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Doc group
purchases are
increasingly
the target
of antitrust
enforcement
Page 16

Another CFO Roundtable:

crack in the Small or large,
readmissions health systems’
foundation / size influences
Page 14 decisionmaking /
Page 20
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 16 Cover story
Medical group dealmaking
drives antitrust actions Opinions/Ideas
By Harris Meyer 24 Editorial 25 Guest Expert
The recent flurry of antitrust If healthcare providers are Training the next generation
actions—state and federal— serious about the importance of physicians requires a
come as concerns mount over the of treating the whole person, renewed focus on social and
increasing consolidation of physician they shouldn’t overlook cultural issues, a movement
groups and its impact on prices and patients’ pocketbook issues. already well underway.
healthcare spending.
26 Letters
Cover: Getty Images/Modern Healthcare illustrations
A reader says that given the broad consequences of rising
healthcare costs, the status quo is no longer an option.
29 Bold Moves
Dr. Rick Gilfillan, who just stepped down as CEO of Trinity
Chief Financial Officers Health, discusses his riskiest decisions while at the helm.
Features
Roundtable 30 Innovations
By Jessica Kim Cohen
Technology is helping to identify and isolate measles patients
before they arrive in the emergency department.

32 Q&A
20 How system size influences decisionmaking Katie Logan, Piedmont
By Tara Bannow Healthcare’s first-ever vice
Chief financial officers from health systems of very different president of experience, discusses
sizes discuss how their organizations address issues such as projects being rolled out to create
consolidation, value-based payment and revenue-cycle outsourcing. a “digital front door” at the
Atlanta-based system.

News
Data
2 Late News 6 Finance 11 Executives 31 Data Points
Rural hospitals support Providers flexing Celebrating the
accomplishments of A look at some of the numbers that worry healthcare CFOs.
wage index reform their debt collection
proposal. muscles. women leaders.
34 By the Numbers
4 The Week Ahead 8 Mergers 12 Insurance The largest professional liability carriers.
5th U.S. Circuit panel to Sanford, UnityPoint N.C. standoff may
hear ACA arguments. combo would create leave 700,000
with just a few in- Diversions
another super-regional
5 Regional News network hospitals. 36 Outliers
system.
Dr. Steven Safyer Amid the ongoing debate over
retiring as CEO of 10 Insurance 14 Quality
Medicaid expansion in some
Montefiore in Kaiser, Centene, Molina Another crack in states, a project by the Robert
New York City. must pay big risk- the readmissions Wood Johnson Foundation
adjustment charges. foundation.
shares real-life success stories
from the program.

ModernHealthcare.com/WebExclusives The CMS has re-issued a memorandum on emergency stabilization

Although inpatient admissions have ticked up over the last few
months, they remain on a long-term downward trend, which has
dented U.S. hospitals’ profitability.
A new study documenting high air ambulance charges could
bolster a congressional effort to ban the medical transport companies
from balance billing for their services.
and treatment of newborn infants that could cause fresh anxiety for
hospitals and physicians over abortion and care for pregnant women
and severely disabled infants.
Nursing homes that serve largely black and Latino patients are
more likely to receive a penalty from the CMS’ Value-Based Purchasing
Program than their peers, according to a new analysis.

MODERN HEALTHCARE (ISSN 0160-7480). Vol. 49 No. 26 is published weekly by Crain Communications Inc. (except for combined issues for June 24 and July 1, and Dec. 16 and Dec. 23; and no issues on Nov. 25 and
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July 8, 2019 | Modern Healthcare 1

 Briefs
„„„
ProvideGx is now supplying cysteine

Rural hospitals support hydrochloride injections to its member

providers. The Premier subsidiary

wage index reform

teamed up with manufacturer Exela
Pharma Sciences to deliver the only
Food and Drug Administration-
approved version of the drug. The
Rural hospital officials are hopeful that the CMS’ proposed changes to the injection used for pediatric and
wage index will provide much-needed help. adult patients who need intravenous
The agency received more than 2,000 comments on its proposed rule, released nutrition has been in short supply since
in April, which boosts funding for rural hospitals. Critics of the current wage 2015. Premier provides access to more
index formula claim it has disproportionately impacted rural providers. They than 100 drugs on the drug shortage list,
hope the agency’s plan to raise the index for low-wage hospitals at the expense with plans to introduce an additional 60
of decreasing it for high-wage hospitals will close a wide payment disparity. pharmaceuticals that have persistently
“Without the relief CMS has proposed, Tennessee hospitals will continue to been in short supply, beginning with
suffer and more may be forced to close their doors to the many Tennesseans sterile generic injectables.
who need care,” wrote Bruce Hartmann, senior vice president and chief com- „„
„
Struggling North Carolina rural
munity relations officer for the University of Tennessee Medical Center in Knox- hospitals could get taxpayer-funded
ville, describing the proposal as a “lifeline.” loans to help them stay open while they
Under the current wage index, all 95 counties in Tennessee fall among the downsize or reshape services through
lowest reimbursement rates in the U.S., Hartmann wrote. He noted a self-per- legislation getting bipartisan support
petuating cycle under the current index’s budget-neutral framework where cer- in the state Senate. The chamber
tain states record higher wages resulting in higher payments to the detriment of voted overwhelmingly last week for
lower-wage states like Tennessee that receive lower payments. the measure that would create a Rural
To address that disparity, the CMS called for hospitals that have a wage in- Health Care Stabilization Fund. Senate
dex value below the 25th percentile to get an increase that is “half the difference leader Phil Berger, a Republican, is the
between the otherwise applicable wage index value for that hospital and the chief advocate of the bill now heading to
25th percentile wage index value across all hospitals.” Meanwhile, a hospital in the House. He says loans with favorable
the 75th percentile will get a decrease to ensure the wage index change is bud- terms could provide a financial bridge
get-neutral. The agency also proposed a 5% cap on any decrease to a wage index to hospitals trying to change with the
in fiscal 2020 compared with 2019. times but that are in the red.
The proposal also recommended removing the “rural floor” provision after „„
„
Centene Corp. continued its expansion
HHS’ Office of Inspector General found that some urban hospitals have used it overseas, buying a larger stake in
to improperly classify themselves to get higher payments. The agency revealed Ribera Salud Group in Spain. The
that the wage index often relies on inaccurate wage data, resulting in at least health insurer now owns 90% of Ribera
$140.5 million in overpayments to 272 hospitals from 2014 to 2017. Salud, up from 50%. Ribera Salud
Currently, a wage index value for an urban hospital can’t be less than the wage manages government-run healthcare
index for a rural hospital in the same state. operations in Spain and Slovakia.
The index pulls data on wages, hours worked and related costs from hospitals’ “With this transaction, Centene is
Medicare cost reports to set payments. It also factors in the cost of living as it sets positioned to expand our innovative
market-based payments, which means a larger hospital would impact an area’s solutions internationally through
wage index more than a smaller facility. cutting-edge technology, value
The southern portion of Pittsburgh’s core-based statistical area, which is creation and positive outcomes for
home to Monongahela Valley Hospital, has seen a continued “death spiral” in our customers,” Centene CEO Michael
its area wage index over the last 20 years, said CEO Louis Panza. This has cost Neidorff said in a statement.
hospitals in Western Pennsylvania more than $1 billion in the last 20 years, he
said. A board member from Ozarks Medical Center in Missouri also described „„
„
As of last week, six babies and
the situation as a “death spiral.” six employees at UPMC Children’s
Panza asked the CMS to amend the proposed rule for the Pittsburgh core- Hospital of Pittsburgh were being
based statistical area to have its wage index increased by 50% of the decline treated for MRSA. UPMC officials said
experienced since fiscal 2000. they believe a visitor to the neonatal
This proposal would apply to core-based statistical areas that do not other- intensive-care unit was the source.
wise benefit from the implementation of the 25/75 criteria within CMS’ pro- UPMC said it is following protocol
posed rule, those that have a wage index below 1.00, and ones that have seen a and guidelines set by the Centers for
wage index decline of more than 10% in the last 20 years. —Alex Kacik Disease Control and Prevention.

2 Modern Healthcare | July 8, 2019

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 EDITORS
Aurora Aguilar Editor

5th U.S. Circuit to hear

312-649-5218 aaguilar@modernhealthcare.com
Matthew Weinstock Managing Editor
312-397-7585 mweinstock@modernhealthcare.com

ACA arguments
Paul Barr Features Editor
312-649-5418 pbarr@modernhealthcare.com
Erica Teichert News Editor
212-210-0209 eteichert@modernhealthcare.com
David May Assistant Managing Editor
312-649-5451 dmay@modernhealthcare.com
JULY 9: The 5th U.S. Circuit Court of Appeals will hear oral Merrill Goozner Editor Emeritus
arguments on the constitutionality of the Affordable Care Act. The mgoozner@modernhealthcare.com
hearing comes almost seven months to the day after U.S. District Judge CREATIVE SERVICES
Reed O’Connor said that the entire law was invalidated by the 2017 Tax Patricia Fanelli Creative Services Director
Cuts and Jobs Act, which zeroed-out the individual mandate penalty. 312-649-5318 pfanelli@modernhealthcare.com
Two of the three judges on the 5th Circuit panel were appointed by Joanne Yj Kim Graphic Designer
312-649-5338 jykim@modernhealthcare.com
Republican presidents—one by George W. Bush, the other by Donald
Paul Romejko Graphic Designer
Trump. The court rejected a plea last week from the plaintiff GOP state 312-649-5335 promejko@modernhealthcare.com
attorneys general to delay the hearing so they could have more time to
DIGITAL
file a supplemental brief on whether the U.S. House of Representatives Saman Creel Digital Content Strategist
and the Democratic states that are defending the landmark healthcare 312-649-5225 screel@modernhealthcare.com
law have standing to intervene in the case. Modern Healthcare reporter Emily Olsen Web Producer
Shelby Livingston will be in New Orleans to provide coverage from inside 312-649-5482 eolsen@modernhealthcare.com
and outside of the courtroom. SENIOR REPORTER
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JULY 10: A House Veterans’ Affairs subcommittee will delve into 312-649-5343 hmeyer@modernhealthcare.com
the “Cost of Caring” for the nation’s vets. The hearing comes a month REPORTERS
after the Veterans Affairs Department officially rolled out its Community Tara Bannow Finance | Chicago
Care Program. Mandated by the VA Mission Act, the program creates 312-649-5362 tbannow@modernhealthcare.com
more opportunities for veterans to access care at civilian hospitals. Maria Castellucci Safety & Quality | Chicago
There have been concerns, however, that the VA has yet to issue rules 312-397-5502 mcastellucci@modernhealthcare.com
establishing competency standards and requirements for provision of Jessica Kim Cohen Technology | Chicago
312-649-5314 jcohen@modernhealthcare.com
care by non-VA providers in clinical areas where the VA has developed
special expertise. Steven Ross Johnson Population Health | Chicago
312-649-5230 sjohnson@modernhealthcare.com
JULY 10: During its July open meeting, the Federal Communications Alex Kacik Operations | Chicago
Commission will discuss a proposal to create a Connected Care Pilot 312-280-3149 akacik@modernhealthcare.com
program. Unveiled in July 2018, the idea is to allocate money from the Shelby Livingston Insurance | Nashville
Universal Service Fund to encourage telehealth and virtual healthcare 843-412-6857 slivingston@modernhealthcare.com
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4 Modern Healthcare | July 8, 2019 July 8, 2019 | Modern Healthcare 4


