Two major health scares at U.S. airports involving inbound flights are related to pilgrims returning from the Hajj, the Muslim pilgrimage to the holy city of Mecca, Saudi Arabia, which ended in late August, U.S. health officials said on Friday.
On Wednesday, U.S. health officials sent an emergency response team with mobile diagnostic equipment to John F. Kennedy International Airport in New York after they were told that more than 100 passengers aboard an Emirates airlines flight from Dubai were experiencing flu-like symptoms.
Dr. Martin Cetron, director for the division of Global Migration and Quarantine at the U.S. Centers for Disease Control and Prevention, told Reuters in a telephone interview that health officials evaluated nearly 549 passengers at the airport, and sent a total of 11 people to a local hospital for more testing.
Ten people were tested for a battery of respiratory viruses and bacteria in hopes of ruling out serious pathogens that could present a public health threat.
Two of them tested positive for an especially virulent type of influenza A virus, and one of the two, who was gravely ill with pneumonia, was co-infected with another respiratory virus, Cetron said. A third person tested positive for a cold virus.
All three had taken part in the Hajj, which this year drew some 2 million people to Mecca, Cetron said.
Seven crew members, who boarded the flight in Dubai and were not at the pilgrimage, tested negative for a number of respiratory infections of public health concern, Cetron said.
The next day, two flights arriving in Philadelphia from Europe were screened by medical teams after 12 passengers reported flu-like symptoms. One of them had visited Mecca for the Hajj.
Cetron said health officials in New York had been prepared to quarantine a large group of sick passengers in an area at the airport. From a total of 11 passengers taken to hospital for evaluation, 10 were tested for respiratory symptoms; one showed signs of food poisoning.
“It was a much smaller incident. That’s not uncommon,” Cetron said. “Often the incoming information from multiple sources can be exaggerated beyond what we really find.”
All 10 patients with respiratory symptoms tested negative for the Middle East Respiratory Syndrome or MERS, a highly infectious and deadly respiratory infection that was first identified in the Middle East in 2012.
The CDC was not alerted in advance about the two flights that landed in Philadelphia from Paris and Munich, but several travelers had complained of illness, triggering a “medical review” of 250 passengers from those flights, a spokesman said.
Twelve passengers were found to have sore throats and coughs, and one also tested positive for the flu, a CDC spokesman confirmed.
The responses were part of a well-rehearsed network of public health officials trained to identify and contain pathogens as U.S. airports and ports of entry, Cetron said.
“Our most critical issue was to rule several respiratory illnesses of urgent public health significance,” Cetron said.
Cetron said the CDC monitors databases to track outbreaks of infectious disease that could post a treat in the United States. Although unlikely, MERS was definitely a concern that the team needed to rule out, he said.
“That was a low-probability, high consequence event that we wanted to rule out,” he said.
The CDC said in a statement that the cases were a reminder that flu season is coming, and urged all U.S. citizens six months or older to get a flu shot by the end of October.
Mom falls and breaks her hip. Her injury is repaired at the local acute care hospital but she needs intensive rehab and post-surgical care. She could be sent home or to a skilled nursing facility (SNF) but instead she is discharged to a long-term care hospital (LTCH)—a facility that specializes in intensive post-acute services.
But a new study, published by the National Bureau of Economic Research, finds that in 2014, Medicare paid LTCHs three-times what it paid SNFs, or about $33,000 more, for each discharge. And there is no evidence, according to the research, that mortality is any lower than for nursing facility patients. Overall, according to the authors, Medicare could save $4.6 billion annually by reimbursing LTCHs like SNFs—with no harm to patients.
The researchers, Liran Einav of Stanford University, Amy Finkelstein of MIT, and Neale Mahoney of the University of Chicago are weighing into a long-standing battle over these facilities. LTCHs argue that their patients are sicker than SNF patients and, thus, they should be paid more by Medicare.
An odd duck
Indeed, Medicare has been gradually slowing its annual payment increases to LTCHs since 2015. Just this month, it decided to boost reimbursements to the facilities by about 0.9 percent for 2019.
Even in the curious world of health care, LTCHs are something of an odd duck. Mostly for-profits located in the south, these facilities are, as the authors say, “a purely regulatory phenomenon.” They do not exist for clinical reasons. They exist because of money.
Here is a brief history: When Medicare revised its hospital payment system 35 years ago, it attempted to protect about 40 long-term care hospitals that cared for very sick patients for long periods of time. Some were old tuberculosis care facilities.
