The Annual J.P. Morgan Healthcare Conference kicked off last Monday in San Francisco. Finance reporter Tara Bannow will provide updates and daily observations here throughout the conference. You can also find additional stories on ModernHealthcare.com or Twitter.
Wednesday, Jan. 15CHS rolls out its 2020 financial guidance early
For-profit hospital chain Community Health Systems unveiled its financial guidance for 2020 on Wednesday afternoon—earlier than in prior years.
For-profit hospital chain Community Health Systems unveiled its financial guidance for 2020 on Wednesday afternoon—earlier than in prior years.
Smith said the company won’t release its results for the final quarter of 2019 until late February. CHS said it anticipates its adjusted EBITDA for full-year 2019 to be toward the middle portion of the company’s adjusted EBITDA guidance for 2019, which is between $1.6 billion and $1.65 billion.
CHS officials said the company is winding down its divestiture program and getting close to its core hospitals. Kevin Hammons, the company’s chief financial officer as of Jan. 1, said CHS raised a total of $1 billion from divestitures through the end of 2019 toward the company’s target of $1.3 billion, a goal it expects to hit in the first half of 2020. CHS also expects to draw $300 million in proceeds from those deals, he said.
CMS Administrator says states, not CMS, should shape their Medicaid programs
CMS Administrator Seema Verma repeatedly harped on the added costs and stifled innovation that comes with government bureaucracy before an audience gathered for a salmon lunch during the J.P. Morgan Healthcare Conference on Wednesday.
Verma said she thinks even more states will choose to relinquish their federal Medicaid match in favor of block grants and waivers. The focus of Medicaid should be on getting people out of poverty and focusing on specific outcome measures.
“For this able-bodied population, it’s not enough to just hand out a Medicaid card,” she said. “We should be able to do more.”
The same is true for states trying to implement Medicaid work requirements, which have been under threat by lawsuits. The focus there is on “community engagement,” she said. At a time when employers are struggling to find enough workers, Verma said states should be helping Medicaid beneficiaries get training and land jobs. She said she also worries legal challenges to the work requirements stifle state innovation.
Verma said the CMS is working to close the time gap between when the FDA approves a drug and the Medicare program begins paying for it.
“The ultimate goal is we want to make sure that Medicare patients have access to the latest technology and not having the government bureaucracy slow down the pace of innovation,” she said.
Centene CEO has big ambitions for Medicare Advantage business
Centene’s CEO told J.P Morgan conference attendees he is “very unhappy” with the company’s performance in its Medicare Advantage business, and that he plans to turn WellCare Health Plans to a Medicare brand once the merger is approved.
In an interview Wednesday morning on the sidelines of the conference, Michael Neidorff said that he switched up Centene’s Medicare Advantage leadership after he wasn’t seeing the desired membership growth. Although annual membership was increasing at about the same rate as Centene’s competitors—7%—he said Centene’s competitors have larger membership bases.
“We just want to be perfectionists,” he said. “We expect all things to perform well.”
Centene currently has roughly 500,000 Medicare Advantage members, a number that’s set to double once the WellCare deal goes through. After that, Neidorff said he wants to compete with the likes of Humana to be number two or three in that business.
The Department of Justice is still investigating the proposed merger, and Neidorff said it’s down to a few technical issues. He expects the deal to be approved before mid-year.
Tuesday, Jan. 14CVS says it wants to partner with docs, not put them out of business
Doctors tend to feel threatened by CVS Health’s foray into providing healthcare services, but the pharmacy giant says it views itself as a partner.
Doctors tend to feel threatened by CVS Health’s foray into providing healthcare services, but the pharmacy giant says it views itself as a partner.
CVS made waves in June when the company announced it was launching a fleet of 1,500 so-called HealthHUB sites in its stores by the end of 2021. The company already runs roughly 1,100 MinuteClinic sites, which are focused on low-acuity services like colds and immunizations.