NORTHEAST
Safyer retiring
as Montefiore CEO
Dr. Steven Safyer, the CEO who pioneered
population health management at Montefiore
Medical Center in New York, is retiring after
11 years at the helm of the academic giant.
Safyer said he will continue to serve as CEO
until a successor is appointed. Dan Tishman,
chair of the Montefiore Medicine board of
trustees, will head the selection process.
Since Safyer became CEO, the number of
hospitals in the system, which includes the
Albert Einstein College of Medicine, increased
to 10, with more than 3,000 employed
physicians and more than 150 clinics. The
Bronx-based system has expanded into
Westchester County and the Hudson Valley.
During his tenure, he made Modern
Healthcare’s 100 Most Influential People in
Healthcare list four times. —Harris Meyer
Dr. Steven Safyer
WEST ment, it was described as a $200 mil-
City of Hope more than lion investment. The cancer center—a
partnership between City of Hope and
doubles investment
FivePoint, an owner and developer
in new cancer center of mixed-use communities in Cali-
City of Hope drastically increased its fornia—was slated to open in 2025 at
investment to build a new cancer cam- 73,000 square feet. City of Hope plans
pus in Orange County, Calif., in terms to modify a 190,000-square-foot build-
of both size and cost. The $1 billion ing on property it acquired.
campus will mark City of Hope’s first
expansion into the county.
Despite being known as a fairly pros- MIDWEST
perous region, Orange County suffers NorthShore agrees to buy
from a dearth of specialty cancer care,
Swedish Covenant in Chicago
said Annette Walker, president of City
of Hope, Orange County. Nearly 20% of NorthShore University HealthSys-
the county’s residents leave the region tem has agreed to acquire Swedish
for advanced care, according to data Covenant Hospital in Chicago, as cost
cited by City of Hope. pressures and shifting models of deliv-
City of Hope—which is based in Du- ering care have made it nearly impossi-
arte in Los Angeles County and has ble for the community health network
more than 30 sites of care throughout to stay independent.
Southern California—named Walk- Swedish Covenant had been in talks
er to her post last year to oversee the with at least six potential buyers since
development of the Orange County last year, CEO Anthony Guaccio said.
campus; at the time of the announce- Meanwhile, Evanston, Ill.-based
NorthShore has looked for opportu-
nities to expand and complement its
four-hospital network since plans to
merge with Advocate Health Care fell
through in 2017, CEO J.P. Gallagher said.
The deal—terms of which were not
disclosed—could provide the scale
needed to compete in a market dom-
inated by expanding faith-based
chains and large academic medi-
cal centers. Swedish was assigned a
fair-market value of $194.8 million, ac-
cording to the Illinois Health Facilities
and Services Review Board.
SOUTH
HCA buys 24 urgent-care
centers from Fresenius
HCA Healthcare purchased 24
MedSpring urgent-care centers from
Fresenius Medical Care. The centers
will operate under HCA’s Medical City
Healthcare division and be rebranded
as CareNow Urgent Care. The acquisi-
tion adds eight centers to CareNow’s
37 North Texas locations. In 2018,
CareNow and Medical City Children’s
Urgent Care clinics served about 10%
of the Dallas-Fort Worth population,
with more than 770,000 patient visits,
according to HCA.
Medical City Healthcare has invest-
ed more than $1.7 billion over four years
in access points including CareNow lo-
cations, infrastructure and new tech-
nology, HCA said. With the addition,
CareNow will operate 160 urgent-care
centers across the country. Terms of the
deal were not disclosed.
Investors have targeted urgent care
and medical offices, particularly in
rapidly growing markets, as the in-
dustry pushes for more convenient,
affordable care.
The number of U.S. urgent-care cen-
ters swelled to 8,774 as of November
2018, up 8% from 8,125 in 2017, accord-
ing to the Urgent Care Association. The
number of Medicare and Medicaid
patients seeking services at the cen-
ters continues to grow, accounting for
nearly 27% of all visits in 2018.
HCA Healthcare reported net in-
come of $3.79 billion on revenue of
$46.68 billion in 2018, up from $2.22
billion in net income on revenue of
$43.61 billion in 2017.
July 8, 2019 | Modern Healthcare 5
 Finance
Providers
flexing
their debt
collection
muscles
By Tara Bannow and Alex Kacik
WITH UNCOMPENSATED CARE
growing alongside the prevalence
of high-deductible plans, providers
are looking for ways to collect on un-
paid bills.
Piedmont Health is requiring patients
who will responsible for their entire bill
to pony up a quarter of the amount be-
fore receiving non-emergent services.
Methodist Le Bonheur Healthcare is
in the hot seat after reports that it was
sending many of its own employees—
largely low-wage workers—to court to
collect on thousands of dollars of medi-
cal debt. Meanwhile others, like Dignity
Health are looking to streamline pay-
ment processing.
Those moves are necessary given un-
compensated care, a combination of
bad debt and charity care, increased to
$38.4 billion in 2017 from $36.1 billion in
2015, according to the American Hospi-
tal Association.
But in an era of greater efforts to
build trust with consumers who are
increasingly in control of their care, ex-
perts wonder if it’s the right move.
“With patient cost-sharing responsi-
bility and bad debt on the rise, we as pro-
viders have had to try to do something
different,” said Steve Scharmann, vice
president of finance and revenue-cycle
management at Dignity Health, which
recently announced it was expanding a
partnership with Ooda Health to settle
patient bills in real time.
6 Modern Healthcare | July 8, 2019
GETTY IMAGES
“With patient cost- Dignity and Ooda started the pilot at
sharing responsibility two Arizona hospitals and will bring it to
two hospitals and a physician practice in
and bad debt on the rise,
Sacramento, Calif. Eventually they hope
we as providers have to expand the program across Dignity’s
had to try to do network. Dignity merged with Catholic
something different.” Health Initiatives in February to form
Steve Scharmann CommonSpirit Health.
Vice president of finance and “We have tried for over a decade to
revenue-cycle management get a single bill and make it a one-stop
Dignity Health shop. Now, a patient can make a single
phone call and talk to someone” with
access to the health plan and providers,
Sensitive subject Scharmann said.
Collecting bills from patients has al- That kind of transparency will be
ways been a pain point for providers, and important to Atlanta-based Piedmont
it has created friction with payers, said which last month began requiring unin-
Seth Cohen, co-founder and president sured, self-pay patients and those with
of San Francisco-based healthcare bill- high-deductible commercial policies to
ing-focused startup Ooda. “We want to pay 25% of their bill before they can re-
get to a place where a patient can check ceive services.
out of a hospital like a hotel,” he said. “As much as people in healthcare want
Executives from Ooda and Dignity transparency, they get uncomfortable
say they’re creating an experience sim- when you start talking about require-
ilar to a credit-card statement, where ments for things, because requirements
every provider encounter is listed on a mean that a patient may hear ‘no’ to their
single bill. Ooda then pres- healthcare,” said Andrea
ents a consolidated invoice Mejia, Piedmont’s executive
to the patient and handles THE TAKEAWAY director of patient financial
reimbursement, claiming Providers must care and revenue cycle, “so
that it can better respond handle debt that gets controversial.”
to patients with its access collections carefully The new policy is the lat-
to payer and provider data or risk damaging est phase in what has been
and develop a long-term relationships with five years of improved pa-
relationship. patients and payers. tient education around
out-of-pocket costs, including sending
patients price estimates—even if pa-
tients didn’t ask for them—prior to al-
most all services.
“To move to point-of-service collec-
tions is a big shift,” said Joseph Fifer, CEO
of the Healthcare Financial Manage-
ment Association. “To do it even before-
hand, that’s even a bigger movement,
given where we’re starting from.”
Balancing debt reduction and
patient experience
Like many of its peers, 11-hospi-
tal Piedmont shoulders a heavy bad-
debt load.
The health system’s $250.7 million
bad-debt expense in fiscal 2018 was
about 8% of its $3 billion in revenue that
year—up from 6.5% of revenue the prior
year and much higher than the 2% na-
tional average the American Hospital
Directory calculated in 2017.
Not-for-profit hospitals’ bad debt is
projected to increase at least 8% this
year as the high-deductible health plan
trend continues, according to Moody’s
Investors Service.
Requiring upfront payment is rela-
tively common at physician practices.
Some hospitals likely employ the tac-
tic, too, but they’re unlikely to publi-
cize such policies, said Jonathan Wiik,
healthcare strategy principal with
TransUnion Healthcare.
Mejia said the policy’s potential to dis-
suade patients from receiving necessary
care for serious conditions is “a very le-
gitimate concern.”
The policy raises red flags, said Ber-
neta Haynes, senior director of policy
and access with the consumer advoca-
cy group Georgia Watch. She said she
fears it could hamper access to care and
take away patients’ ability to negotiate.
“It does have the potential to become
a real impediment for folks seeking
healthcare,” she said.
Brian Unell, Piedmont’s vice pres-
ident of revenue cycle, said the new
advance payment policy allows Pied-
mont’s physicians to escalate cases to
administration in situations where pa-
tients need care urgently, such as for
cancer treatment.
“That’s been the biggest lesson
learned so far and pushback we’ve got-
ten,” he said.
There’s currently no ceiling amount
on what patients could be forced to
pay before receiving services, but Un-
ell said the system would probably
make an exception if 25% ended up
being $2,500, for example. Piedmont
discounts its billed charges by 70% for
self-pay patients.
Building (and maintaining)
relationships
For policies like Piedmont’s to be
successful, they need to have very good
relationships with their referring physi-
cians, Wiik said. Friction tends to occur
when physicians argue that their pa-
tients aren’t getting medically neces-
sary services, he said.
Wiik argued that if patients were truly
unable to pay the bill, the hospital’s fi-
nancial assistance policy or Medicaid
eligibility would kick in.
Bad debt and charity care,
based on cost
(Uncompensated care, $ in billions)
$46.8
$43.2
$38.4 $38.4
$36.1
2013 2014 2015 2016 2017
Source: American Hospital Association
Annual Survey data
In Memphis, Tenn., Methodist Le
Bonheur CEO Michael Ugwueke had
to respond to criticism after a Pro-
Publica investigation found that from
2014 to 2018, the safety-net hospital
had filed more than 8,300 lawsuits
against patients, whose wages were
garnished as a result.
“Our team will work with every pa-
tient—insured and uninsured—strug-
gling with medical expenses. Uninsured
patients receive an automatic 70% dis-
count off the cost of their care and we
will work with any patient willing to
work with us to create a payment plan
that fits their budgets,” Ugwueke wrote
in an op-ed printed in the Commercial
Appeal newspaper.
The future of debt collection
The cost of billing and insurance-re-
lated activities will amount to $496 bil-
lion in 2019, according to an estimate
from the left-leaning think tank Center
for American Progress. A 2018 study
by Harvard and Duke academics pub-
lished in JAMA found that up to 25% of
emergency department visit revenue at
an academic medical center went to-
ward billing costs.
Inpatient service volumes continue
to either stagnate or decline, which
means hospitals may not be able to
abate the effect of rising bad-debt lev-
els. Thus, they are turning to special-
ists to try to lower the time and cost to
collect. Some health systems have out-
sourced thousands of revenue-cycle
employees to third parties while others
employ one-off technology solutions.
But layering different types of software
can complicate matters.
Whatever strategy is implemented,
something has to change, experts said.
“The core infrastructure of how claims
get paid and collected seems to be rela-
tively unchanged for decades,” Ooda’s
Cohen said.
Dignity reported provision of bad
debt of $587.3 million in 2018, up from
$547.8 million in 2017. That number
grew to $979 million on a pro forma
basis for the first nine months of its fis-
cal 2019 as the system added Catholic
Health Initiatives to its balance sheet.
Executives said they don’t yet have
data on the exact reduction of bad
debt or time and cost to collect since
the Dignity pilot was launched in Sep-
tember, but the feedback they have
gotten from customers who are sur-
prised to receive one bill has resonat-
ed, they said.
“The No. 1 goal in the pilot is not in-
creasing the yield; it is prioritizing the
member experience,” Cohen said, add-
ing that Ooda offers discounts for creat-
ing payment plans and 0% financing.
Providers and payers have advo-
cated for resolving what has typically
been an adversarial relationship. But
few have reached a collaborative mid-
dle ground.
“There is a groundswell happening,”
Scharmann said. “I would say it has
been lip service for many years, and to
a certain degree it still is. But I see more
payers and providers coming to the ta-
ble to try to do this better.” l
July 8, 2019 | Modern Healthcare 7
Mergers