Sweet profits
Because Medicare paid LTCHs much more than acute care hospitals, companies saw an opportunity. Now there are more than 400 of these facilities, mostly units within larger acute care hospitals. Discharging a patient from a hospital bed to an LTCH located on the same campus is easy. And the returns are sweet: The study authors estimate that the two largest operators of LTCH’s earn profits ranging from 16 percent to 29 percent on the facilities.
It is no wonder. The authors calculated that in 2014, Medicare paid SNFs an average of about $450-per-day but paid LTCHs $1,400. Medicare paid about $73-a-day for home health care.
LTCHs provide the most intensive treatment but it is not clear whether patients discharged to these facilities require such a high level of care. And, as the authors write, it is difficult for even doctors to know which setting is most appropriate for their patients. At least one study found that mortality is lower for certain patients discharged from LTCHs than for similar patients in other settings.
In recent years, the Centers for Medicare and Medicaid Services and Congress have tried to squeeze some reimbursement from the facilities. But as long as they operate under unique payment rules, their owners will find ways to benefit from what the authors call a regulatory “game of whack-a-mole.”
Why health care costs so much
Other Medicare changes may drive care from LTCHs to lower-cost settings, however. For example, about one third of Medicare beneficiaries are members of Medicare Advantage managed care plans that are unlikely to discharge their patients to such high-cost facilities.
As the authors note, there are some limitations to their study. Because they measure mortality rates only, they do not attempt to capture other medical or quality of life benefits of care in long-term care hospitals relative to care in skilled nursing facilities or at home. And, as they acknowledge, things may have changed since 2014, the most recent year for which data were available.
In the US, we always ask ourselves why health care costs so much. Increasingly, the answer is: Because the price is so high, not because we use too much of it. Einav, Finkelstein, and Mahoney have explained an important example of what may be needless health care spending. And they may have identified an easy way for Medicare to save $4.6 billion.
(Full disclosure: I am an unpaid board member of Suburban Hospital in Bethesda MD and of Johns Hopkins Medicine. Neither owns a LTCH)
Canada’s TELUS Health is joining forces with London-based AI company Babylon to bring virtual medical services, including video consultations, to Canadians who do not have a family doctor or are in rural locations far from a surgery.
TELUS Health, a provider of electronic medical records, said AI services would complement existing healthcare provision by making it quicker, simpler and cheaper to access care.
“We are absolutely committed to leveraging the power of technology to drive better health outcomes for Canadians,” TELUS Health vice president Juggy Sihota said on Friday.
“We went around the globe to look for the best partner for virtual care, and from both a values perspective as well as a technology perspective we have found the best partner in Babylon.”
The London-based tech firm, founded in 2013 by entrepreneur Ali Parsa, aims to offer medical advice on a par with a family doctor by using AI to assess disease symptoms.
It deploys its technology through a smartphone chatbot app that provides a diagnosis and passes the data on to a doctor accessible via a video consultation, potentially offering a big saving in time and money for healthcare providers.
Parsa said Babylon, which is already providing healthcare services in Britain and Rwanda and signed a deal with Prudential Corporation Asia last month, wanted to expand into North America, and Canada was the best place to start.
“It has a government that is very progressive in the use of technology and in healthcare provision,” he said.
“What is exciting about Canada is that we will be providing artificial intelligence and we will also be providing clinical services.”
Sihota said Canada, like many countries in Europe, had an ageing population and shortage of family doctors, and in addition it also had the challenge of around 20 percent of its people living in rural areas.
“Five million Canadian families do not have primary care physicians at all,” she said. “AI is a more efficient way for patients to see their doctors.”
TELUS Health, a unit of telecommunications firm TELUS, would work with health ministries to roll out virtual services, she said, building on the relationship it already had with doctors, pharmacies and authorities.
Babylon will develop a mobile app especially tailored to the Canadian healthcare system, Parsa said, and video consultations will be provided by licensed Canadian healthcare providers.
Health insurer Aetna has agreed to cover Abbott’s Proclaim neurostimulation pain therapy under a new national policy.
The decision means Aetna’s 22 million medical plan members can access an implant that alleviates pain by stopping signals passing from the dorsal root ganglion (DRG) to the brain.
Increasing access to the device may further efforts to counter the opioid epidemic through the provision of alternative painkillers, while also helping Abbott generate a return on its $25 billion takeover of St. Jude Medical.
