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Top 10 Issues Facing Community Hospital CEOs

Last month the American College of Healthcare Executives released the results of its annual CEO survey on the top concerns confronting community hospitals. The most pressing concerns of the CEOs in 2015 were:

  1. Financial challenges
  2. Patient safety and quality
  3. Governmental mandates
  4. Personnel shortages
  5. Patient satisfaction
  6. Physician-hospital relations
  7. Access to care
  8. Population health management
  9. Technology
  10. Reorganization [mergers, acquisitions, restructuring, partnerships]

Financial challenges has remained the top concern when compared to 2013 and 2014 surveys. Transition from volume to value, Medicaid reimbursement, bad debt, and increasing costs were among the financial challenges most often mentioned. Engaging physicians in improving the culture of safety/quality and in reducing clinically unnecessary tests and procedures were top concerns related to patient safety and quality.

Access to care and reorganization were new to the top 10 list in 2015, and personnel shortages rose to 4th place on the list, up from the 10th spot in 2014.

Source: Top issues confronting hospitals in 2015. American College of Healthcare Executives, Feb. 2, 1016. http://ache.org/pubs/research/ceoissues.cfm [press release: http://ache.org/pubs/Releases/2016/top-issues-confronting-hospitals-2015.cfm]

Posted by AHA Resource Center (312) 422-2050, rc@aha.org

New Kaiser Permanente Medical School and Other Provider-Sponsored Med Schools

The recent announcement that Kaiser Permanente will open its own medical school in southern California raised the question about other providers that may have medical schools.

A Kaiser Health News article mentions these providers that have launched med schools as well:

  • Mayo Clinic has had its own med school since 1972
  • North Shore-LIJ System co-launched Hofstra North Shore – LIJ School of Medicine [with Hofstra University] in 2011.

Providers are already heavily involved in medical education, and the partnership between North Shore-LIJ System and Hofstra University is itself a new trend, according to the article.

Source: Rovner J. New Kaiser Permanente Med School Part of a Growing Trend. Kaiser Health News, Dec. 18, 2015. http://khn.org/news/new-kaiser-permanente-med-school-part-of-a-growing-trend/

Related: Howard B. Academic Medicine’s Relationship with Hospitals: Notes from a Joint Venture. Becker’s Hospital Review, May 13, 2015. http://www.beckershospitalreview.com/news-analysis/academic-medicine-s-relationship-with-hospitals-notes-from-a-joint-venture.html

Posted by AHA Resource Center (312) 422-2050 rc@aha.org

Hospitals with equity interest in insurance plans

Florida Hospital Healthcare System is a major health care provider in the Orlando area.  In this brief news item, FHHS announces intent to partner with Health First Plans of Brevard County to offer a health insurance plan.  The advantages of creating a financial incentive to reduce inpatient and emergency department utilization are mentioned.

Would you like to know more about which hospitals have an equity interest in insurance plans?  The American Hospital Association includes questions about a hospital’s relationship with health maintenance organizations (HMOs), preferred provider organizations (PPOs), and indemnity fee for service plans in the AHA Annual Survey.  For more information about purchasing data from this survey , please call 866.375.3633.

Source: Aboraya, A.  From hospital to health plan: Florida Hospital and Health First to partner, offer insurance.  Orlando Business Journal, Aug. 25, 2013.  Click here for full text:  http://www.bizjournals.com/orlando/news/2013/08/23/from-hospital-to-health-plan-florida.html?s=print  Posted by AHA Resource Center (312) 422-2050, rc@aha.org

Private Equity and Non-Profit Hospitals: Strange Bedfellows or Saving Grace?

An article this week in Becker’s Hospital Review discusses a relatively new twist in the hospital/hospital system merger and acquisition arena  – the involvement of private equity firms. Several examples are listed:

  • Acquisition of Caritas Christi Health System by Steward Health System, an entity of Cerberus Capital Management
  • Purchase of Detroit Medical Center by Vanguard Health Systems, owned by Blackstone Group
  • Catholic system Ascension Health formed a funding venture with Oak Hill Capital Partners

The article briefly discusses the pros and cons for private equity involvement.

Source: McLaughlin J. Private equity and non-profit hospitals: strange bedfellows or saving grace. Becker’s Hospital Review, Mar. 26, 2013. http://www.beckershospitalreview.com/hospital-transactions-and-valuation/private-equity-and-non-profit-hospitals-strange-bedfellows-or-saving-grace.html

Related resources:

Healthcare Private Equity Association: http://www.hcpea.org/

Page L. Private equity funds are changing the face of U.S. hospitals. Becker’s Hospital Review, May 2, 2011. http://www.beckershospitalreview.com/hospital-transactions-and-valuation/private-equity-funds-are-changing-the-face-of-us-hospitals.html

Saint Mary’s plans joint venture with private equity company. Catholic Health World, Apr. 15, 2011. http://www.chausa.org/Saint_Marys_plans_joint_venture_with_private_equity_company.aspx

Creswell J and Abelson. A giant hospital chain is blazing a profit trail [re: HCA now owned by 3 private equity firms]. New York Times, Aug. 14, 2012. http://www.nytimes.com/2012/08/15/business/hca-giant-hospital-chain-creates-a-windfall-for-private-equity.html?