Sanford, UnityPoint combo would

create another super-regional system
By Alex Kacik tain long-standing relationships
with independent physicians,
A MERGER OF Sanford Health hospitals and other healthcare
and UnityPoint Health would cre- partners, executives said.
ate a super-regional health system “Sanford and UnityPoint are
stretching across the Midwest that two successful systems intent
would rival in size such systems as on controlling our own desti-
Advocate Aurora Health and Bay- ny,” Kelby Krabbenhoft, CEO of
lor Scott & White Health. Sanford Health, said in prepared
Sanford and UnityPoint, which remarks. “We believe that in the
announced the signing of a letter very near future, fully integrated
of intent to explore a merger late health systems will drive great-
last month, together would be er value through affordable op-
a $9.2 billion integrated health tions for high-quality healthcare
system, placing it among the top to patients, governments and
15 not-for-profit health systems System snapshot employers. The combination of
by revenue, according to Mod- Sanford Health and UnityPoint are Sanford and UnityPoint will help
ern Healthcare’s Health System close in size. both organizations better meet
Financials Database. this need, creating a new system
The deal fits in with recent Mid- Sanford UnityPoint positioned for continued growth
($ in millions)
western combinations like the Health Health across a broad geography.”
transaction that created Advocate Hospitals 44 32
Aurora Health; NorthShore Uni- Krabbenhoft would take the
versity HealthSystem’s pursuit helm of the merged institution
Employees 48,622 30,000+
of Swedish Covenant Hospital; and UnityPoint CEO Kevin Ver-
and the potential merger being Operating or meer would be senior executive
discussed by Gundersen Health $4,819.1 $4,411.5* vice president. Part of the goal
total* revenue
System and Marshfield (Wis.) is to become a world leader in
Operating
Clinic Health System, which have income
$172.9 $40.8 personalized primary care,
all embraced a more regional ap- they said.
proach. Before a recent merger, Kelby Kevin “We are approaching our dis-
CEO
Sanford had locations in North Krabbenhoft Vermeer cussions very purposefully, with a
and South Dakota, Minnesota Revenue and income are based on 2018 reports.
clear and common vision for suc-
and Iowa; UnityPoint has facilities cess,” Vermeer said in prepared
Sources: Modern Healthcare Metrics,
in Illinois, Iowa and Wisconsin. Modern Healthcare Health System Financials Database remarks. “First and foremost, our
Some health system executives focus is on people. Work-
argue that regional concentration ing together, we will find
can be more helpful than far-flung tie- partner to employers look- THE TAKEAWAY new ways to broaden ac-
ups when negotiating with vendors ing to create narrow net- cess to care—beyond the
and payers. Regional systems also works. And they shouldn’t The combined entity traditional settings—and
would rank among the
have better insight into specific ser- run into any antitrust is- top 15 not-for-profit
take greater responsibility
vice lines and performance data, and sues, he said. health systems with for the health of the popu-
can adapt more quickly, they say. The Sanford-UnityPoint more than $9 billion lations we serve.”
“If they are first or second in their combo would form a uni- in operating revenue; The deal is expected to
local market, that is more important fied governing board while 76 hospitals across be completed by the end of
than being a behemoth,” said Joe Lu- both organizations would 26 states and nine 2019, following customary
pica, chairman of Newpoint Health- continue to operate their countries; and more regulatory reviews.
care Advisors, adding that Sanford respective fully integrated than 83,000 staff and As health systems con-
and UnityPoint would be an attractive medical groups and main- 2,600 physicians. tinue to pursue massive

8 Modern Healthcare | July 8, 2019

regional and national networks in
search of the highly touted benefits of
scale, economists and policy experts
have cautioned about consolida-
tion’s tendency to raise prices. Hos-
pital price growth is one of the main
drivers of rising healthcare costs, re-
search shows.
lion in 2017. in Costa Rica, Ireland, New Zealand,
Sanford and post-acute provider South Africa and Vietnam.
Evangelical Lutheran Good Samaritan Des Moines, Iowa-based Unity-
Society completed their merger in Jan- Point reported operating income of
uary, expanding Sanford’s footprint $40.8 million on revenue of $4.41 bil-
into 20 more states in the Midwest, lion in 2018, up from a $21.5 million
South and West. It is also broadening operating loss on revenue of $4.16 bil-
its global presence with new facilities lion in 2017. l

Organizations like CommonSpirit

Health, the result of the merger of
Catholic Health Initiatives and Dig-
nity Health, aim to leverage sprawl-
ing national networks to boost
access and expedite technology
and capital investments. But a 2018
working paper produced by Whar-
ton School academics found that ac-
tual supply chain savings produced
by mergers fell short of expectations.
Neighboring systems attained more
favorable price negotiations than
far-flung organizations, they found.
Although it’s typically not the top Gain
Experience
draw, academic institutions can also
add to a transaction’s value propo-
sition, evidenced by deals like HCA

Overnight
Healthcare acquiring a majority
stake in Galen College of Nursing
and the Atrium Health and Wake
Forest Baptist Health merger in
North Carolina. UnityPoint has four
teaching hospitals in Iowa. Answering the unique challenges of
There is a labor shortage that’s inpatient and outpatient rehabilitation
acutely felt in rural areas, and an takes experience – the diverse experience
easy solution is for health systems to of managing staffing, compliance and
merge or affiliate with universities, reimbursement barriers.
© 2019 Kindred Healthcare Operating, Inc. CSR 197328, EOE

said Rick Kes, a senior healthcare

analyst with RSM. For decades we’ve offered customizable
“I could easily see this model clinical and management solutions to help
growing because the talent pipeline our 150 hospital-based partners improve
is such an important factor,” he said. outcomes and deliver a better patient
“The demographics of the world are experience.
changing quicker than ever, and if
you continue to have more physi- With clinical expertise and intuitive
cians retire than those entering the technology, our over 7,000 therapists help
workforce, you could run into a big over 160,000 patients get back to their
strategic issue.” lives and our partners achieve clinical and
While Sanford and UnityPoint are operational success.
similarly sized as far as revenue, San-
ford has stood on more stable finan-
cial footing. 7RVHHKRZRXUH[SHUWLVHKDVPDGHXVWKHSDUWQHURIFKRLFHIRU
Sioux Falls, S.D.-based San- KRVSLWDOV\VWHPVDFURVVWKHFRXQWU\YLVLWNLQGUHGUHKDEFRP.
ford reported operating income of
$172.9 million on operating reve-
nue of $4.82 billion in 2018, up from
$151.5 million in operating income Freestanding IRFs ARU Management Outpatient Rehab Medical/Surgical Rehab
on operating revenue of $4.41 bil-

July 8, 2019 | Modern Healthcare 9

Insurance

Kaiser, Centene, Molina must pay

big risk-adjustment charges
By Shelby Livingston The three insurers set to while, rival Blue Cross and Blue Shield of
receive the largest payments Tennessee enrolled most members in sil-
KAISER PERMANENTE, Centene Corp. ver and gold plans. Silver and gold plans
and Molina Healthcare are among the Each will receive smaller have higher risk scores under the risk-ad-
risk-adjustment payments for the
health insurers that racked up massive small-group market as well. justment methodology, while bronze
charges under an Affordable Care Act plans, which tend to attract young and
program meant to stabilize premiums (Payments tallied in the individual market healthier than average members, have a
in millions)
in the individual insurance market and lower risk score, Anderson said.
discourage cherry-picking. $784.8 By concentrating on selling bronze
According to Modern Healthcare’s Blue Shield of California plans, Oscar was already going to have
analysis of data recently released by risk-adjustment charges. But with a
the CMS, the Kaiser Foundation Health $574.7 membership heavy in silver and gold
Plan must pay $891.7 million into the Health Care Service Corp. plans, the Tennessee Blues pushed the
risk-adjustment program for the individ- $512.3 statewide average risk higher, making
ual market for 2018, which will be trans- Oscar’s membership look even healthier.
Blue Cross and Blue Shield of Florida
ferred to insurers who enrolled riskier Oscar said the risk-adjustment pay-
patients. Kaiser must pay another $414.3 Source: Modern Healthcare analysis of ment was expected. “We accurately set
million into the program for the small- CMS data rates and manage costs, and projecting
group market. Modern Healthcare did risk-adjustment transfers is a component
not analyze catastrophic plans and high- of that,” a company spokeswoman said.
risk pools. Kaiser said it “planned ac- 572 health insurers participated in the Centene and Molina saw big charges
cordingly in 2018” for the payments. program and transfers between them because of their membership bases and
Centene, which is the dominant totaled $10.4 billion. the insurers’ narrow networks and low
ACA marketplace insurer with nearly Various factors can contribute to premiums, Anderson said. Centene
2 million exchange enrollees, racked whether a plan receives payments or prices and structures its health plans to
up charges of $629.7 million in the in- must pay into the program. “At the end capture low-income, relatively healthier
dividual market. Molina Healthcare of the day, it comes down to the risk of patients; Molina does something simi-
must pay $373.2 million for individual your membership and the premiums lar, he said.
market risk-adjustment purposes. you’re charging,” said Deep Banerjee, Anderson noted that risk-adjustment
Most of the companies set to receive insurance analyst at S&P Global Ratings. charges and payments are not necessar-
the biggest payments were Blue Cross Large insurers that have a wealth of ily indicators of profitability. Centene,
and Blue Shield affiliates, as has been long-term data on their members and which is pursuing a merger with Well-
the case in previous years. Combined, can code them accurately are more like- Care Health Plans, has turned a profit
the Blues plans, including Anthem, will ly to receive risk-adjustment payments, on the exchanges and its business as a
get $2.5 billion for the individual mar- which explains why the Blues compa- whole despite having big charges under
ket and another $567.4 million for the nies benefit. The opposite is true of Oscar the program.
small-group market. Health, a smaller insurer that expanded The risk-adjustment program is con-
Risk-adjustment is a permanent pro- in five states in 2018 and has less mem- troversial. Small health plans and ACA
gram that shuffles money from plans ber data. Oscar must pay $201.9 million co-ops have long argued that the for-
that enroll relatively healthy members in risk-adjustment payments. mula used to calculate payments favors
to plans with sicker, riskier patients. But there are more technical factors. large plans with more claims experi-
The zero-sum program David Anderson, a research ence. In early 2018, insurance co-op
is based on a patient's THE TAKEAWAY associate at Duke Univer- New Mexico Health Connections won
risk score. Payments and sity’s Margolis Center for a partial victory in a lawsuit challenging
charges are calculated by Blues plans, with Health Policy, explained that the program. In response, the Trump
their large and loyal
comparing each health in Tennessee, for example, administration froze payments to in-
member base, won
plan’s average patient risk big because of their new arrival Oscar enrolled surers for the 2017 benefit year but then
score to the average pre- vast claims data. a number of members in a restored the program not long after. Lit-
mium in the state. In 2018, bronze plan in 2018. Mean- igation in the case is ongoing. l