Opioids such as oxycodone, morphine, hydrocodone and fentanyl can effectively alleviate pain caused by complex regional pain syndrome (CRPS) and other conditions. Amid claims the drugs were non-addictive, use of the drugs soared in the 2000s, which has created ongoing problems for the country. In 2015, one-third of U.S. adults used prescription pain relievers, according to government data. More than 10% of these adults misused the painkillers at least once in 2015.
The prevalence of painkiller use and misuse has created an epidemic. By 2016, 2.1 million people in the U.S. had an opioid-use disorder. The same year, more than 17,000 people died after overdosing on prescription opioids.
Those numbers have spurred businesses and U.S. regulatory agencies to prioritize the development and availability of non-opioid painkillers that help people manage their conditions without exposing them to the risks of misuse. Abbott sees its Proclaim implant, which it acquired in the takeover of St. Jude, as such a non-opioid painkiller.
The FDA approved the device in 2016. Medicare soon decided to cover the implant but private payers have been slower to act. Getting coverage from Aetna marks an important step in Abbott’s efforts to convince payers of the safety and efficacy of Proclaim.
Abbott’s case for Proclaim is underpinned by data from a trial of 152 people with CRPS or causalgia. After three months, 81% of patients who received Proclaim experienced a 50% or greater reduction in pain. Around 55% of patients who received spinal cord stimulation, the control treatment, experienced that level of pain relief, resulting in the clinical trial meeting its primary endpoint.
In persuading Aetna to cover Proclaim, Abbott has opened up a sizable new market, furthering its efforts to counter the opioid epidemic and generate a return on its acquisition of St. Jude.
Growing demand for healthcare services could spur a shortage of medical office space in some U.S. markets, a new report by commercial real estate firm Transwestern warns.
Current projections anticipate an additional 150,000 new healthcare workers over the next two years, with a subsequent need for more office space. Transwestern puts that need at somewhere between 150.5 million and 225.8 million square feet nationwide by the end of next year.
The situation could be a plus for telemedicine and digital health sectors as providers look for alternative care delivery options to meet patient needs.
Fueling a potential office shortfall is an aging population in need of more healthcare services, necessitating additional clinicians and more office space.
The share of Americans 65 and older is expected to hit 17% by 2020, growing at an annual rate of 3.5% or 14% faster than those under age 65. Healthcare spend is rising 5.2% a year, with older Americans consuming an ever greater portion of medical services.
Markets with the tightest projected margins for office space include Atlanta, Dallas-Forth Worth, Denver, Miami-Fort Lauderdale, New York and Washington, D.C.
“There is approximately 110 million square feet of available medical office space in existing and under-construction buildings in the U.S. as of the second quarter of 2018,” Elizabeth Norton, director of research at Transwestern and the report’s author, said in a statement. “If all healthcare practitioners added to the economy through 2019 aim to locate within medical office space, absorption of this demand is impossible without a major shift in how people expect and receive healthcare.”
To alleviate the crunch, healthcare practitioners could lease space in conventional office buildings or look into repurposing empty retail space for medical use, according to the report. Virtual care, digital health and shared service centers could also ease demand if adopted widely enough.
A growing number of startups are focusing on technology and home health approaches to identify gaps in care in the older population and help seniors age in place for as long as possible. Landmark Health, for instance, developed an in-home, risk-based medical group focused on the elderly and chronically ill. The company, with financial support from growth equity firm General Atlantic, currently has about 75,000 patients and hopes to penetrate 20 markets across 13 states by the end of 2018.
Mayo Clinic this week announced a $648 million expansion that will roughly double the size of its Phoenix campus.
The five-year capital investment project includes new clinical space, support services and infrastructure and is expected to add 2,000 new jobs, including 200 physicians, by 2029. Mayo said the expansion is needed to meet growing demand from patients with complex medical conditions residing in the southwestern U.S.
The Rochester, Minnesota-based health system is also pursing a $144 million expansion in Jacksonville, Florida. It will add a five-story medical building, parking garage and connecting structures to its existing 400-acre campus.
Mayo’s expansion plans come as many nonprofit health systems are divesting and downgrading facilities in the face of higher operating costs and slower revenue growth. Financial challenges include fewer inpatients, lower reimbursements and a shift to delivering more care in outpatient settings.
Mayo, however, appears to be on sound financial ground. The system reported $3.1 billion in revenue for the second quarter of 2018, up from $3 billion in the same period last year. Operating income dipped 7.6% to $159 million, due in part to rising expenses.
Under the lofty construction plan, called Arizona Forward Project, Mayo’s Phoenix campus will go from 1.7 million square feet to 3.1 million square feet and support 374 beds, up from 280 currently.
