Archive for July, 2014

HFMA Research Report — Value-Focused Acquisition & Affiliation Strategies

July 26, 2014 Leave a comment

A few weeks ago, the Healthcare Financial Management Association (“HFMA”) published a report examining healthcare acquisition and affiliation activity.  The report is titled “Acquisition and Affiliation Strategies” and is available as a free download.

There are no surprises in the Report’s so-called “research highlights.”  In fact, the highlights are ho-hum obvious:

An emphasis on value-focused strategies. The healthcare organizations interviewed for this report understand that the best way to gain market share is by meeting care purchasers’ demand for high quality, convenient access, and competitive prices. They are seeking acquisition and affiliation partners that will help them achieve these goals.

An understanding that different needs require different approaches. Organizational needs vary greatly depending on local market conditions and the organization’s mission, existing capabilities, and future goals. Organizations are considering a range of partners and partnership opportunities to meet these needs, often pursuing several options simultaneously.

The emergence of new organizational combinations. Healthcare organizations are growing both horizontally (e.g., hospital to hospital) and vertically (e.g., healthcare system to health plan), and different types of organizations are combining forces (e.g., academic medical centers and regional health systems).

A blurring of the lines between competition and collaboration. Market conditions and organizational needs are opening up collaborative possibilities for organizations that may have viewed one another as competitors.

The need to change governance and support structures as organizations change. As organizations grow and gain new capabilities, they are reevaluating and reshaping existing board and management structures, IT systems, financial systems and fund-flow models, and physician relationships to accommodate the changes.

However, the conclusion reached by the Report is very telling:

Few doubt that the forces transforming health care today will lead to further consolidation within the industry.  The difference is significant, however, between consolidation that seeks only to increase market power and an acquisition and affiliation strategy that seeks partners who can help produce the cost-efficiencies, gains in clinical quality, and access that care purchasers both need and demand. By taking the latter approach, healthcare organizations will be best-positioned to compete in their markets and win market share by offering patients, employers, and other purchasers a superior value proposition. [emphasis added]

The acquisition/affiliation focus of healthcare organizations has shifted away from market share and toward quality and cost-effective care.  That is an important shift.  Healthcare organizations that may have  looked like good targets in the past may no longer be desirable.  If an acquisition or affiliation is the goal, all parties need to make sure that their own healthcare houses are in order.  Otherwise, they may be standing at the altar alone.

Hospitals Buy Clinics, Doctors’ Practices; Higher Prices Result

July 26, 2014 Leave a comment

I’m shocked to find that hospital run care is more expensive (with apologies to Casablanca):

For the past four years, Pennsylvania insurance company Highmark has watched its bills for cancer care skyrocket. The increase wasn’t because of new drugs being prescribed or a spike in diagnoses. Instead, the culprit was a change that had nothing to do with care: Previously independent oncology clinics and private practices have been acquired by big hospital systems that charge higher rates, sometimes three times as much, for chemotherapy drugs. “The site of care and the type of service provided does not change at all,” says Tom Fitzpatrick, Highmark’s vice president of contracting. “The only significant difference that we primarily see is the [patient] gets a wristband placed on them.”

Hospitals have long charged more than freestanding medical offices for similar services. It’s part of how they pay for higher operating expenses such as running 24-hour emergency rooms. As the Affordable Care Act attempts to steer people away from pricey inpatient admissions, hospitals have begun buying up doctors’ offices in hopes of increasing their revenue and market share. The number of oncology practices owned by hospitals increased by 24 percent from 2011 to 2012. By turning what used to be independent medical offices into so-called hospital outpatient centers, hospitals are creating networks that, critics say, give them the power to set prices and ultimately raise costs for private insurers and government programs such as Medicare.

From Businessweek: Hospitals Buy Clinics, Doctors’ Practices; Higher Prices Result


Online access: Portals connect patients with their medical info

July 26, 2014 Leave a comment

“We do everything online, book airline tickets, paying bills,” said Tupelo family physician Dr. Brad Crosswhite, who helped pilot the North Mississippi Medical Clinic portal in 2012. “Why not handle medicine the same way?”

The secure, free services give access to medication histories, visit summaries, lab results and reminders about upcoming appointments. On most hospital portals, patients can see their discharge instructions. With the clinic portals, patients can request refills and communicate securely with the staff.