10 Modern Healthcare | July 8, 2019

Executives
Celebrating the accomplishments of women leaders
By Aurora Aguilar
BOSTON-BASED Partners HealthCare
recently named its first female CEO, Dr.
Anne Klibanski, to lead a system that
includes world-renowned Massachu-
setts General Hospital and Brigham
and Women’s Hospital. The American
Medical Association continues to place
women in its office of the president,
including Dr. Barbara McAneny, im-
mediate past president, and Dr. Patrice
Harris, current president.
All three were recognized this year by
Modern Healthcare for being among
the nation’s Top 25 Women Leaders
in Healthcare, and will be celebrated
during a gala in Chicago on Aug. 1. The
event will top off a two-day conference
where the honorees and other leaders
will discuss the strides the industry has
made in positioning women to have
greater impact in the transformation un-
derway in healthcare.
They’ll also talk
about the challenges
that remain. Recent
research by consul-
tancy Oliver Wyman
found that it takes women three to five
years longer than men to make it to the
corner office, and that they still make
up only 30% of C-suite executives and
13% of CEOs.
Hospital boards also are underrep-
resented. The American Hospital As-
sociation’s 2019 National Health Care
Governance Survey Report found that
only 30% of hospital board members
were women, though that’s an improve-
ment from 2015 when a similar survey
found just 23% of hospital board mem-
bers were women.
At this year’s Women Leaders in
Healthcare Conference, Modern Health-
care will present original research on the
programs that have been
2019 put in place to help even
the playing field at most
healthcare organizations.
Our readership respond-
ed enthusiastically when
asked to share information about diver-
sity and inclusion efforts in their work-
places and how successful they’ve been
at elevating women leaders, eliminating
harassment and discrimination, and
bringing equality to compensation.
In addition, luminaries Marna Borg-
strom, CEO of Yale New Haven Health
System; Dr. Joanne Conroy, CEO of Dart-
mouth-Hitchcock Health; and Susan
DeVore, CEO of Premier, will share their
stories of climbing the corporate ladder.
We hope you’ll join us for the gala and
conference, both of which will provide
great insight about what’s happening
in the industry. Learn more at Modern
Healthcare.com/WomenLeaders. l

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July 8, 2019 | Modern Healthcare 11

Insurance

N.C. standoff may leave 700,000 with

just a handful of in-network hospitals
By Shelby Livingston The plan is
estimated to
THE MORE THAN 700,000 teachers save almost
and state employees and retirees who $258 million
receive health coverage from the North for taxpayers
Carolina State Health Plan could soon and health
face higher hospital bills.
That’s because few hospitals have
plan members
signed contracts to join the State Health about $57
Plan’s new network in which providers million.
will be reimbursed for their services at GETTY IMAGES
a percentage of what Medicare pays for
the same service. The deadline to sign a ning out of money within five years. Pro- man wrote in an email prior to the dead-
contract was July 1. fessional services would be reimbursed line to sign a contract.
Hospitals, clinicians and others who at about 160% of Medicare. The chang- The State Health Plan confirmed at
did not sign a contract will be consid- es would save almost $258 million for least three hospitals have signed con-
ered out-of-network starting Jan. 1, taxpayers and another $57 million for tracts to be included. There could be
2020, and receive lower reimburse- health plan members, according to the more. The three hospitals are Randolph
ment for services provided to state treasurer’s office. Health, Asheboro; North Carolina Spe-
employees. Patients who visit those But the hospitals argue that the pay- cialty Hospital, Durham; and Martin
providers could see higher out-of-net- ment cuts are arbitrary and will lead General Hospital, Williamston.
work medical bills. them to slash services, particularly in In a statement, Randolph Health,
The North Carolina Healthcare Asso- rural areas. Instead, they want Folwell which includes a 145-bed hospital, said:
ciation has opposed the state treasur- to collaborate with them to create a val- “As the only hospital within this commu-
er’s mission to move the State Health ue-based strategy. nity, it is imperative that we continue to
Plan to a reference-based reimburse- The NCHA spokeswoman said the provide critical health care services with
ment model. group cannot advise its members on trusted providers to plan members.”
“Now that our state’s hospitals have contractual matters. Still, the association The State Health Plan is also mak-
had the chance to independently weigh has lobbied against the reference-pric- ing progress with other providers. Last
the non-negotiable proposal, it appears ing plan, saying it would cost hospitals week, the plan had collected contracts
that the Treasurer has effectively forced $450 million per year, and supported a representing about 15,000 primary-care,
most of them out of his network,” a state bill to block the plan from going mental health and other providers and
spokeswoman for the association said. into effect. That bill passed the House in counting.
A State Health Plan spokeswoman April, but the Senate has yet to take it up. The plan currently uses Blue Cross
said members shouldn’t be concerned Vidant Health, a hospital system and Blue Shield of North Carolina’s
because the plan “is working on con- in Greenville, N.C., said it would lose Blue Options network, which includes
sumer protections to assist members $38 million annually under the ref- 65,000 providers.
with accessing health care erence-based reimburse- Tryon Medical Partners, a large in-
services at a transparent ment model. Its CEO, Dr. dependent medical practice in Char-
and affordable price.” THE TAKEAWAY Michael Waldrum, is chair- lotte, N.C., that broke away from Atrium
North Carolina Trea- More than 700,000 man of the North Carolina Health’s Mecklenburg Medical Group
surer Dale Folwell, who teachers and other Healthcare Association’s last year, also signed a contract to join the
oversees the State Health state employees board of trustees. State Health Plan network.
Plan, insists that paying covered by the North “As we continue to eval- It wasn’t a hard decision, said CEO
providers 182% of Medi- Carolina State Health uate the contract, it will be Dr. Dale Owen. “It’s going to take in-
care on average for in- Plan next year could necessary to consider how novative, different ways of thinking of
patient and outpatient face higher medical this plan will restrict access things to fix this healthcare system and
services is necessary to bills from many to care for the communities this is a really good step in the right di-
hospitals in the state.
keep the plan from run- we serve,” a Vidant spokes- rection.” l

12 Modern Healthcare | July 8, 2019

N AT I O N A L C E N T E R f o r H E A LT H C A R E L E A D E R S H I P

Join Us in Honoring the Recipient of the

2019 LEADERSHIP AWARD
2019 GAIL L. WARDEN SELECTION COMMITTEE

LEADERSHIP EXCELLENCE AWARD

John W. Bluford, III, co-Chair
Bluford Healthcare Leadership
Institute
Peter W. Butler, co-Chair
The National Center for Healthcare Leadership Rush University
is pleased to announce that Rod Hochman, MD, Nancy Howell Agee
president and CEO of Providence St. Joseph Carilion Clinic & 2018 Gail L. Warden
Health has been named the recipient of the 2019 Leadership Award Recipient
Gail L. Warden Leadership Excellence Award.
Barbara A. Anason
Vizient
Dr. Hochman leads Providence St. Joseph Health,
a Catholic not-for-profit health and social services Marc L. Boom, MD
system that has served the Western US for 160 Houston Methodist
years. Under Dr. Hochman’s leadership, Providence Joseph Cabral
St. Joseph Health is transforming healthcare for Press Ganey
the future through digital innovation, genomics Joanne M. Conroy, MD
and scientific wellness, population health, and Dartmouth-Hitchcock Health
outreach to the poor and vulnerable. Dr. Hochman Edgar J. Curtis
is also actively involved in Providence Health Memorial Health System
International and has traveled to Guatemala to
Darrell G. Kirch, MD
strengthen Providence St. Joseph Health’s local
American Association of Medical
relationships to continue to improve the health Colleges
of local communities in a sustainable way. He is
Eric Langshur
R O D N E Y F. H O C H M A N , M D passionate about drawing on the diverse resources
AVIA
PRESIDENT & CEO and talents of Providence St. Joseph Health’s
seven-state health system to touch lives wherever Shoou-Yih Lee, PhD
PROVIDENCE ST. JOSEPH HEALTH University of Michigan
relief, comfort, and care are needed most.
Brian Peters
Please join us as we celebrate Dr. Hochman’s outstanding leadership and lifetime commitment Michigan Health & Hospital
to improving community health at the annual Gail L. Warden Leadership Excellence Award Association
dinner on November 19, 2019 at InterContinental Chicago Magnificent Mile. The Leadership Mary A. Pittman, DrPH
Award is held in conjunction with NCHL’s 2019 Human Capital Investment Conference, Public Health Institute
Healthcare. Powered By People. Ninfa M. Saunders, DHA
Navicent Health
For questions about sponsorship opportunities, please contact Nilu Faiz-Ali at nfaiz-ali@nchl.org
or visit nchl.org. Jill Schwieters
JAS & Associates
Maryjane A. Wurth
E VENT & MEDIA SPONSORS Health Forum & American Hospital
Association

