, Low Test Scores for 13-Year-Olds Say About U.S. Education Now “ New York Times June 21, 2023 www.nytimes.com
Study: Medicare Advantage enrollment and MA payment cuts: Researchers analyzed the association between MA payment reductions under the Affordable Care Act (ACA) and MA enrollment growth from 2008 to 2019. Findings:
- “Among 3138 counties with 37,639 county-year observations, ACA-induced benchmark cuts were sizeable and varied, ranging from 0% to 42.9%. Counties with benchmark cuts above the 75th percentile had population-weighted average benchmark cuts of 14.9% compared with 4.4% in other counties.
- In the 8 years following the ACA, there was no differential change in MA enrollment between counties with larger vs smaller benchmark cuts. Plan payments differentially fell in counties with larger benchmark cuts by $78.35 (95% CI, $62.21-$94.48) per member per month.
This cohort study found no evidence that the MA benchmark and ensuing payment cuts imposed by the ACA were associated with reduced MA enrollment, compromising access to MA. “
Schwartz “Growth of Medicare Advantage After Plan Payment Reductions” JAMA Health Forum. June 24, 2023;4(6): e231744. doi:10.1001/jamahealthforum.2023.1744
Study: meal benefit impact on post-hospitalized outcomes: Researchers evaluated the association of a 4-week posthospitalization home-delivered meals benefit with 30-day all-cause rehospitalization and mortality in patients admitted for heart failure (HF) and other acute medical conditions (non-HF). Findings:
- Unadjusted rates of 30-day death and rehospitalization for the meals, no meals–2019, and no meals–2021/2022 cohorts were as follows: HF: 23.3%, 30.1%, and 38.5%; non-HF: 16.5%, 22.4%, and 32.9%, respectively.
- For HF, exposure to meals was significantly associated with lower odds of 30-day death and rehospitalization compared with the no meals–2021/2022 cohort but was not significant compared with the no meals–2019 cohort. For non-HF, exposure to meals was associated with significantly lower odds of 30-day death and rehospitalization when compared with the no meals–2019 and the no meals–2021/2022 cohorts.
Note: the methodology did not allow a causal relationship to be established.
Nguyen et al “Association of a Medicare Advantage Posthospitalization Home Meal Delivery Benefit With Rehospitalization and Death “JAMA Health Forum June 25, 2023;4(6):e231678. doi:10.1001/jamahealthforum.2023.1678
Study: bundled payment model shows lower episode cost: Researchers analyzed the association between a bundled payment program and changes in total episodic spending or quality of care for Medicare Advantage beneficiaries receiving lower extremity joint replacement surgery. Findings:
“Participation in the bundled payment program was associated with a 2.7% decrease in spending per episode (mean episodic spending, $21 964 as well as reductions in skilled nursing facility use after discharge (21.3% for bundled episodes vs 25.0% for control episodes; and increased use of the outpatient surgical setting (14.1% for bundled episodes vs 8.4% for control episodes. The program was not associated with changes in quality outcomes, including 90-day complications (8.8% for bundled episodes vs 8.6% for control episodes and readmissions (4.3% for bundled episodes vs 4.6% for control episodes.”
Sutherland et al “Association Between a Bundled Payment Program for Lower Extremity Joint Replacement and Patient Outcomes Among Medicare Advantage Beneficiaries” JAMA Health Forum June 25, 2023;4(6):e231495. doi:10.1001/jamahealthforum.2023.1495