Tag Archives: Mergers

Hospital prices, not physicians, drive cost growth, Health Affairs says | Healthcare Dive

Here’s another article about prices from last Tuesday that should be read in conjunction with today’s article on prices.

If we keep doing the same things over and over again to make things better, and they don’t work, that is a sure sign we are crazy, so ideas like antitrust enforcement, while a good idea in general business, and the incentivizing of more cost-efficient physician referrals, only scratches the surface.

The real problem is how health care in the US is just another revenue stream for investors and stockholders of insurance companies, pharmaceutical companies, and hospitals and hospital systems, as I reported also today in Hospital Mergers Improve Health? Evidence Shows the Opposite – The New York Times

So here is last Tuesday’s article:

The report suggests measures aimed at cutting healthcare costs focus on issues like antitrust enforcement and incentivizing more cost-efficient physician referrals.

Source: Hospital prices, not physicians, drive cost growth, Health Affairs says | Healthcare Dive

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Hospital Mergers Improve Health? Evidence Shows the Opposite – The New York Times

Yesterday’s post, Hospital lobby ramps up ‘Medicare for all’ opposition | Healthcare Dive, suggested that moving towards an improved and expanded Medicare for All system would force hospitals to close, so the article below in today’s New York Times would seem to argue that the urge to merge does not improve health.

So on the one hand, if we adopt a democratic socialist approach to health care, hospitals may close; yet, if we allow them to follow capitalist economic laws regarding economies of scale, they don’t offer better care.

Perhaps, then it is better to try the democratic socialist approach, because the economies of scale approach has not worked, and let’s see if hospitals do close, or they see an increase in patients due to more people being covered.

EHR Vendor to Benefit from CVS/Aetna Merger

An article here from Healthcare IT News.com discusses how a CVS partner, Epic Systems, will benefit from the merger between CVS and Aetna.

The article reports that this signals a new era in analytics, interoperability, and population health.

According to Healthcare IT News.com, CVS is the biggest pharmacy chain in the U.S. by a number of locations and prescription revenue, Aetna is the nation’s third-largest insurance company. Epic Systems, which was not a party to the merger, but has been a CVS partner since 2015, is the largest electronic health record vendor.

The deal, according to the article,  stands to have a transformative impact on how healthcare is delivered in this country. Data, and lots of it, given that CVS has 9,700 retail locations and more than 1,100 walk-in clinics nationwide, was clearly a huge driver for the deal.

Epic’s vice president of population health, Alan Hutchinson, said that by using Epic’s Care Everywhere and Share Everywhere interoperability tools, CVA and Aetna could provide the rest of the community with information and insights to improve care.

“What’s really interesting about working directly with payers, providers, and patients is the ‘gray space’ – the opportunity that exists between traditional sites of care and all of the other organizations that are involved in the patient’s healthcare experience,” Hutchison said.

David Anderson, a research associate at Duke University Margolis Center, said in a recent blog post, “I can think of using the CVS retail data as a population health monitoring service, I can think of using the over the counter sales data tied to individuals to fuel predictive models for future opioid issues, or arthritis flares, or pulmonary hospital admissions or one hundred other things,”

He went onto say, “So from my former point of view as an insurance data geek, this merger offers an incredibly rich vein of data that can be mined and minted.”

The fundamental aim of the merger, is the management of chronic diseases through patient engagement, telehealth, and remote monitoring.

Aetna CEO Mark Bertolini said, “I think you have to think of it as keeping people away from the medical-industrial complex by offering better services in the home by meeting social determinants of health, which are big drivers of healthcare expenditures today, much bigger than people understand.”

Larry Merlo, CEO of CVS Health said the arrangement will enable the combined company to deliver services that many hospitals currently do not.

Consolidation Rolls On In Work Comp

Consolidation was mentioned in the last post as one of the areas of concern over physician payment reform.

Yet, consolidation is also a concern in workers’ compensation, as Joe Paduda reports this morning.

Joe has been keeping tabs on all of the acquisitions occurring in the workers’ comp sphere for a very long time, and one of the main companies involved in these transactions has been Apax Partners, owners of One Call Care Management and GENEX Services.

GENEX has itself been bought or bought other companies in the past three years that I am aware of, thanks to Joe’s reporting.

Reuters, Joe says, reported that Apax is preparing a bid close to $2 billion for peer Helios. Helios is the product itself of a merger between Progressive Medical and PMSI, and is the largest workers’ comp Pharmacy Benefit Manager (PBM).

PMSI was bought by H.I.G. Capital some years back for about $40 million, Joe states, then purchased for probably 8-10 times that figure a couple years ago and merged with Progressive, and there are countless other companies in the work comp service sector that have gone through similar mergers, acquisitions, purchases, etc.

Given the consolidation in the health care sector with hospitals, insurers, and physician practices, especially the development of ACOs, the consolidation on the work comp will also lead to higher cost for services or cuts to services provided.

Competition was supposed to be a good thing in a capitalist society, but as we have seen before in many other industries, leveraged buyouts, mergers and acquisitions, and hostile takeovers have shrunk the competitive sphere, so that in these industries, only a handful of large corporations remain.

Banking, insurance, and financial services, especially Wall Street brokerage firms, have all been consolidated in one form or another, so that now, a company like Goldman Sachs dominates the market after the financial collapse of a few years ago.

Health care and work comp are no different. Perhaps one day, the world of “Rollerball” will become reality, and all companies will be combined into their own industries, headquartered in different cities around the world, as was in that groundbreaking film.

Who knew the highest form of capitalism was really monopoly?

The Urge to Merge: Why Health Care Costs Are Still Rising

Back in March of last year, I wrote a piece about the consolidation of US hospitals leading to higher costs and the reduction of quality.

In that article, I provided the reader with a chart of the changes in hospital consolidation in the US by region, and referred to an article on Payerfusion.com that stated that hospital spending is the key driver of healthcare costs in the US and has been growing at nearly 5% year over year.

In today’s Wall Street Journal, Suzanne Delbanco, executive director of Catalyst for Payment Reform, wrote an Opinion article further expounding on the issue of hospital consolidation and its impact on health care costs.

According to Dr. Delbanco, nationwide, payments to hospitals on behalf of the privately insured are an estimated 3% higher as a result of consolidation, according to a report by her organization.

She states that in some cases, hospitals have increased their prices by nearly 50% after a merger, and mentioned that when two San Francisco area hospitals merged, their prices increased 28%-44%, according to an analysis by an FTC economist.

For employers, who pay about 60% of the total cost of an employee’s health care, this meant that they were burdened with higher costs, as well as consumers, who also saw their portion of the bill go up.

As long as there is an urge to merge, as long as hospitals and hospital systems consolidate, health care costs for privately insured individuals, insurance companies, employers, and consumers will continue to rise.

For the purpose of this blog, employers who must deal with group health insurance costs, as well as workers’ comp costs, need to decide if they are going to continue to be played as fools and allow hospitals to get away with ever increasing costs. That brings to mind the line in the original Star Wars movie, where Obi-Wan says to Han Solo: “Who’s the more foolish? The fool, or the fool who follows him?”

It does not have to be that way. There are alternatives to high cost medical care, and you would be foolish not to look into them.