S AV E T H E D AT E
2019 HUMAN CAPITAL INVESTMENT CONFERENCE

NOVEMBER 19–20, 2019

I N T E R C O N T I N E N TA L C H I C A G O HEALTHCARE.
MAGNIFICENT MILE POWERED BY People.
Quality
Another crack in the
readmissions foundation
By Maria Castellucci
WITH YET ANOTHER study finding
flaws in the CMS readmissions penalty
program, some are again calling for an
elimination or overhaul of the contro-
versial policy.
The latest finding involved read-
mission penalties for hip and knee re-
placement procedures. A new study,
published last week in Health Affairs,
found the program didn’t lead to signifi-
cant reductions in 30-day return rates to
hospitals for the surgeries.
The CMS “may have squeezed all of
the juice that was possible out of these
penalties,” said Dr. Karan Chhabra, lead
author of the study and a fellow at the
Institute for Healthcare Policy & Inno-
vation at the University of Michigan.
While readmission rates have declined
for total hip and knee replacement sur-
geries, the most dramatic improvements
happened before providers even knew
the procedures were included in the
Hospital Readmissions Reduction Pro-
gram, according to the analysis.
The program was announced in 2010
with the passage of the Affordable Care
Act, but the CMS didn’t notify hospitals
that hip and knee replacement proce-
dures would be included until August
2013. Even so, the study found that re-
ductions in 30-day readmission rates for
the surgeries nearly doubled from 2010
to 2013 but then returned to pre-2010
reduction rates after the program was ex-
panded to those procedures.
The findings are in line with those
from other analysts who found most of
the improvement in readmission rates
actually happened in the time leading
up to the start of the program as hos-
pitals made organization-wide perfor-
mance improvement changes to avoid
a penalty. The program dings hospitals
for up to 3% of their Medicare payments.
In a statement, a CMS spokeswoman
echoed previous comments from the
14 Modern Healthcare | July 8, 2019
the CMS has expanded it. Since 2010, the
program has grown from an initial three
conditions—heart attack, heart failure
and pneumonia—to a total of six, the
most recent addition being coronary ar-
tery bypass graft surgery, which was add-
ed in fiscal 2017. Chhabra said he doubts
there will be significant reductions in
readmissions if the CMS decides to add
more conditions. Hospitals have likely
done all they can to reduce unneces-
sary readmissions and some returns to
the hospital are necessary.
“Based on the experience so far, it’s
hard to believe that adding on penalties
for more conditions will further bend
the curve of readmissions,” he said.
Chhabra suggested bundled-pay-
ment programs as an alternative. The
readmissions program has successfully
encouraged hospitals to pay attention
to care coordination to avoid a penalty.
“If the benefits are That kind of focus shouldn’t be lost, but
starting to shrink but the bundled payments take a more holistic
harms are persisting … approach to patient care, Chhabra said.
this program may be at “Bundled-payment programs do dis-
the end of its life.” courage unnecessary readmissions, but
in the setting of a broader 90-day epi-
Dr. Karan Chhabra
Fellow, Institute for Healthcare Policy sode,” he said.
& Innovation Another alternative would be to test
University of Michigan the program’s impact by removing part
or all of the penalty for some hospitals
agency and said it thoroughly reviews while keeping it for others. “You can see
“relevant literature to inform future where the inflection point is, where the
actions” to the program. She added, readmissions don’t start to creep back
“Significant reductions in readmissions up,” Chhabra said.
have been made over time, which CMS A frequent complaint from research-
believes is due in part to the program ers is that the program wasn’t tested
linking Medicare reimbursement for before it was rolled out on a national
hospitals to their performance on read- scale, so it’s difficult to know what its
mission rates.” impact has been.
This study is the latest that questions In addition to the readmission rates,
the impact of the program the study also found that
in addition to one that found THE TAKEAWAY the average Medicare cost
a link between the program of hip and knee replace-
and increases in death rates While hip and knee ments dropped by $3,000
surgery readmission
for heart-failure patients. from 2008 to 2016.
rates have declined,
Given this growing body the most dramatic While that’s a positive
of research, Chhabra said improvements sign, Chhabra said the
it may be time to retire the happened before savings likely weren’t the
program. “If the benefits are providers even knew result of the readmissions
starting to shrink, but the the procedures program. Instead, there has
harms are persisting … this were included been a focus on discharg-
program may be at the end of in the Hospital ing patients home instead
its life,” he said. Readmissions of to post-acute settings,
As more research raises Reduction Program, which would explain the
questions about the program, a new study finds. savings. l
 FIVE
TAKEAWAYS
THE COST OF CARING: WHY PROVIDERS SHOULD BE INFORMED ABOUT PATIENT DRUG COSTS
Amid a crisis of high drug prices, clinicians are
faced with the difficult challenge of prescribing
effective, affordable treatments, but in most cases have
little-to-no information about patients’ prescription drug
coverage or out-of-pocket costs.
During a June 11th webinar, Kyle Kiser of RxRevu and Dr.
CT Lin of UCHealth discussed how providers can ensure
patients can afford and adhere to prescribed treatments,
ultimately improving patient satisfaction and reducing
administrative burden. The entire webinar can be
accessed at www.modernhealthcare.com/CostofCaring.
New technology is giving clinicians more insight
into patient out-of-pocket costs.
Real-Time Benefit Check (RTBC) is a new
technology that verifies member and coverage
status while offering a specific cost for each
prescription within the EHR at the point-of-care. By
exchanging data in real time with the customer’s
pharmacy benefit manager or payer, clinicians
can ensure the information they have
is accurate and is specific to both the
patient and their preferred pharmacy.
The technology also allows physicians to see
the real-time status of prior authorizations
and can offer alternative drugs or
pharmacies that may be lower in cost.
RxRevu is free for health systems —
it’s paid for by PBMs and payers.
The ultimate beneficiary of an optimized,
lower-cost outpatient prescription process
is most often the PBM or payer, with cost
savings ultimately being passed on to the
payer. That’s why RxRevu has aligned its
business model so that its RTBC solution is
free for health systems, made possible by
PBMs and payers. While it provides obvious
benefits to providers and patients, RTBC
gives PBMs and payers a voice at the point
of prescribing and better tracks compliance
and adherence with formularies.
WATCH
THE FULL
WEBINAR
on-demand at
modernhealthcare.com/
CostofCaring
Rising drug costs affect all patients, but especially those
with high-deductible plans.
Driven in part by an astronomical rise in the cost of
specialty drugs, America is suffering from a drug price
crisis that is impacting medication adherence. When
patients can’t afford the drugs they’re prescribed, some are
foregoing treatment and damaging their health. Through a
series of rules aimed at manufacturers and Medicare Part D
plans, CMS is attempting to increase transparency for both
consumers and prescribers, but many providers have called
for greater access to patient out-of-pocket cost information
directly in the Electronic Health-Record.
A lack of cost information is leading to
inefficiency and dissatisfaction for both patients
and clinicians.
Most physicians don’t know the patient-specific
cost or coverage of the drug they’re prescribing,
which can result in rejected claims. The IMS
Institute estimates that providers spend 20
hours a week on pharmacy callbacks and prior
authorizations, a significant burden on efficiency
that may take clinicians away from valuable time
with patients.
Equipped with real-time information, clinicians can
have honest conversations with patients about
affordability prior to writing prescriptions.
Dr. CT Lin, Chief Medical Informatics Officer at
UCHealth, notes that clinicians too often get into
a “guess again” loop, writing a prescription and
“guessing again” if it isn’t covered or affordable. Dr.
Lin notes that real-time information allows him to turn
to his patient during the visit and ask, “Does this cost
seem reasonable?” When both parties are informed,
the patient is more likely to receive their therapy
and the clinician has avoided inefficiency and risk.
 Medical group deals face
growing antitrust scrutiny
as price worries rise

“I am concerned
about the state
of consolidation.
Healthcare costs in
Colorado have risen
at an alarming rate.
Protecting competition
needs to be a central
part of our strategy to
provide affordable and
quality healthcare.”
Phil Weiser
Colorado attorney general

GETTY IMAGES

By Harris Meyer

ECENT ACTIONS by antitrust enforcers and ney General Wayne Stenehjem in 2017.

R courts to block or regulate purchases of physi-

cian practices by hospitals and insurers may
signal increasing scrutiny for such deals as poli-
cymakers intensify their focus on boosting competition to
reduce healthcare prices.
And in May, Washington Attorney General Bob Fergu-
son settled an antitrust lawsuit with CHI Franciscan setting
conditions on the health system’s 2016 affiliation with the
Doctors Clinic, a multispecialty group, and its purchase of
WestSound Orthopaedics, both in Kitsap County. CHI Fran-
Last month, the Federal Trade Commission announced a ciscan will pay up to $2.5 million, distributed to other health-
settlement with UnitedHealth Group and DaVita unwinding care organizations to increase access to care.
United’s acquisition of DaVita Medical Group’s The cases represent the most significant anti-
Las Vegas operations. trust developments involving physician acquisi-
At the same time, Colorado Attorney General THE TAKEAWAY tions since federal and state antitrust enforcers
Phil Weiser separately reached a deal imposing won a 9th U.S. Circuit Court of Appeals ruling in
conditions on UnitedHealth’s acquisition of The recent flurry of 2015 upholding a lower-court decision forcing
antitrust actions come
DaVita’s physician groups in Colorado Springs. as concerns mount
Idaho’s St. Luke’s Health System to unwind its
Also in June, the 8th U.S. Circuit Court of Ap- over the growing 2012 acquisition of Saltzer Medical Group.
peals upheld a District Court ruling blocking consolidation of The agreements with UnitedHealth in Nevada
Sanford Health’s proposed 2015 acquisition of physician practices and Colorado show a new willingness by federal
the multispecialty Mid Dakota Clinic in the Bis- and the impact on and state antitrust enforcers to use seldom-cited
marck, N.D., area. That antitrust case originally prices and total health vertical merger theory. Under that theory, acqui-
was filed by the FTC and North Dakota Attor- spending. sitions of physician groups by insurers or hospi-

