Who Owns American Health Care Services?
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Gaffney, Woolhandller and Himmelstein, examine (here, in Milbank) long term trends in the financing and ownership of American health care. They found “Over the past century, the tax-financed share of health care spending has risen from 9% in 1923 to 69% in 2020; a large part of this tax financing is now the subsidization of private health insurance. For-profit ownership of health care facilities has also increased in recent decades and now predominates for many health subsectors. A rising share of physicians are now employees. US health care is, increasingly, publicly financed yet investor owned, a trend that has been accompanied by rising medical costs and, in recent years, stagnating or even worsening population health.”
They suggest that “A reconsideration of US health care financing and ownership appears warranted.”
HOSPITALS, ASCs, SKILLED NURSING AND OTHER HEALTH CARE FACILITIES
Cross Market Mergers = CEO Compensation, Career Boost
Burns and Pauly (here) examine the new consolidation trend of “cross market” mergers (Kaiser-Geisinger, Advocate-Aurora-Atrium, Sanford and anybody) and find “Advocates of cross-market hospital mergers cite a host of benefits. Research suggests these benefits are nonexistent. Additional evidence suggests other motives may be at play in the formation of cross-market mergers that have nothing to do with efficiencies, synergies, or community benefits. Instead these mergers may be self-serving efforts by system chief executive officers (CEOs) to boost their compensation.”
They write, “Warned by Adam Smith, we also come with a bias against combinations of sellers unless there are clear advantages to consumers from that combination; pious hopes should be supported by evidence, and the burden of proof in health policy (even if not in antitrust law) should be on those who wish to combine rather than on those anxious because of the proven harmful effects of past combinations.”
Moreover, they report, the financial results of mega-mergers are negative. “Nearly two-thirds of large systems experienced an aggregate decline in their operating income from 2015 to 2017, totaling $8.3 billion; 21 systems saw their incomes decline by more than $100 million. Average operating margins fell 39% from 4.2% in 2015 to 2.6% in 2017; 22% of systems reported operating losses across these years. Such losses were generated by a host of driving forces, particularly expenditure increases that outpaced revenue increases by 2%-3% . . . high capital costs (e.g., for electronic medical records [EMRs] and buildings) . . . increasing employment of physicians, and rising corporate overhead costs (10% or more annually).”
“Economists indicate that nonprofits and for-profits engage in the same strategies.”
Much of the promotion and support for such mergers comes from non-peer reviewed studies published by the American Hospital Association. Burns and Pauly report that health care economists “are unable to replicate and explain the AHA findings because of the opaque methodology.”
A Tarnished Treasure
Troubles mount for the “national treasure,” the National Health in the UK. The New York Times (here) puts the focus on inconvenience and disappointment for patients. Bloomberg (here) calls it the “National Hell Service,” reporting “How severe is the crisis? Bloomberg looked at data for eight indicators including: ambulance waiting times, cancer treatment times, overnight hospital bed availability and wait times for diagnostic tests, and analyzed it by electoral constituency to see which regions were faring better than others. The results are stark: almost nowhere in England is meeting even half of the metrics and a fifth are meeting none.”
Doctors and nurses continue walkouts and strikes (here, in the BMJ). Goldman Sachs and Morgan Stanley, among other corporations, sponsor (here in the FT) a return to the “in-office” doctor, in response, for their employees.
Appropriate Hospital Utilization, A Continuing Challenge
Brown’s Vincent Mor (here) examines the rationale for the requirement of a prior three day hospital stay, in order for a patient to qualify for nursing home admission and be paid through Medicare. “Perhaps it is time to revisit the reasonableness of the 3-day prior hospital stay rule. Almost all Medicare Advantage plans have dropped it, largely because with their existing utilization review processes they are able to deflect hospital admissions . . . all of which translates into savings for them. Furthermore, many accountable care organizations have received permission to waive the 3-day stay requirement . . . Thus, the decades-old concerted effort to reduce incentives to hospitalize older individuals and those with frailty, such as NH residents, may have made the 3-day stay requirement obsolete.”
Non clinical factors such as race, insurance and practice patterns (here) may influence systemic anti-cancer therapies at the end of life. Clustering of (here) ICU use (“patients are more likely to be transferred to the ICU in the hours after another patient’s critical illness event on the same ward”) is examined (editorial here), both in JAMA Internal Medicine, together with the anomaly of overload and underuse in area hospital ICUs (here, in Health Affairs).
MEDICARE, MEDICAID AND COMMERCIAL HEALTH INSURANCE
Medicaid Unwinding
The Dallas Morning News (here) reports that “More than 500,000 Texans booted off Medicaid following end of COVID-era enrollment,” largely due to failure to return mailed forms. A State-leading 82% of the Texas Medicaid program is financed by general and specific sales taxes, as reported (here) by Pew.
DRUGS & DEVICES
Who Will Make Low Margin and Generic Drugs?
Politico Prescription Pulse reports (here) that “Razor-thin margins for generic drugmakers are behind critical drug shortages, say FDA officials, drugmakers and supply chain experts. But it appears unlikely Congress will financially support the industry.” The FDA approves Leqembi for Alzheimer’s (here), and CMS (here) is not far behind with payment, although through patients in registries. High cost drugs draw new payment strategies (here), as drug makers abandon generics (here from KFF, here in Becker’s).
To others, it appears we are on the verge of major drug breakthroughs, for example (here), a breathless essay in The New York Times Magazine which proposes that “Suddenly, It Looks Like We’re in a Golden Age for Medicine. We may be on the cusp of an era of astonishing innovation — the limits of which aren’t even clear yet.”
The limits of realized clinical value for “accelerated” spending on accelerated drug approvals were discussed (here) in JAMA Internal Medicine: “In 2019, 75% and 84% of commercial health plan and out-of-pocket spending on accelerated approval products, respectively, were attributed to product-indication pairs that did not assess clinical end points or had not yet confirmed clinical benefit.”
Still, CMS presses on with a new proposal in the Federal Register (here) for “transitional coverage” for emerging technologies. Adam Fein discusses in Drug Channels (here) his predictions for drug sales and distribution in the near future under the Inflation Reduction Act.
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Notes to Fred Hyde, MD, JD, MBA, news@dcmedicalnews.org
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