Hospital operating margins slide 39% after ObamaCare expansion

The three-year stretch between 2015 to 2017 saw widespread income deterioration along with declining operating margins, according to a new study.

Both nonprofit and for-profit health systems suffered significant operating margin declines associated with the expansion of the ACA between 2015 and 2017, according to a Navigant study released Wednesday morning.

Average operating margins declined 39% overall, including 34% for nonprofits and 39% for for-profits, while 47% of hospitals saw “significant deterioration of operating earnings” and 22 systems experienced three-year operating income declines of more than $100 million.

The study found multiyear reductions in topline operating revenue growth along with uncontained expenses were to blame, falling from 7% from 2015 to 2016 down to 5.5% from 2016 to 2017.

Additionally, 65% of systems experienced operating income declines totaling $6.8 billion, a 44% reduction over that three-year span. These declines were primarily experienced by systems in the West and South, regions with some of the fastest growing populations in recent years.

Most states in these areas decided not to expand their Medicaid programs under the ACA and now find themselves providing care to a larger population without the increased government reimbursements to compensate for costs.

Navigant analyst Jeff Goldsmith told HealthLeaders that systems have responded to declining margins by focusing primarily on cost-cutting measures, such as freezing capital expenditures, spending on travel or board education. Goldsmith added that some of the most positive operating income performances in 2016 can be attributed to systems who struggled in 2015 and corrected course to deal with the financial challenges facing them.

The financial challenges facing systems have also arrived in waves, according to Goldsmith, with regional Catholic systems experiencing the brunt of operating declines in 2016 while investor-owned systems struggled throughout 2017. Despite the confluence of unfavorable financial circumstances, Goldsmith said there are four areas of opportunity for CFOs to effectively curb the issues they face.

1. RATIONALIZING CONTRACTS WITH VENDORS

• Goldsmith listed services that are commonly contracted out of system as areas where hospital leaders can recoup costs.
• These include administrative support services, housekeeping and food services, consulting, as well as physician staffing contracts for major units like the ICU.

2. ‘ATTACKING THE LAYERS OF MANAGEMENT’

• Goldsmith described this as the distance betweent the patient and the CEO, pointing to the effectiveness of corporate systems delegating what specific functions are tiered between the national, regional, and local levels of the institution.

3. PRUNING THE PORTFOLIO

• Some multi-hospital systems like Tenet and CHS have already begun the process of reexaming their portfolio of facilities and services that they operate.
• Though this leads to operating revenue being dashed because of selling facilities or closing hospitals, Goldsmith said systems have begun to look at what is core to their operations.
• The same goes for service line rationalization, according to Goldsmith, where hospitals are deciding to pull out of areas where there are multiple hospitals competing for the same population or offering duplicate programs.

4. PHYSICIAN SPEND

• Goldsmith clarified the aim is not to deal with the cost of large physician groups but rather the service contracts that require 24-hour call at the hospital, clinical directorships, and other forms of physician subsidy.
• Often, Goldsmith said, there have been instances of hospitals paying for physician-related services at well above their operating revenue growth rate, which puts additional financial pressure on the system.

“I think, to be optimistic about it, that there are a lot of levers to pull here, that’s the good news,” Goldsmith said. “The bad news is a lot of those levers are attached nerve endings, and ultimately, it’s going to take a change in the operating culture of these places to really put them on a sustainable footing.”

https://www.healthleadersmedia.com/finance/hospital-operating-margins-slide-39-after-aca-expansion

Telehealth offers eye into hurricane impact zone

Technology offers new ways for health systems to meet the needs of their communities during natural disasters, and telehealth is moving center stage as the go-to resource.

As Hurricane Florence barrels toward the coast of the Carolinas, telehealth providers, including American Well and Teladoc, are reaching out to affected communities, offering free access to their services for those who may not be able to access their normal healthcare providers during and after the storm.

This humanitarian effort is a recent phenomenon enabled by evolving technology. It also adds a critically useful element to the household disaster preparedness toolkit: a telehealth app.