16 Modern Healthcare | July 8, 2019

tals may foreclose competition by making it more difficult
or costly for rivals to obtain physician services.
“I am concerned about the state of consolidation,” Weis-
er said in an interview. “Healthcare costs in Colorado have
risen at an alarming rate. Protecting competition needs to
be a central part of our strategy to provide affordable and
quality healthcare.”
These recent antitrust actions come as concerns mount
over the growing consolidation of hospitals and physician
practices and the impact on prices and total health spending.
Sixty-five percent of metropolitan statistical areas are highly
concentrated for specialist physicians, while 39% are highly
concentrated for primary-care doctors, according to Martin
Gaynor, a health economist at Carnegie Mellon University.
Hospital acquisitions of physician practices have led to
higher prices and health spending, researchers have found.
Average outpatient physician prices in 2014 ranged from 35%
to 63% higher, depending on physician specialty, in highly
concentrated California markets compared with less-con-
centrated markets, according to a 2018 study by researchers
at the University of California at Berkeley. The link between
physician market concentration and prices is similar across
the country, experts say.
That’s why some elected officials and antitrust attorneys
say it’s past time to step up oversight of physician practice
acquisitions by hospitals, insurers and private-equity firms.
These deals traditionally have received less scrutiny than
hospital and insurance mergers, partly because they are
smaller transactions that federal and state antitrust enforce-
ment agencies may not have known about beforehand.
The recent cases suggest state attorneys general may play
a growing role in policing physician acquisition deals by hos-
pitals and insurers, given that they are in a better position
than the feds to find out about brewing local deals. Most of
Market consolidation
The average percentage of physicians in California counties
who work for foundations owned by a hospital or health system
increased to 39% in 2016, compared with 24% in 2010.
2010 2016 75%-100%
50%-75%
25%-50%
0-25%
No data
Source: “Consolidation in California’s Health Care Market
2010-2016: Impact on Prices and ACA Premiums,” University of
California at Berkeley, School of Public Health
the growth in physician group size has come from piecemeal
acquisitions of small group practices, a Health Affairs study
found last year.
Washington and at least two other states have passed laws
requiring healthcare providers to give state officials advance
notice before finalizing a merger or acquisition. That gives
state AGs another advantage over the FTC, which under fed-
eral rules only must receive advance notice of deals exceed-
ing $78.2 million in value. Few physician acquisitions meet
that threshold.
Others worry, however, that the absence of clear federal
guidelines for challenging vertical mergers between hospi-
tals and physicians has made the FTC and the courts over-
ly cautious, and that it now may be too late because many
physician markets are already highly concentrated. In
March, the FTC and the Justice Department said they were
working on new vertical merger guidelines, which were last
updated in 1984.
“The horse may be out of the barn in a number of markets
where there have been very large acquisitions of physician
practices,” said Tim Greaney, a visiting professor at the Uni-
versity of California Hastings College of Law. “It’s not clear
what you can do about that.”
But hospitals, insurers and other physician aggregators
argue that making it harder to buy physician groups would
hamper their ability to establish cost-saving, high-quality de-
livery models emphasizing care coordination.
That’s how Sanford Bismarck President Dr. Michael
LeBeau responded to last month’s 8th Circuit ruling
against his organization’s merger with Mid Dakota Clinic.
“Sanford continues to believe that combining with Mid
Dakota Clinic would lead to the enhanced provision of
and access to healthcare for patients in central and west-
ern North Dakota,” he said in a written statement.
Researchers have raised doubts, however, about whether
hospital acquisitions of medical practices have truly achieved
efficiencies and cost savings, and whether any cost savings
have been passed on to payers and patients.
Going forward, hospitals, insurers and other healthcare
organizations need to prepare themselves for an era of clos-
er state and federal examination of physician acquisition
deals, antitrust experts agree. That also may apply to pri-
vate-equity firms, which have accelerated their investment
in physician groups and have sought to build market power
in particular specialties.
The FTC did not respond to requests for an interview.
Healthcare organizations pursuing physician deals must
be ready to cite circumstances where competition contin-
ues to thrive following a merger. But that may not be easy,
conceded Lisa Gingerich, an antitrust attorney at Michael
Best & Friedrich.
“The challenge now is there has been so much consolida-
tion that it’s harder and harder to find those circumstances,”
she said.
Read more about the recent antitrust
enforcement actions in Colorado, Nevada,
North Dakota and Washington state
in the sidebars on pp. 18 and 19.
July 8, 2019 | Modern Healthcare 17
Scaling back integration commissioners and the two Democratic-appointed

Nevada
commissioners disagreed on whether to ask a judge to

in block United’s acquisition of DaVita’s medical group in

Colorado, a purely vertical merger. The 2-2 split meant no

Colorado
federal action was taken.

and
The Democratic commissioners. Rebecca Kelly
Slaughter and Rohit Chopra, said the merger would harm
competition and consumers, and welcomed the Colorado
attorney general’s remedial conditions. “We hope all
HE UNITEDHEALTH GROUP-DAVITA state attorneys general actively enforce the antitrust

T case may present the clearest warning shot to

organizations contemplating large physician
acquisitions, attracting both federal and state
attention.
The FTC argued that the proposed acquisition by
laws to protect their residents from harmful mergers and
anticompetitive practices,” they wrote.
But the Republican commissioners, Noah Joshua
Phillips and Christine Wilson, opposed action in Colorado
on the grounds that the law on
United’s OptumCare of DaVita’s HealthCare Partners of vertical mergers is “relatively
Nevada would result in a near-monopoly controlling more “We hope all state underdeveloped” and that
than 80% of the market for services delivered by managed- attorneys general there was mixed evidence on
care provider organizations to Medicare Advantage plans. actively enforce whether the Colorado merger
The merger would be both horizontal—combining the antitrust laws was pro- or anti-competitive.
OptumCare’s and DaVita’s competing physician groups— to protect their Weiser said his office had
and vertical, as it would combine a Medicare Advantage residents from to intervene to protect the
insurer and a physician group. That, the FTC said, would harmful mergers ability of Humana and other
increase costs and decrease competition on quality, and anticompetitive Medicare Advantage insurers
services and amenities by forcing rival Medicare practices. to compete with United by
Advantage plans to pay more for physician services. having access to physicians
Under the FTC settlement, UnitedHealth agreed to Rebecca Kelly Slaughter and hospitals. “State attorneys
sell DaVita’s Nevada medical group to Intermountain and Rohit Chopra, general will be a critical part of
Democratic FTC
Healthcare, which offers a Medicare Advantage product in commissioners protecting competition, both
Las Vegas through its SelectHealth insurance arm. because we’re close to our
citizens and because of a lack
Colorado’s terms of action by the federal government,” he said.
Meanwhile, under a separate consent judgment with To other observers, the Nevada and Colorado
Attorney General Phil Weiser in Colorado, UnitedHealth agreements were notable because they invoked seldom-
will lift its exclusive contract with Centura Health for used vertical merger theory, which the FTC has been
at least 31/2 years, expanding the provider network reluctant to use because it generally saw vertical mergers
available to other Medicare Advantage plans. In as helping reduce costs and increase competition.
addition, DaVita Medical Group’s agreement with “This shows that in the proper case, the FTC won’t
Humana, United’s main competitor in Colorado Springs, hesitate to pursue vertical theory to reverse the course
will be extended through at least 2020. of” a physician group acquisition, said Douglas Ross, a
All four FTC commissioners approved the enforcement veteran antitrust attorney at Davis Wright Tremaine in
action in Nevada. But the two Republican-appointed Seattle.

HE OUTCOME in the North capture if it completed the deal,

A classic
example in T Dakota case was more
conventional than the others.
There, the 8th U.S. Circuit
experts said.
Sanford would control 99.8% of
general surgeon services, 98.6% of

North
Court of Appeals affirmed the District pediatric services, 85.7% of adult
Court’s preliminary injunction blocking primary-care services, and 84.6% of
Sanford Health’s acquisition of Mid OB-GYN services in the Bismarck-

Dakota
Dakota Clinic as a horizontal merger.
That was fairly predictable because
of the huge physician market share
Sanford—whose physician group
competed with the clinic—would
Mandan market, the 8th Circuit
panel found.
The appeals court also upheld
the lower court’s finding that a
competitor, Catholic Health Initiatives’

18 Modern Healthcare | July 8, 2019

A muddier outcome in
Washington
state
ASHINGTON ATTORNEY GENERAL

W
recent cases.
Bob Ferguson’s settlement of his antitrust
case against CHI Franciscan was less
definitive than the outcomes in the other

He had accused the hospital system of engineering

the purchase of WestSound Orthopaedics and the
affiliation with the Doctors Clinic to capture a large share
of orthopedists and other physicians in Kitsap County,
fix prices at a higher level, and shift more services to its
Harrison Medical Center in Bremerton. But the settlement
left in place CHI Franciscan’s purchase of WestSound and
its tight professional services agreement with the Doctors
Clinic, while placing relatively modest conditions on joint
contracting by the hospital system and the clinic.
Ferguson’s bargaining position was weakened by a federal
District Court decision in March granting CHI Franciscan’s
motion to summarily dismiss his allegation that the
acquisition of WestSound reduced competition and violated
antitrust law. That may be the first time since the 1990s that a
defendant won summary judgment on a horizontal merger
claim in an antitrust case, one expert said.
In addition, the judge required the parties to go to trial
on whether the transaction between CHI Franciscan
and the Doctors Clinic was a true merger, as the two
organizations claimed, or whether they remained two
competing provider groups. If Ferguson lost on that issue,
his antitrust case would be dead because a merged entity
cannot be cited for price-fixing.
The attorney general settled that claim with CHI
Franciscan and the clinic by requiring a $2.5 million
payment to other healthcare providers and expanding the
types of value-based contracts they could participate in.
The two sides in
the settlement of an
antitrust case brought
by Washington Attorney
General Bob Ferguson
differed sharply in their
characterization of the
agreement.
GETTY IMAGES
But the two sides differed sharply in their characterization
of the settlement.
“This was a matter where we identified anticompetitive
effects and ongoing harm to consumers and saw a need to
act quickly,” said Jonathan Mark, senior assistant attorney
general in Washington. “We believe the remedies in the
consent decree are sufficient to address the anticompetitive
effects we alleged.”
For its part, CHI Franciscan said there never was
any court judgment or admission that it engaged in
anticompetitive conduct, noting that the settlement
preserved its deals with WestSound and the Doctors Clinic.
It was particularly important for hospitals all over the
country that Ferguson failed to establish that a professional
services agreement with a physician group constituted
price-fixing, an attorney for the hospital system said.
“The AG lost this lawsuit and is now twisting the facts
to match his baseless allegations,” said Cary Evans, the
hospital system’s vice president for government affairs.
“Had we not affiliated, the closing of the Doctors Clinic
and WestSound would have resulted in less choice,
decreased access, and high costs for residents.”

St. Alexius Health, would not be able
to enter the market quickly after the
merger, at least partly because it
faced difficulty recruiting physicians
in the Bismarck-Mandan area.
“That case really seemed like a no-
brainer to me,” said Tim Greaney, a
visiting professor at the University of
California Hastings College of Law.
A key takeaway was the 8th
Circuit’s rejection of Sanford’s
“powerful buyer” defense. Sanford
had argued that Blue Cross and Blue
Shield of North Dakota, the state’s
dominant insurer, had enough market
power to resist any price increases
sought by the newly merged entity.
But analysis of claims data
and testimony by a Blues plan
representative demonstrated that
the merged provider would have the
market power to force the insurer to
raise prices or leave the market, the
8th Circuit panel wrote.
“If antitrust authorities see
someone getting more bargaining
power and being able to charge
higher prices, that’s something they’ll
worry about, even if the (payer) has
significant bargaining power as well,”
said Debbie Feinstein, a former top
Federal Trade Commission official
who heads Arnold & Porter’s global
antitrust group.
Sanford didn’t say whether it
planned to abandon the deal.

July 8, 2019 | Modern Healthcare 19

 Chief Financial Officers
Roundtable

Small and rural or large and

urban—health systems’ size
influences decisionmaking

Michele Cusack Gary Fulbright Lisa Medovich

Chief financial officer Chief financial officer Chief financial and compliance officer
Northwell Health Citizens Memorial Healthcare Peterson Health
New Hyde Park, N.Y. Bolivar, Mo. Kerrville, Texas

n healthcare, size matters. It influences just about every aspect of how health systems operate and do business.
IModern Healthcare finance reporter Tara Bannow sat down with the chief financial officers of three very different
sized health systems—two single-hospital systems and a 23-hospital system whose revenue exceeds $11 billion.
The panel included Michele Cusack, CFO of Northwell Health, based in New Hyde Park, N.Y.; Gary Fulbright, CFO
of Citizens Memorial Healthcare in Bolivar, Mo.; and Lisa Medovich, chief financial and compliance officer with
Peterson Health in Kerrville, Texas. The three discussed how their systems differ and align with respect to value-
based payment, cost accounting and outsourcing revenue-cycle functions. The following is an edited transcript.