Highlights include a six-story patient tower, three-floor addition to the existing four-story clinic building, three-story facility for expanded emergency and other departments, expanded patient and infrastructure space and added parking. The new patient areas could open as early as June 2020, Mayo said.
The Phoenix complex, ranked one of America’s best hospitals in 2018 by Healthgrades, has already undergone significant growth. In the past five years, the hospital added a new cancer center, proton beam facility and image guided operating rooms.
Mayo has faced some struggles, however.
Earlier this year, the company was caught up in a contentious battle with employees over plans to consolidate services at its Albert Lea, Minnesota, hospital with a facility 25 miles away in Austin.
The system has also faced pushback from Minnesota lawmakers that a $585 million public funding initiative to support Destination Medical Center may be overly ambitious. The project calls for a mixed-use development project near Mayo’s Rochester, Minnesota, headquarters.
In addition to expansion projects, Mayo has been rolling out Epic’s EHR systemwide, with costs estimated at about $248 million. That effort is expected to wrap up sometime this year. Mayo CEO John Noseworthy has acknowledged the move is unpopular, but said it will “serve the best interests of our patients.”
Three prominent New York City hospitals continue to make money—about $64 million this year—off a revamped version of an insurance maneuver that New York regulators last year characterized as a hidden scheme to funnel hundreds of millions of dollars back to the hospitals.
New York’s state Department of Financial Services, or DFS, found that the professional liability insurer Hospitals Insurance Co. illegally kept secret the fact that its offshore captive insurance company soaked up more than $160 million in premium payments that yielded more than $200 million in investment income over a two-decade period, all while avoiding domestic regulation.
Despite the violations, which came to light in a 2017 settlement between the state, Hospitals Insurance Co. and HIC’s third-party administrator, FOJP Service Corp., the latest financial filings from Montefiore Medical Center, Mount Sinai Hospital and Maimonides Medical Center indicate the hospitals have kept a version of the operation running.
The hospitals involved, which are among New York City’s largest employers, obtain supplemental medical malpractice insurance through the state of New York. But they effectively devised a way to convert that coverage into cash through a series of reinsurance transactions that funneled the money to their Cayman Islands-based captive insurance company at the heart of the scheme. They used the money to obtain cheaper insurance and pay dividends, according to the settlement agreement.
Even after the settlement, not-for-profit Montefiore Health System, which includes the medical center, posted a 72% jump in net income during the first half of 2018, despite mixed utilization results, due in large part to more than $43 million from FOJP, according to Modern Healthcare’s health system financial database.
Mount Sinai collected $17.8 million from HIC in the first six months of 2018, which the health system attributed to a gain on its equity investment and related costs of the program.
Spokeswomen for Montefiore and Mount Sinai said no one was available to comment.
During the same time period, Maimonides reported a $3.8 million equity gain from its captive insurance program.
A spokeswoman for Maimonides shared the following joint comment from the hospitals: “When the compliance issues at HIC/FOJP were first discovered, the boards of directors, which include representatives from each partner hospital, immediately authorized an independent internal investigation and reported their concerns to DFS. As a result, appropriate steps were taken to correct the problems identified and strengthen compliance policies and procedures.”
FOJP and HIC’s websites list Montefiore, Maimonides and Mount Sinai hospitals, including Mount Sinai Beth Israel, as current clients. The settlement agreement includes Beth Israel Medical Center, which has been part of Mount Sinai since 2013, as a participant in the scheme.
According to the settlement agreement, HIC broke state insurance laws by hiding the existence of its captive insurance companies from state regulators, failing to get state approval to perform retrocession transactions among the insurers and working with an unlicensed adjuster—FOJP—for nearly 40 years. The company was fined $3 million.
WHY HEALTHCARE CAPTIVE INSURERS ARE CHOOSING THE CAYMAN ISLANDSThe Cayman Islands has become the jurisdiction of choice for healthcare businesses looking to set up captive insurance companies, with the sector representing almost one-third of all the captives, according to the Cayman Islands Monetary Authority.
A major reason is that the group of islands, which are an overseas territory of the United Kingdom, doesn’t tax things like income, capital gains, profits, corporations or withholding, according to a report from the legal services provider Appleby.
Industry stakeholders have managed to influence the laws passed there, resulting in what Appleby’s 2015 report called “progressive” and “leading edge” legislation. In fact, the main focus of the Cayman Islands Monetary Authority is safeguarding the interests of investors in, and customers of, regulated institutions from undue loss, according to Appleby.