CVS acts as a strong referral source for primary-care providers, having made nearly 4 million primary-care referrals last year alone, Tom Moriarty, CVS’ chief policy and external affairs officer and general counsel, told Modern Healthcare at the J.P. Morgan conference on Tuesday. Half of the visits to MinuteClinics take place on nights and weekends, when primary-care clinics are closed, he said.
CVS finds out which doctors near its clinics are accepting referrals and adds them to lists it hands out to patients, Moriarty said. The first question CVS representatives ask patients is whether they have primary-care physicians, he said. If they already do, CVS shares the patient’s information with their provider, Moriarty said.
Through its merger with Aetna, CVS learned that roughly 34% of emergency department visits in the health insurer’s book of business did not require that more expensive level of care, Moriarty said.
CVS has opened 50 HealthHUBs so far, and plans to have 600 by year-end, or roughly two new clinics per day. Unlike MinuteClinics, HealthHUBs are more focused on chronic disease management.
UPMC says Highmark still steering patients from its facilities
It turns out the long-running feud between UPMC and insurer Highmark Health over isn’t exactly over, despite the 10-year contract the rival health systems signed in June.
It turns out the long-running feud between UPMC and insurer Highmark Health over isn’t exactly over, despite the 10-year contract the rival health systems signed in June.
UPMC Treasurer Tal Heppenstall said that hundreds of thousands of Highmark members are being excluded from visiting certain UPMC facilities. Those members are enrolled in a plan called Community Blue, which he said is designed to steer patients toward providers in Highmark’s provider arm, not-for-profit Allegheny Health Network.
Highmark spokesman Aaron Billger wrote in an email that Community Blue members do not have in-network access to a handful of UPMC facilities in the Pittsburgh area. They have in-network access to UPMC hospitals outside of Pittsburgh.
Billger said Community Blue’s in-network providers include the Allegheny Health Network. He noted that UPMC was invited to participate in the plan, but declined.
Beyond that, Heppenstall said he’s pleased with the 10-year contract to allow Highmark Blue Cross and Blue Shield patients to receive care at UPMC, although he declined to share details about what’s in it. He also said he’s looking forward to moving on to other things.
“It has taken the political pressure off of UPMC,” he said. “We’re happy with the outcomes. We’re seeing Highmark patients come back in droves.”
The legal battle was contentious and ultimately led to intervention from Pennsylvania Gov. Tom Wolf and Attorney General Josh Shapiro, who announced the negotiated deal in June.
Partners HealthCare’s secret sauce in 2020? Centers of excellence
Boston-based Partners HealthCare, after recent pushback from state regulators against its efforts to expand in New England, is aiming its growth strategy around developing center of excellence programs.
Dr. Anne Klibanski, CEO of the not-for-profit health system, told Modern Healthcare on the sidelines of the J.P. Morgan conference that she expects Partners to make announcements around center of excellence partnerships in the next four to six months.
Part of the goal is to attract patients from across the country and worldwide, she said.
“So that people nationally can say, ‘Now that you’ve put this together, this level of expertise, I’m going to come here,’ ” Klibanski said.
The strategy coincides with Partners’ recently announced rebranding, including changing its name to Mass General Brigham. The name change is part of an effort to focus more attention on the health system’s renowned academic medical centers, Massachusetts General Hospital and Brigham and Women’s Hospital. Klibanski said Partners hopes to leverage expertise in areas like neuroscience and oncology.
Partners has reentered talks with New Hampshire’s attorney general to potentially acquire Exeter Health Resources. In September, Attorney General Gordon MacDonald said the combination would violate state law requiring free and fair competition. That was just months after Partners dropped its bid to acquire Care New England in Providence, R.I., bowing to pressure from that state’s governor.
Partners Chief Financial Officer Peter Markell confirmed to Modern Healthcare that talks have restarted.
“We don’t know if we’ve changed his mind,” he said.
Tenet outsourcing business support operations to Manila
As part of an effort to hit its goal of $450 million in cost savings, Tenet Healthcare recently opened an office in the Philippines that will house a significant portion of its business functions, including payroll, accounting and legal.