MH: Tell me about your approach to consolidation. It
seems like Peterson Health and Citizen’s Memorial
are solidly in the camp of staying independent. How
do your payer mix and shifts in reimbursement
models influence your decision on that?
Medovich: Kerrville is unusual in the state of Texas in
that we have a very solid Medicare payer mix. Some of
you may think that’s not good, but it really is. Around
60% of our gross patient revenue comes from Medicare.
We are unique in that we are not hampered by a single
large industry. I came from Youngstown, Ohio, where the
closure of the GM Lordstown plant and Delphi Packard
and the astronomic fallout from those closures made a
very viable community hospital not so viable anymore.
We don’t have that type of issue in Kerrville. We’re also
unusual in that we are a retirement community. So there’s
a lot of well-to-do folks from Houston, California and
Colorado coming into Kerrville. At one point, when we
were doing our bond offering, we had the second-highest
wealth in the state of Texas. So we’re not concerned about
having to go out and consolidate with a for-profit entity.
I’ve been part of larger health systems. It’s not fun to be
taken over.
Fulbright: We are in a somewhat similar area. We are about
30 miles north of Springfield, Mo. Even though we consider
ourselves rural, we are having some population growth.

20 Modern Healthcare | July 8, 2019

It’s allowed us to add specialties. We are pretty heavily
Medicare, as was mentioned about the hospital in Texas.
We provide a variety of services, not just hospital. We also
have clinics, home care and six long-term care facilities. Our
goal is to remain independent. We did look at consolidation
two or three years ago. We signed a letter of intent with
the Cox Medical Center in Springfield and, through due
diligence, weighed the pros and cons and just felt that we,
for the time being, wanted to remain independent.
Cusack: We’ve been seeing an increase in our population
as well, albeit slight, but the increase has predominantly
been in those covered by Medicare and Medicaid. There
has been a lot of consolidation in our marketplace. That
has been part of the reason for these stand-alone facilities
to choose partners such as Northwell; it was for financial
viability because they were no longer able on their own
to maintain the level of service and investment they
would need to be sustainable in the long term. The payer
mix is obviously one of the challenges and just the cost
environment we’re in. Through consolidation we’re now 23
hospitals. They are able to leverage our infrastructure and
take advantage of shared services at a lower price point.
That enables them to continue on and continue to invest.
It’s a combination of price as well as the payer mix shift,
which continues to shift more into government. We’re at
about 65% government payer mix overall.
MH: How are you catering to patients’ demands
for price transparency? How would the Trump
administration’s proposed regulation that hospitals
make public what they charge insurance companies
for services affect your health system?
Cusack: We’ve been at this for a while. We were actually
the first in New York state. Probably back in 2010, we put
up an online expense calculator to estimate patients’
out-of-pocket costs. Since then, we’ve added other tools to
enhance the transparency of our pricing information. We
have a back-office call center that has direct engagement
and connects patients back with their insurance
companies as needed to make sure they have the most
accurate, up-to-date information. With respect to Trump
and putting the pricing out there, I think it’s going to cause
some confusion. A lot of the key principles he issued to
guide Congress do not seem possible to implement in the
near future. And as far as publishing rates, I think it’s going
to cause more confusion than clarity for patients because
they’re only going to be looking at pieces of services they’re
getting rather than at their entire healthcare needs across
the spectrum.
Medovich: We initiated what’s called a Revenue Cycle
Governance Council to help us effectively and strategically
perform ongoing price analysis. This allows us to review
the high volume of services and find price breaks for a
patient. When you think about how hospitals continue
to improve the patient experience, it’s also improving
your revenue-cycle patient experience. Preparing to pay
As far as publishing
rates, I think it’s going
to cause more confusion than
clarity for patients because
they’re only going to be
looking at pieces of services
they’re getting rather than at
their entire healthcare needs
across the spectrum.”
Michele Cusack
for healthcare services is probably the most challenging,
stressful issue for patients to deal with. We developed
a card to distribute in physicians’ offices that states the
following: “Peterson Health is committed to improving
your health, including helping you afford the care
you need. Call and ask about our ways to make your
healthcare affordable.”
MH: More providers are outsourcing their revenue-
cycle functions as patients are being made to
shoulder a higher proportion of their medical
costs. Bad debt is increasing. How are you
addressing that?
Fulbright: We have outsourced some in the past, and it
seems like it was with mixed results. Probably our goal
is to keep those functions, those jobs in the community
if we can. I think a lot of times we feel like we can do a
better job than that, but we do ask for some, of course,
bad-debt collections.
Cusack: We outsource certain functions with the use of
management. The management and all the policies and
procedures around that are Northwell-driven. We dictate
how they’re interacting with our customers. So specific
to the functions, there is certain back-office follow-up
we have outsourced with a strategic partner. There are
certain coding functions that we’ve outsourced as well.
Just simply a lack of resources within the local area with
some of the specialties. Given our size, we’re unable to find
them within the marketplace. It’s a hybrid, but all of it is
managed by Northwell, because we want to ensure it’s in
accordance with how we want to interact with the patient.
Medovich: We outsource what we need similarly to
what Gary and Michele said. We have a vendor on-site to
focus on Medicaid eligibility, charity care applications,
worker’s comp, and motor-vehicle accident claims. It’s
really just supplementing our current workforce, not to
fully outsource, because we truly believe in looking at
and focusing on the blocking and tackling strategies. It’s
holding everyone accountable, and more importantly,
holding your vendors accountable to make sure they’re
July 8, 2019 | Modern Healthcare 21
doing their job. The key when you outsource is if
they’re not performing, they’re gone. It’s holding them
accountable as you would your own team.
MH: What percentage of your revenue is currently
tied to risk-based contracts, both on the commercial
and the government side? What would it take to
push that number up?
Fulbright: We’re fairly low. Several years ago, we had our
own HMO and participated in an HMO with some other
hospitals. We learned quite a few things there. It was
an expensive lesson, but it’s one thing we’ve been very
successful at in the last two or three years. In Missouri,
we’ve participated in the Missouri Medicaid medical
home project. I think we’ve learned a lot there about how
to manage patients and make sure they receive the care
they should. It’s setting us up well to expand that to other
providers. We do a similar thing with a couple of insurance
companies. We also participate in Medicare+Choice, the
chronic care management program and are applying for
the Bundled Payments for Care Improvement Initiative
this year. I think we’re positioned pretty well to be
successful in that.
Cusack: If you’re just looking at specific risk-based
components, it’s probably less than 5%, but we do participate
in both commercial and government-type risk programs,
which vary from pay-for-performance. I just mentioned
various shared-savings arrangements and in one of our
companies, Healthfirst, we have shared risk and full risk
across various government products. So we’ve been at this for
a while. We actually created our own commercial insurance
company, CareConnect, which at its peak had over 125,000
lives, which we were at full risk for. (Northwell shut down that
plan in 2017 after suffering financial losses in the prior year.)
Medovich: Right now, this is the easiest response you’ll
receive: zero. We do not have that. We’re looking into
bundled payments as an opportunity in regard to the BPCI
Advanced. We’ll be applying for that. Other than that, we
don’t have any currently.
MH: Why not?
Medovich: The majority of our contracts are already
established and have been established for quite some time
through what’s called the Greater Hill Country Healthcare
Alliance.
MH: Commercial carriers, at least in Northwell’s
area, want to move that way. Are you not seeing
that?
Medovich: We’re not seeing that. We’re not seeing that at
all. It’s a different market.
22 Modern Healthcare | July 8, 2019
Fulbright: I think we’re very similar to what she expressed.
We’re probably just not large enough to be on the radar
that much for the health plans to try to do something and
perhaps also the organization having the infrastructure to
do so. What we’ve done so far in the medical home model,
it’s not a full-risk type thing, but I think it is working well for
us and the payers. I think that has some promise.
MH: I’ve talked to health system leaders about the
importance of having a cost accounting system
to track the actual cost of delivering care. That
discussion has been in relation to the transition
toward value-based care. Have your systems
adopted cost accounting tools?
Cusack: We’ve had a cost accounting system probably
since about 2000. We roll it out as new hospitals or entities
join Northwell. In addition, we have a robust productivity
tool and key performance indicators in some of the areas
you mentioned: cost per operating room minute, for
example, to be able to help find variation and understand
where there are opportunities to gain efficiency from a
cost perspective. We use our cost accounting system and
these productivity tools to build our business plans. It helps
with our contract negotiations and with identification of
opportunities as we get into budgets each year. It’s definitely
a discipline in terms of making sure that the model we
have is well managed and people understand the cost
assumptions underneath so they make the right operational
decisions as they’re interpreting the numbers.
Medovich: We will adopt a cost accounting system
probably in Q3 of this calendar year. It’s going to be a full
cost accounting and decision-support system to do exactly
what Michele said: Drill down to the service lines. You
have to keep in mind that we’re nothing more than a rural,
community hospital, and we’re going to do what we’re
going to do best. That’s our area of focus. You don’t want
to brag about being a half-billion-dollar company and lose
money. I would rather brag about being a $100 million net
patient revenue hospital and make money. You can get so
specific you lose sight of the fact that cash is a fact, profit
is an opinion. If your overall daily cash collection is under
what you’re spending on a daily basis, Houston, you have
a problem and you have to start looking at it. The reason
we were delayed getting the cost accounting system up
and running is that we had an upgrade to our electronic
health record on March 1, 2019, so that probably took
around a year and a half of our time and it was extremely
successful.
Fulbright: We don’t have a cost accounting system. Of
course, we do look at costs very closely in benchmarking.
Recently we’ve had a project to look at all of our implants
and other costs. Our productivity reporting, we do that
every pay period and I try to get reports out in the managers’
hands within a couple of days after paychecks are issued. We
definitely have to match staffing with volume. l
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AURORA AGUILAR Editor

M
y husband recently had a series of tests done to rule out any significant issues
related to abdominal pain. Within a week, we received bills that ranged from
$65 to $2,200 for an MRI. We hadn’t yet met our annual deductible, so we were
responsible for much of the costs. We’re both healthy and so have a robust balance in our
health savings account. Our only worry was waiting to find out what was causing him pain.