The jurisdiction also has no exchange control regulations, so money and securities in any currency can be freely transferred to and from the Cayman Islands. Once all necessary documentation is in place, a Cayman Islands company can be incorporated within a single day, according to Appleby.
The prospect of holding a company board meeting in the tourist destination can’t hurt either.
Ultimately, it wasn’t the reinsurance operation that got HIC and FOJP into trouble, it was the fact that they didn’t disclose it. Hospitals band together all the time to form overseas captive insurance companies, especially in the Cayman Islands, where there are looser laws and more favorable tax codes, said Christian Puff, a Dallas-based attorney with Hall Render.
“They just operated as an insurance company with a whole lot of surplus just kind of passing it out among the owners, and they were not properly filed,” she said.
New York state operates a program that gives healthcare providers excess medical malpractice insurance on top of their primary policies. The settlement agreement shows HIC reinsured that policy through an AIG affiliate, National Union Fire Insurance Company of Pittsburgh, over a total of 10 transactions.
Each time, the risk and premiums paid taken over by the AIG affiliate were retroceded to another AIG affiliate, Richmond Insurance Co., and then retroceded again to Briarwoods, a Cayman Islands company formed in 1990, which was being used to hide the proceeds from the operation and, as part of the settlement, was dissolved, according to the settlement.
Ultimately, Briarwoods ended up with $168 million in excess malpractice premiums and $216 million in investment income.
“HIC designed a round-trip reinsurance chain to hide the magnitude of the surplus funds and ensure that its owners received dividend payments directly from Briarwoods,” DFS wrote in the settlement agreement. DFS representatives declined to provide additional comment.
In addition, FOJP performed claims adjustment services for 38 years without being licensed to do so, according to the DFS. Between 1977 and 2015, the company improperly adjusted more than 18,000 claims on behalf of HIC and others, and state regulators determined that was so that the scam wouldn’t be uncovered.
“Prior management was concerned that licensing would have subjected FOJP to regulatory scrutiny and posed a potential threat to FOJP’s tax-exempt status, required proof that it was in ongoing compliance with its licenses and could have resulted in the captives being treated as doing business in New York for tax and regulatory purposes.”
According to the agreement, the massive operation came to light after HIC and FOJP got a new general counsel; the general counsel recommended the companies conduct an internal investigation, which they reported to state regulators in spring 2014.
“HIC and FOJP are pleased to have resolved this matter with the DFS through a comprehensive and thoughtful remediation strategy put in place well over a year ago, including HIC’s payment of a $3 million fine, replacement of executive leadership, revision of certain regulatory filings, and enactment of changes to operating structures and procedures to ensure future compliance with all NYS insurance regulations,” FOJP wrote in a statement.
FOJP and HIC’s websites list the same CEO, Walter Harris; chief financial officer, Noeleen Doelger; chief medical officer, Dr. David Feldman; and general counsel, Robert Kauffman.
Other companies involved include FFH Insurance Corp., a Barbados-based company formed in 1986 that acted as the hospitals’ excess professional liability insurance writer, according to the agreement. A Bermuda-based company formed in 1982 served as a holding company to the Barbados company but had no outstanding insurance policies or claims at the time of the settlement agreement, according to the DFS.
Another Bermuda company, Northeast Insurance Co. mostly dealt with the reinsurance assumed from the Barbados company. Bermuda-based Fulton Investment Trust was responsible for investing the assets of those companies, as well as FOJP’s executive retirement plans.
At one point, HIC arranged to have 51% of the Briarwoods voting shares to be nominally owned by Blythedale Children’s Hospital in Valhalla, N.Y. Under the DFS agreement, however, those shares would be acquired by the other hospitals and Briarwoods dissolved. The agreement says the hospitals will receive Briarwoods’ assets and use them “for charitable purposes and not for executive compensation.”
Blythedale spokeswoman Connie Cornell said the hospital no longer has an interest in Briarwoods and was not a party to the DFS settlement. FOJP and HIC’s websites list Blythedale as a client.
The DFS settlement required the hospitals to create a new entity to control their operating companies. They must operate under a transparent, simplified structure that’s compliant with New York insurance laws and regulations. Both FOJP and HIC were permitted to continue operating—assuming FOJP got the required licenses—and providing services for the hospitals involved.
The case illustrates the increased importance of transparency in complicated insurance transactions, attorney Puff said. It should serve as a warning to hospitals to ensure their operations follow the laws of the states they’re in. If they’re in doubt, they should have an attorney review them, she said.
“We are at a time when transparency is paramount,” Puff said. “Consumers want transparency. The government wants transparency.”