Ron Rittenmeyer, Tenet’s CEO, told Modern Healthcare in an interview on the sidelines of the J.P. Morgan conference that the new unit, which occupies four floors of a building in the capital city Manila and opened within the last few months, will help the for-profit hospital chain run its business on a 24/7 basis. He declined to say how much money the company expects to save from the move, but said the office currently employs 400 to 500 people.
“Our competitors all do it, so it’s consistent with what everybody is doing,” Rittenmeyer said.
Tenet spokeswoman Lesley Bogdanow wrote in an email that does not mean Tenet will eliminate 400 to 500 positions from its U.S. operations.
Dallas-based Tenet did not relocate employees to Manila for the new office, which will support its hospitals; Conifer Health Solutions revenue-cycle subsidiary; and United Surgical Partners International ambulatory network. Rittenmeyer said the company is offering enhanced severance as well as resume and interview support for domestic jobs that will be shifted to Manila.
“So far we’ve had almost no backlash or any concern about it,” he said. “We’re out in front of it. We talked to people way in advance that it was going to happen.”
Some business operations will still take place in Tenet’s hospitals, but will be supported by the Manila center, Rittenmeyer said.
The cost savings will come from operating more efficiently, Rittenmeyer said, not as a result of tax or regulatory differences. He described Manila as a massive hub for business outsourcing, and said the population there is very “Americanized” and there are no language barriers.
“It just complements the team we already had,” he said.
Providence St. Joseph Health launches virtual, same-day visits
Providence St. Joseph Health announced Tuesday it has launched on-demand, virtual services for common health issues.
Using Providence Express Care Virtual, patients in Alaska, California, Montana, Oregon and Washington will be able to see doctors without appointments using their mobile devices or computers, the health system announced during the J.P. Morgan conference.
Not-for-profit Providence St. Joseph’s Express Care Virtual accepts most insurance plans, and most out-of-pocket expenses won’t exceed $49, according to a news release.
Dr. Sunita Mishra, chief executive of Providence Express Care, said in a statement the idea is to give patients more flexibility. “Our hope is that by making care more accessible and creating fewer barriers, more people will seek care, especially those who may not be able to leave work, those who do not have transportation, or are homebound,” she said.
Express Care Virtual treats conditions such as flu, strep throat, infections, eczema, vomiting, reproductive health and other conditions.
Ascension’s Google partnership will give “longitudinal record” on patients
Ascension’s Google partnership is designed to give providers a unified view of patients’ information, transforming the provider experience, the health system said Tuesday.
Ascension’s Google partnership is designed to give providers a unified view of patients’ information, transforming the provider experience, the health system said Tuesday.
The project is led by not-for-profit Ascension’s chief nursing officer and involves redesigning care around the patient, Eduardo Conrado, Ascension’s chief strategy and innovations officer, told an audience at the J.P. Morgan conference on Tuesday. Providers will be able to use the electronic platform to quickly see a patients’ previous Ascension visits, medications, labs and other orders. Providers will also be notified of changes in patients’ acute status in real time.
“We’re trying to give clinicians access to a longitudinal record,” Conrado said.
The health system is testing the platform at one of its Florida hospitals, and it has reduced length of stay and improved satisfaction scores there, he said.
Ascension sustained significant blowback—and even a federal probe—when news of its Google partnership first surfaced in November. Conrado did not mention that during his presentation.
UPMC will spend $1 billion on bioscience development by 2024
UPMC announced Tuesday—the second day of the J.P. Morgan Healthcare Conference in San Francisco—that its Enterprises arm will spend $1 billion on new drug, diagnostics and device development by 2024.
UPMC announced Tuesday—the second day of the J.P. Morgan Healthcare Conference in San Francisco—that its Enterprises arm will spend $1 billion on new drug, diagnostics and device development by 2024.
The Pittsburgh-based integrated academic health system said it’s looking to make investments that complement the scientific and commercial work it already has underway.
The $1 billion is on top of the more than $800 million UPMC has invested in its entrepreneurial efforts to date, primarily in digital solutions, which the health system says have returned more than $1.5 billion.