“The ultimate goal is to have patients more engaged with their care.”

This is from an online article from Online access: Portals connect patients with their medical info.

Yes, of course, this is a good thing.  But couldn’t it be better.  It’s time we stopped being so apoplectic about privacy and security, and more focused on how to get better patient engagement in their care.  HIPAA has run a muck and clearly makes things unintentionally harder than they need to be.  As with most government regulations, compliance is more costly and disruptive than the problem being addressed.  No one disputes the value of keeping healthcare records private, but that goal needs to be balanced against the real goal of improving healthcare.

Tele-ICU connects rural patients

July 26, 2014 Leave a comment

As hospitals are closed and patients need access to physicians who may be far away, telemedicine is one answer.

This YouTube video provides a good insight on tele-ICU and the value it brings to rural patient care.

Concern mounting over Prime Healthcare pursuit of Bay Area hospitals – San Jose Mercury News

July 26, 2014 Leave a comment


A controversial Southern California-based hospital chain that buys financially struggling hospitals has surfaced as a bidder for the beleaguered Daughters of Charity Health System, which operates four Bay Area hospitals that serve the poor.

But the overture by Prime Healthcare Services isn’t playing well with local hospital employee unions, who say the chain’s checkered history shows it will turn its back on low-income patients and slash workers’ pay and benefits.



So, we know this is the way that healthcare is going — consolidation into bigger and bigger organizations.   In the short run quality should go up and costs should go down. Hopefully.  In the long run, I’m not sure bigger is better for anything.

New OIG Special Fraud Alert Aimed at Laboratory Payments to Referring Physicians

July 13, 2014 Leave a comment

Two of  my partners, Michael Gennett and Elizabeth Hodge, and I authored the following post for Akerman’s Healthcare Blog:


On June 25, 2014, the U.S. Department of Health and Human Services Office of Inspector General (OIG) issued a Special Fraud Alert entitled “Laboratory Payments to Referring Physicians.” While the Alert breaks no new ground (see, e.g., its 1994 Special Fraud Alert), it demonstrates the OIG’s continuing concerns about clinical laboratories’ offering inducements to referring physicians.

The Alert provides an in-depth discussion of laboratories’ paying referring physicians for collecting specimens and paying physicians for submitting patient data to a registry or database. The Alert explains that physicians who prepare specimens for transfer from the office to a laboratory have a CPT code (99000) to bill Medicare for a nominal charge. Where laboratories are separately paying the same physician for specimen collection, the double billing is evidence to the OIG of an obvious intent to induce referrals. Similarly, with respect to physicians submitting patient data for a database, even if the project has legitimate underpinnings, it may still be illegal if an intent is to induce referral. The Alert contains a detailed list of characteristics of specimen processing and data registry arrangements that it finds suspect.

The OIG ‘s concerns are not lessened in referral arrangements that “carve out” Medicare and other federal programs and focus only on commercial insurance. The OIG takes the position that, because physicians refer to a limited number of labs, inducements with respect to commercial insurance are likely intended to induce Medicare referrals also. Equally important, inducements for commercial insurance referrals may violate applicable state laws (for example, Florida’s Patient Brokering law).

Physicians should review their financial arrangements with outside clinical labs. The question to be asked always is whether one of the reasons for the arrangement is to induce referrals of patients for lab services. Although the Alert focuses on specimen processing and data registry arrangements, that does not mean that other arrangements are OK. The fraud and abuse concerns set forth in the Alert extend to any arrangement that provides some sort of financial benefit to physicians with the intent to induce referrals of patients for lab services.


Following publication of the Alert, the OIG published a study entitled “Questionable Billing for Medicare Part B Clinical Laboratory Services.” In the Study, the OIG found that “[a]lmost half of the labs that exceeded the thresholds for five or more measures of questionable billing—compared to 13 percent of all labs—were located in California and Florida, areas known to be vulnerable to Medicare fraud.” The OIG’s recommended that it “[r]eview the labs identified as having questionable billing and take appropriate action” and also “[r]eview existing program integrity strategies to determine whether these strategies are effectively identifying program vulnerabilities associated with lab services.” As a result, clinical labs and physicians should exercise great vigilance in reviewing their financial and referral relationships with each other to insure that they comply with applicable federal (and state) fraud and abuse and other healthcare laws.

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