What does this new dynamic mean for health systems that provide these services? It offers access to care when patients and community members need it most, building engagement and satisfaction, and perhaps presenting an opportunity to reach new consumers.

CALLS SURGED DURING IRMA

Nemours Children’s Health System discovered the power of telehealth this time last year when Hurricane Irma hit Florida. Calls to Nemours CareConnect, the system’s 24/7 direct-to-consumer app, increased by 2,000% over the same period the previous year. Busiest times? The days before and after the storm.

“It was an anxious time for parents because they couldn’t access their physicians,” says Joanne Boezem, MD, medical director for Nemours CareConnect. “And, because of the conditions of the roads, it was difficult for them to get to emergency care.”

The reasons for the televisits were no different than the calls Nemours typically receives: fevers, skin infections, GI complaints, and respiratory illnesses.

“But what was interesting,” says Dr. Boezem, “is that we looked at patient satisfaction afterwards.” While hold times were longer, due to increased volume, “parents were even more satisfied than they were [during the same period a] year ago.”

PRESCRIPTION DRUG ACCESS HAMPERED

After analyzing the experience, post-hurricane, Nemours identified one significant opportunity for improvement: access to prescription drugs. While the hospital worked with a few key pharmacies to stay open, the same issues that prevented parents from getting to physicians” offices, made it difficult to get medication. Road conditions limited driving, and many pharmacies were closed.

Nemours continues to address this issue to prevent future challenges, but the unpredictability of natural disasters requires additional planning.

“The lesson that we learned here is that if your child has chronic illness, you need to refill your medications as part of your disaster preparedness plan,” says Boezem. “Also, download the app and learn to use it before the storm hits so that you’re comfortable using it when the time comes.”

TECH CHANGING HEALTHCARE DELIVERY

Technology offers new ways for health systems to meet the needs of their communities during natural disasters, and telehealth is moving center stage as the go-to resource. Representatives from two leading telehealth companies have seen the transformation occur in markets across the country.

“Technology plays a key role in overcoming access barriers and distributing quality healthcare in a more efficient manner,” says Roy Schoenberg, MD, CEO of American Well. “One of telehealth’s biggest powers is its ability to beam care instantly to where its most needed. Often this ‘superpower’ is used for convenience, but when a disaster strikes, like hurricanes in the Southeast, a flood in Houston, or area fires in California, telehealth can mean the difference between being stranded, and getting the care you need.”

“During natural disasters, we’ve seen virtual care be a valuable tool for health systems, enabling them to expand their abilities to provide access to care to those in affected areas, says Anne Stowell, vice president of member experience for Teladoc Health. “As we saw with Hurricanes Irma and Harvey, through telehealth, clinicians can be effectively mobilized, even if the patient is displaced during a storm, to deliver quality care. The nature of technology and operations also helps physicians who impacted or even evacuated themselves, still take calls and provide care.”

FREE TELEHEALTH DURING FLORENCE

American Well is offering access to those located in areas impacted by the storm through its Amwell app and online; Teladoc’s services are available in the same manner. In addition many other telehealth providers may be providing free or discounted services for those impacted by Hurricane Florence, including local hospital systems and health insurance companies.

Residents impacted by the storm should check with their provider and download apps before power is affected.

https://www.healthleadersmedia.com/innovation/telehealth-offers-eye-hurricane-impact-zone-florence-targets-carolinas

Acne advice for returning students

TUESDAY, Sept. 11, 2018 (HealthDay News) — As if the start of a new school year isn’t stressful enough, many teens may find their acne worsens when classes start, a skin doctor says.

During summer vacation, teens’ acne often eases because they have less stress and more sun exposure, but it could flare up now that they’re back in school, explained Dr. David Shupp. He’s a dermatologist at Penn State Health Medical Group.

“A teen often feels alone in suffering from embarrassing pimples,” Shupp said in a Penn State news release.