UPMC Enterprises, UPMC’s innovation, venture capital and commercialization arm, has formed five transactional sciences companies in the past two years and launched more than 30 research projects. The organization has expanded its focus to include retinal and respiratory disease, autoimmune diseases and neuroinflammation. Its initial focus was immunotherapies for cancer, transplantation and age-related diseases.
The J.P. Morgan conference is a popular venue for health systems to drop such news. At last year’s event, Providence St. Joseph Health announced the launch of its second, $150 million healthcare venture fund. UPMC’s leaders are not presenting during this year’s conference, although a team from the health system is attending the event.
Each of UPMC Enterprises’ investments will have a “direct and powerful impact” on how UPMC cares for patients, while also generating a “significant financial return,” Jeanne Cunicelli, UPMC Enterprises executive vice president, said in a statement.
UPMC Enterprises has funded startups like Generian, a company striving to tackle diseases related to aging, and BlueSphere Bio, which strives to develop personalized T-cell therapies for cancer.
Monday, Jan. 13ProMedica pulling out of managed Medicaid in southeast Ohio
Not-for-profit ProMedica is pulling its insurance arm, Paramount, out of managed Medicaid in southeast Ohio after experiencing significant losses due to what the system said were inadequate rates and enrollment errors.
The change affects about 30,000 members who will be shifted onto one of the state’s four other managed Medicaid providers, Steve Cavanaugh, ProMedica’s chief financial officer, told Modern Healthcare at the J.P. Morgan conference. Paramount, which covers more than 237,000 Medicaid members in Ohio, will remain in Medicaid managed care in the northeast and western parts of the state.
“It wasn’t an easy decision to leave even part of the state, but we think it was the right one in the short run,” Cavanaugh said.
Paramount attributed its $102.8 million operating loss in the nine months ending Sept. 30 to managed Medicaid. The plan had already implemented a freeze on new Medicaid patients.
Cavanaugh said he doesn’t think ProMedica will pull the health plan out of managed Medicaid in the state entirely. It’s possible Paramount will reenter southeast Ohio in the future. He said the system will consider that move when the state issues a request for information in 2021.
Advocate Aurora’s lofty goal: Double revenue by 2025
Advocate Aurora Health has set a number of ambitious goals to hit by 2025, including more than doubling its revenue, which currently stands around $12 billion.
The not-for-profit system’s CEO, Jim Skogsbergh, announced to an audience at the J.P. Morgan conference Monday morning its Transformation 2025 initiative, which includes growing revenue to $27 billion and serving 10 million patients.
Advocate Aurora, with headquarters in Downers Grove, Ill., and Milwaukee, also strives to grow its operating margin to 4.7%—it was 4.6% in the third quarter of fiscal 2019—and cut costs by $1.1 billion in that time.
The system will rely in part on a strong drive to become more consumer-focused, he said.
“That requires a herculean effort, pivoting to where the industry is going and making sure that we get really, really intimate with the consumer in ways that we haven’t in healthcare before,” he said. “We admire so many organizations that are doing that.”
Among other 2025 goals: to serve 10 million people and derive 10% of revenue from new businesses that have a consumer focus, Skogsbergh said.
He closed by refuting recent research that challenged the assertion that health system mergers improve outcomes.
“Ours have,” he said. “They’re demonstrable and measurable. So we believe in it.”
Baylor Scott & White wants $1 billion in cost savings over five years
Baylor Scott & White Health is plowing ahead with a second aggressive cost savings target since its 2013 formation.
The Dallas-based health system is working toward a new goal of $1 billion in cost savings over five years, Chief Financial Officer Penny Cermak said. The system has arrived at $200 million in annual improvements to its cost structure in the second year of a new savings program, she said.
“If we want to make the cost of healthcare more affordable for our patients, the only way to get there is to first be lean and efficient ourselves so we can pass along savings to our customers and our members,” Cermak said.
Following the merger that formed Baylor Scott & White, the system achieved its goal of $1.5 billion in merger-related savings over five years, Cermak said.
“We did that and then some,” she said.