Denning S. HCA: the unsustainable private equity bubble in US health care. Forbes, Aug. 15, 2012. http://www.forbes.com/sites/stevedenning/2012/08/15/private-equity-wont-fix-health-care-either/

Wechsler P. HCA plans biggest U.S. private equity IPO at $4.28 billion. Bloomberg.com, Feb. 22, 2011. http://www.bloomberg.com/news/2011-02-22/hca-offering-as-much-as-4-28-billion-in-shares-to-public.html

Evans M. Limited potential: private-equity deals come with conditions. Modern Healthcare, Jan. 28, 2012. http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=5&cad=rja&ved=0CFMQFjAE&url=http%3A%2F%2Fwww.modernhealthcare.com%2Farticle%2F20120128%2FMAGAZINE%2F301289974&ei=V_VVUZjCIqWYyAGqj4H4DA&usg=AFQjCNFZJy9RjBAyFmhnac6Xi5OTRCVZVw&bvm=bv.44442042,d.aWc

Becker S and others. Private equity investing in healthcare — 13 hot and 4 cold areas. McGuireWoods LLP, Aug. 4, 2011. http://www.mcguirewoods.com/news-resources/publications/health_care/private-equity-investing-healthcare.pdf

Shinkman R. For hospitals, M&A market means more private equity, payer partnerships. FierceHealthCare, Jan. 29, 2013. http://www.fiercehealthfinance.com/story/hospitals-ma-market-means-more-private-equity-payer-partnerships/2013-01-29

Private equity firms: could they help save your hospital? REDW LLC, Sept. 11, 2011. https://www.redw.com/publication_full_story.php?Page=publications&Blog_Ref=213&UserRef=1&CategoryName=Healthcare+Publications 

Vaughan J. Private equity investment in health care services. Health Affairs, Sept. 2008. http://content.healthaffairs.org/content/27/5/1389.abstract

Applebaum E and Batt R. Private equity at work: when Wall Street manages Main Street. Russell Sage Foundation, May 2014. https://www.russellsage.org/publications/private-equity-work

Related post: https://aharesourcecenter.wordpress.com/2015/03/24/2014-private-equity-acquisitions-in-health-care-sector/

Posted by AHA Resource Center, (312) 422-2050, rc@aha.org

Early benchmarks in ACO development

The Healthcare Intelligence Network has produced a free white paper [registration required] on how ACOs – accountable care organizations – are evolving in the health care provider arena.  The survey reflects data from February 2011.  Some highlights include:

  • 14% of respondents already have a functioning ACO
  • one-third of the ACOs reported are hospital-administered
  • one-half of the ACOs reported took anywhere from a year to a year and a half to launch
  • 40% of reported ACOs have shared savings built in to their reimbursement plan

Source: ACO Readiness in 2011: Physician-Led Accountable Care Organizations Wave of the Future.  Healthcare Intelligence Network, February 2011.  http://www.hin.com/library/registeraco11.html

Co-management model: doctors manage service lines

A co-management model, implemented July 2009 at Genesys Regional Medical Center (Grand Blanc, MI), is described in this case study.  The hospital already had a successful PHO in place, the Genesys Physician-Hospital Organization, with 160 FTE primary care physicians, but was looking for an alignment model to integrate with specialists.  The new model involves investment by specialists in a co-management company that manages a service line.  Although there were challenges gaining acceptance of this new idea, the changes has led to improved patient satisfaction and has positioned the hospital and medical staff to pilot an accountable care organization.

Source: Aderholdt, B., and Lockridge, J.  Partnering with doctors through co-managementHealth Progress;92(4):26-29, July-Aug. 2011.  Posted by AHA Resource Center, (312) 422-2050, rc@aha.org

Is it still worth doing joint venture ASCs?

Reasons why hospitals should consider partnering with physicians in joint venture ambulatory surgery centers are reviewed.  A model that is recommended as successful is an ownership structure with 50 percent physicians, 25 percent corporate partner, and 25 percent hospital.  (It is worth noting that one of the co-authors is an exec with ASCOA, Ambulatory Surgery Centers of America, a surgery center developer.) 

Why I like this article:  It’s helpful to find overview articles like this that explore the pros and cons of an issue. 

Source: Fine, A., and Frazier, B.  Can a hospital benefit from partnering with physicians?  Healthcare Financial Management;65(5):70-76, May 2011.  Posted by the AHA Resource Center, (312) 422-2050, rc@aha.org