“Because acne is caused primarily by hormone levels, the condition often begins at puberty and clears up by the late 20s,” he added. “Girls are more susceptible than boys to hormone-related acne.”

For teens with mild acne, the first step is to try over-the-counter creams, gels or lotions applied directly to affected areas. Teens with other skin conditions — such as eczema or psoriasis — should consult their doctor before using over-the-counter acne medications, Shupp advised.

The most common over-the-counter acne medications contain:

• Benzoyl peroxide, which kills bacteria, helps remove excess oil from the skin and reduces inflammation.
• Salicylic acid, which dries excess oils and works best for blackheads and whiteheads.
• Adapalene, which prevents plugging of hair follicles and is available over-the-counter in 0.1 percent strength.

“If over-the-counter medications don’t provide enough relief from acne, it’s time to discuss prescription medications with a dermatologist or family physician,” Shupp suggested.

Prescription acne treatments include:

• Stronger retinoids, such as Retin-A. These are among the most effective topical medications but can be more drying than over-the-counter options.
• Antibiotics, which can be administered orally or via a topical gel or cream to kill excess bacteria. Topical antibiotics are often combined with benzoyl peroxide to maximize effectiveness while lowering the risk of antibiotic resistance.
• Hormonal treatments, which impact the balance of hormones that cause acne and are usually prescribed to supplement topical medications or antibiotics in young women.
• Isotretinoin (Accutane) is a powerful vitamin A derivative used to treat severe acne that does not respond to other medications. Potential side effects include birth defects, so teenage and adult women taking this oral medication must undergo monthly pregnancy tests.

Don’t use acne medications prescribed for someone else, Shupp said.

Along with treatment, there are a number of things teens can do to reduce acne, he added.

Gently clean affected skin twice a day. Avoid scrubbing, which can damage the skin and aggravate an acne problem. Do not use abrasive products.

Use oil-free cosmetics, sunscreen, moisturizer and hair products. They’re labeled “noncomedogenic.”

Keep hands and hair away from the face to reduce the transfer of oil. Don’t squeeze pimples. This can cause permanent scarring.

The most common skin condition in the United States, acne strikes close to 85 percent of people between the ages of 12 and 24, according to the American Academy of Dermatology.

More information

The American Academy of Family Physicians has more on acne.

SOURCE: Penn State, news release, September 2018

https://consumer.healthday.com/kids-health-information-23/acne-news-3/acne-advice-for-returning-students-737498.html

SEC says short seller spread untrue claims about Ligand

The Securities and Exchange Commission charged Gregory Lemelson and Massachusetts-based Lemelson Capital Management LLC with fraud for allegedly illegally profiting from a scheme to drive down the price of San Diego-based Ligand Pharmaceuticals Inc., LGND, -0.78% by taking a short position on behalf of The Amvona Fund, a hedge fund he advised and partly owned and then issuing false information about Ligand. The SEC alleges Lemelson used written reports, interviews, and social media to spread untrue claims, including that Ligand was “teetering on the brink of bankruptcy” and that Ligand’s investor relations firm agreed with his view that its flagship Hepatitis C drug, Promacta, was going to become obsolete. Lemelson also allegedly misled investors by citing a European doctor’s negative views on the same Ligand drug without revealing the doctor was Amvona’s largest investor and had a significant financial interest in seeing Ligand’s stock price decline. According to the SEC’s complaint, Ligand’s stock lost more than one-third of its value during the course of Lemelson’s alleged scheme. Short-sellers profit when the price of stock declines. Lemelson collected more than $1.3 million in trading profits for the adviser and the hedge fund. The complaint names the Amvona Fund as a relief defendant and seeks to have it return gains it obtained as a result of Lemelson and his firm’s alleged misconduct.

https://www.marketwatch.com/story/sec-says-short-seller-spread-untrue-claims-about-ligand-pharamceuticals-2018-09-12?siteid=yhoof2&yptr=yahoo

Gilead News: Arthritis Drug, Precision BioSci Deal, Chief Medical Officer Change

Gilead Sciences had a lot of news lately. First off, Gilead and Belgium-based Galapagos NVannounced results from their FINCH 2 Phase III clinical trial of filgotinib in adults with moderately-to-severely active rheumatoid arthritis. The drug hit its primary endpoint in a proportion of patients reaching an American College of Rheumatology 20 percent response (ACR20) at Week 12.