After that, the cost savings slowed to a crawl. That’s when, two years ago, the system launched a new program called REACH, which stands for realizing efficiencies through achieving cost effective healthcare.
Bon Secours Mercy Health touts merger savings
Bon Secours Mercy Health locked in $160 million in merger-related savings in 2019, significant progress toward its overall savings goal.
The not-for-profit health system, formed through the September 2018 merger between Mercy Health and Bon Secours, identified $280 million in merger-related synergies, CEO John Starcher said on Monday morning.
On July 1, 2019, the 51-hospital system became the largest private provider in Ireland with the purchase of five hospitals with roughly $320 million in annual revenue.
“We’re excited about this,” Starcher said.
Cincinnati-based Bon Secours Mercy’s EBITDA margin is projected to have fallen to 9.2% in 2019 from 10% in 2018 on a pro forma basis. Its operating margin shrunk from 3.4% in to 3% in that time. Meanwhile, the system’s initial 2019 forecast shows $8.7 billion in revenue last year, up from $8.1 billion in 2018 on a pro forma basis.
On the bright side, Bon Secours Mercy CFO Deborah Bloomfield said employment expenses fell 2% year-over-year as a percentage of revenue. Admissions grew 6% in that time, and days cash on hand improved from 183 to 253 on a pro forma basis. The system’s debt to capitalization improved from 41% to 31% year-over-year.
Lowering patients’ costs takes $100 million from Intermountain’s margin
Intermountain Healthcare has been vocal about its effort to lower its patients’ out-of-pocket costs—at the expense of the health system itself.
Salt Lake City-based Intermountain’s efforts to bring down costs for patients and members of its health plan have shaved $100 million off its margin in the past two years, Bert Zimmerli, the system’s CFO, told a packed audience during the conference’s kickoff session Monday.
Nonetheless, Zimmerli said it’s “absolutely” the right thing to do.
“You hear all the time at this conference: Healthcare is becoming unaffordable,” he said. “I don’t agree with that. It’s already unaffordable.”
To compensate, Intermountain has had to double down on its efficiency efforts, Zimmerli said.
One example of cost savings is bringing the cost of a normal, vaginal delivery with a plan available for uninsured patients that reduced the cost from approximately $6,000 to $4,150.
Intermountain has created a platform of 60 such shoppable procedures, Zimmerli said.
“We make a lot of money on those,” he said.
The system’s finances remain strong, however. Intermountain has 367 days cash on hand, Zimmerli said, attributing the metric to strong collections under its revenue-cycle vendor, Chicago-based R1 RCM.
Northwell to implement “self-service” price estimator
Hospitals that don’t offer patients financial estimates ahead of scheduled visits are falling behind in an area that’s now dominating the industry: consumerism.
Not-for-profit Northwell Health has offered a price estimator for a while, but it relies on employees calling the patients’ health insurance company, which takes up a lot of time. By the end of the year, Northwell plans to implement a major upgrade. Patients will be able to get price estimates on their own through the health system’s website.
“We have to be able to give our consumers a better out-of-pocket cost estimate,” Rich Miller, Northwell’s chief business strategy officer, told Modern Healthcare in San Francisco on Sunday ahead of the J.P. Morgan conference. “To the degree technology can make that easier and more accurate, we feel it’s the right thing to do for consumers.”
New Hyde Park, N.Y.-based Northwell is working with credit-reporting company Experian to implement technology that will electronically submit the relevant information to a patient’s insurer and determine their out-of-pocket costs for certain procedures automatically.
Currently, that’s a manual process that “takes quite a bit of time,” he said. It’s also rudimentary and creates estimates using prior patients with the same insurance and procedure, he said. As time went on, Miller said the health system realized it had to improve its offerings.
The new price estimator tool will be up and running for Northwell’s medical group in April and for its hospitals in July. The self-service website function will be ready by year-end, Miller said.
While hospitals are happy to share individual patients’ price estimates, they vigorously protested a CMS rule that would require hospitals to publish payer-negotiated prices for various services. The rule is set to go into effect on Jan. 1, 2021.