“Gilead is committed to the development of new therapies that offer meaningful benefit for people living with rheumatoid arthritis and other serious inflammatory diseases,” said John McHutchison, Gilead’s chief scientific officer, Head of Research and Development, in a statement. “These initial Phase III data support the potential of filgotinib, in combination with select disease-modifying drugs, to help patients with active rheumatoid arthritis who do not adequately respond to current biologic disease-modifying agents. These data are particularly encouraging as we look ahead to Phase III results from the ongoing FINCH 1 and 3 trials, which are exploring filgotinib in other populations of patients with rheumatoid arthritis.”

On September 12, Gilead announced that it and Precision BioSciences had inked a strategic collaboration deal to develop drugs that target the in vivo elimination of hepatitis B virus (HBV) using Precision’s genome editing platform, ARCUS.

Current treatments for HBV suppress replication of the virus, but don’t completely clear it. If the treatment is stopped, the virus starts replicating again. Early studies at Gilead using ARCUS nucleases to target HBV covalently closed circular DNA (cccDNA) have shown significant activity against cccDNA and HBV DNA found in human liver cells.

ARCUS is a next-generation genome editing platform made up of a natural genome editing enzyme called a homing endonuclease. It’s built on the ARC nuclease, a fully synthetic enzyme similar to a homing nuclease, but improved so it can be the starting point for a therapy-grade genome editing platform.

Under the terms of the deal, Precision will be responsible for the development, formulation, and preclinical evaluation of the nucleases. Gilead will handle the clinical development and commercialization of possible therapies. Gilead will completely fund the research and development. Precision is eligible for milestone payments up to a total of $445 million as well as tier royalties that can hit the mid-teens.

“Gilead’s cure-based approach to hepatitis B is comprehensive and exciting,” said Derek Jantz, Precision’s chief scientific officer, in a statement. “Precision is pleased that initial studies with our ARCUS platform have established an important role for genome editing in their HBV program. This is an excellent application for our technology, which has made notable progress toward therapeutic in vivo editing in relevant models over the last year.”

On August 14, Gilead had announced several executive changes, including that Andrew Cheng,the company’s chief medical officer, had decided to leave the company. It was announcedtoday that he has been appointed president and chief executive officer of Akero Therapeutics, headquartered in Cambridge, Massachusetts. Cheng joined Gilead in 1999 to head the company’s programs in HIV/AIDS. In 2009, he took on additional responsibility for Gilead’s Development Operations, and in 2015 was named executive vice president. He was appointed chief medical officer in March 2018. Cheng left Gilead on September 7.

“During his time at Gilead, Andrew played a definitive role in bringing forward new medicines that transformed the lives of millions of people with serious illnesses,” said John F. Milligan,Gilead’s president and chief executive officer, in a statement in August. “Andrew played an especially critical part in advancing our portfolio of HIV products, and we’re extremely grateful for his many contributions and wish him all the best in the future.”

https://www.biospace.com/article/cp8r-ppl4-gilead-news-arthritis-drug-precision-biosci-deal-and-chief-medical-officer-change/

Progenics Phase 3 study for 1404 meets one co-primary endpoint, misses other

https://thefly.com/landingPageNews.php?id=2789598

LHC Group initiated at Cantor Fitzgerald

LHC Group initiated with an Overweight at Cantor Fitzgerald. Cantor Fitzgerald analyst Joseph France initiated LHC Group with an Overweight and $117 price target.
https://thefly.com/landingPageNews.php?id=2789631