But we wondered, how do people not
as lucky as us handle these situations?
Reporting on the industry has given
me new insight on what it takes to op-
erate hospitals, health systems and phy-
sician practices. I understand that the
lower the margin, the harder it is to fulfill
the mission of healthcare.
However, there’s no denying that
while reimbursement has tightened and
costs have gone up (in part by the indus-
try’s own doing), a sizable portion of the
industry is doing well. There are about
1,100 hospitals or groups of hospitals
reporting double-digit margins on their
Medicare cost reports, according to
Modern Healthcare Metrics. And sala-
ries among not-for-profit executives are
through the roof, as reporter Alex Kacik
detailed in our last issue.
Meanwhile, the average patient, often
saddled with debt and increased costs of
living, is struggling more each year.
That’s why recent news coming out
of Memphis, Tenn., troubled me. A lo-
cal reporter there noticed that defen-
dants appearing in county court were
regularly identified as employees of
Methodist Le Bonheur Healthcare.
Working with ProPublica, the report-
er analyzed court records and found
that from 2014 to 2018, Methodist filed
more than 8,300 lawsuits against pa-
tients who owed money—many of them
their own employees whose wages were
garnished as a result. According to Pro-
Publica, a Methodist employee in May
was ordered to pay $100 a month to set-
tle a $5,400 debt that included the cost
of delivering her child. In her sworn af-
fidavit, the employee said her checking
account balance was less than $4.
Adding insult to that injury was the
fact that Methodist’s wages lag behind
other large employers in Memphis.
While other local healthcare and mu-
nicipal employers pay a $15 minimum
wage, Methodist’s lowest-paid workers
get $10 an hour.
It took about a month for doctors
to diagnose my husband. He was some-
times doubled over in pain and we were
warned it could be an autoimmune dis-
order or worse, cancer. Test after test, we
never hesitated to hand over our HSA
card, grateful we didn’t have to wait to
cross one more issue off the list. Imag-
ine the anxiety that might drive people
to forgo care because they can’t afford it.
That should make hospitals consid-
er how hard to push patients. Atlan-
ta-based Piedmont Health is requiring
25% of the cost of non-emergent care to
be paid upfront if a patient is in a high-
deductible plan or pays out of pocket.
The system says it will work with pa-
tients to make sure they’re not bypass-
ing important care (See story, p. 6).
Patients sign agreements promising
to pay for services rendered. But with
growing evidence of prices being often
arbitrarily set at unreasonable amounts,
the plight of the average American is go-
ing unnoticed even by the people who
espouse the mission of caring for the
“whole” person.
The stress of owing money factored
into Mary Washington Healthcare’s
debt collection strategy.
Last month, the safety-net hospital
in Fredericksburg, Va., announced it
would stop suing patients to collect on
unpaid bills. In a news release, system
officials said it was in their community’s
best interest to suspend the practice.
By the time my husband was finally di-
agnosed—with lactose intolerance—we
owed nearly $3,000. I wonder had we not
been able to so easily pay, if we would
have been given as many costly options.
My hope is that in the continued effort
to consider each patient as a whole, pro-
viders take into account the role medical
debt, and the resulting stress, plays in
making their patients unhealthy. l

24 Modern Healthcare | July 8, 2019

Training tomorrow’s physicians requires
a renewed focus on social and cultural issues
By Drs. Darrell Kirch and Alison Whelan
T
oday’s healthcare system faces immense challenges—from a
shortage of physicians, to millions of people lacking access to
care, to the burden of chronic diseases with no cure.
Ensuring that the next generation of
doctors learn and train in ways that will
enable them to meet the demands of a
rapidly changing healthcare environ-
ment is critical as we prepare them to
care for the nation’s growing, aging and
more diverse population. America’s
medical schools, teaching hospitals,
and research institutions—known col-
lectively as academic medicine—are
working to do just that.
For doctors to be healers, they need
to know more than memorized facts
about biology, chemistry and anato-
my. Even before they arrive at medical
school, future physicians are now eval-
uated on their knowledge of cultural
and social differences, social stratifi-
cation, and factors that influence com-
munication and behavior.
As part of this shift, the Association of
American Medical Colleges introduced
a new Medical College Admission Test
in 2015 that included a section to assess
a student’s understanding of behavior-
al and social sciences. The core of our
profession, after all, is the human inter-
action between doctor and patient.
To practice these skills, medical
schools are using the power of technol-
ogy to enhance learning, such as high-
tech mannequins in operating-room
settings, simulation labs for teaching
anatomy with 3D graphics, and ad-
vances in virtual reality. Done right,
the use of technology can help us im-
prove skills while refocusing on the hu-
manism at the core of medicine.
Medical education has seen a para-
digm shift over the last two decades,
with medical schools continuing to
Dr. Darrell Kirch is president and CEO
and Dr. Alison Whelan is chief medical
education officer at the Association of
American Medical Colleges.
innovate the way students learn. To-
day, many schools have eliminated
some, if not all, lecture hall classes
and replaced them with new models
of active learning—small-group case
studies, peer-to-peer teaching and
simulation labs—all with the goal of
tying the clinical to the scientific.
A particularly important goal
of small-group teaching is fostering
critical thinking and lifelong learning
skills, as well as focusing on integra-
tive application that goes beyond the
acquisition of knowledge. Learning
is now evaluated by competencies, or
the mastery of core proficiencies, that
cover everything from patient care to
communication skills to improving
clinical practice.
Medical schools also are adapt-
ing curricula to prepare tomorrow’s
physicians to address some of today’s
most pressing healthcare crises, such
as the opioid epidemic. And they are
providing opportunities for students
to learn through community outreach
programs and experiences that have
been shown to impact educational
outcomes in the socio-economic fac-
tors that influence health.
A team-based approach is another
key to providing compassionate, quali-
ty care, and the AAMC is collaborating
with nurses, pharmacists, psychologists
and other allied health professionals to
integrate medical training so that pa-
tient-centered care becomes more than
just a catchphrase. Medical schools also
are experimenting with new models
of academic progression. Not only are
more schools offering three-year pro-
grams, but some are extending the time
frame for graduation to five or six years
to accommodate students’ individual
aspirations, be it to pursue a master’s de-
gree in public health or conduct clinical
research.
Much has changed since the Flexner
report, commonly considered the blue-
print for modern medical education,
was published more than 100 years
ago. More than half of those entering
medical school today are women. And
medical schools are incorporating the
holistic review of applicants—which
looks beyond test scores to consider
experiences, attributes and academic
achievements—as well as supporting
programs to reduce debt or offer free
tuition to increase the number of mi-
nority students in medicine.
We still have a long way to go. But as
we look to the next 100 years, we know
that future generations of medical stu-
dents and researchers will benefit from
the tremendous progress that has been
made at our nation’s medical schools
and teaching hospitals to prepare phy-
sicians and researchers to meet the
healthcare needs of all Americans. l
July 8, 2019 | Modern Healthcare 25
 Status quo in healthcare
is no longer an option
The article “Report: Patients’
out-of pocket costs increased
up to 14%” (ModernHealthcare.
com, June 25) is a stark reminder:
With many American workers
living paycheck to paycheck, even
expensively insured families can
face financial ruin from routine
illness and injury. That dilemma
is echoed on a national scale: with
healthcare consuming nearly 18%
of gross domestic product and
rising, the question is not whether
we can afford to change the system
radically but whether we can
afford not to.
Soaring healthcare costs are
driving America’s wage stagnation
problem. Employer-sponsored
health coverage is compensation,
and the cost has risen so fast
that there’s little room for wage
increases. When we ask how we can
pay for universal health coverage we
Send us nominations for
should remember that the amount
employers and employees now
spend on health coverage could
become taxable income under a
single-payer system.
Making the system affordable
will require cost reductions, and
the “public option” proposals will
not achieve them. A single billing
and payment system could address
runaway administrative costs,
and a single payer would have the
leverage to control prescription
drug costs. Economies of scale still
exist. Hospital administrators worry
about Medicare-level payments, but
they would also lose the burden of
uncompensated care.
The status quo is no longer
an option. This is a crisis, and it
needs an immediate and decisive
response. Single-payer systems are
working all over the world; they
can work here too. We just need the
courage to act.
Steve Rogers
Olympia, Wash.
Fixing our healthcare
system is about more
than prices
Regarding “Rising prices drive
estimated 6% medical cost inflation
in 2020” (ModernHealthcare.com,
June 20), societal spending on
healthcare isn’t just about prices.
It’s the product of both prices and
the volume of services utilized. We
need to address both.
We spend a large chunk of our
healthcare dollars caring for
people with multiple chronic
and disabling conditions and
providing care to patients in their
last two years of life. In both cases,
providers are mostly reimbursed
by a single payer, our government,
through Medicaid and Medicare,
which already wield negotiating
power to restrain prices.
A more troubling problem
than prices is the variation in the
utilization of care without evidence
of better health, longer life, or more
effective or satisfying care for our
higher spending. Simply put, some
care providers achieve superior
outcomes at lower prices and
fewer services.

25 Emerging Top 25 Emerging Leaders

TOP

Price containment has been

Leaders recognition tried previously and failed because
healthcare delivery systems offset
As the healthcare industry continues to reinvent itself, facing increasing lower prices through increased
pressure to deliver a more consumer-centric, convenient experience, a new utilization of services. Meanwhile,
generation of leaders will need to step up to meet that demand. blindly restricting the utilization of
Modern Healthcare is looking for young executives who are already care is immoral.
proving they are up to the challenge. Nominations are now being accepted To contain societal spending on
for the inaugural Top 25 Emerging Leaders recognition program, previously healthcare requires an “all of the
known as the Up & Comers. above” approach that addresses
Nominees must be 40 years of age or younger as of July 29, 2019, both prices and variation in the
the deadline for entries, and can be working in any sector of healthcare, volume, quality and outcomes
including providers, insurers, vendors and suppliers. Nominations will be of services.
judged based on the following criteria: Thom Walsh
New York
l Specific actions the nominee took this year to help the organization
meet or exceed financial, operational and clinical goals.
l Specific steps the nominee has taken to establish or contribute to a
culture of innovation and transformation.
Letters welcome
Visit ModernHealthcare.com/EmergingLeaders to review the entry Write us with your comments.
process and submit a nomination. To submit a letter electronically,
send an email to dmay@modernhealthcare.com

26 Modern Healthcare | July 8, 2019

Announce your Promotions, New Responsibilities, Retirements or New Hires
To place your ad contact Kathleen Cavalieri l kcavalieri@modernhealthcare.com

HOSPITAL HOSPITAL SPECIALTY

Dignity Health St. Mary’s Medical Center, Comprehensive Pharmacy Services,

San Francisco, CA Memphis, TN
Dignity Health is pleased to Comprehensive Pharmacy
announce the appointment Services, the nation’s largest
of David Klein, MD, MBA, hospital pharmacy services
as President and CEO of provider, is pleased to announce
Dignity Health St. Mary’s that Karl Bedwell, R.Ph. has
Medical Center, located in San joined the company in the
Francisco, effective June 18. position of Chief Information Officer.
Dr. Klein joined Dignity Health in 2016 Bedwell is an experienced healthcare leader
as President and CEO of Saint Francis with more than three decades of experience
Memorial Hospital, and will also retain in healthcare operations, technology and
that position. broad systems implementations.

3*<+*&9:7*8)&9&*=5147*7&3)(:89425**7,74:58

:SQNRNYJINSXNLMYX
*SIQJXXTUUTWYZSNYNJX
2TIJWS-JFQYMHFWJ2JYWNHXNXFIJHNXNTSXZUUTWYYTTQYMFYUWT[NIJXZSUFWFQQJQJINSXNLMYNSYT
YMJ‫ܪ‬SFSHNFQTUJWFYNTSFQFSIXYWFYJLNHUTXNYNTSTKMTXUNYFQXFSIMJFQYMX^XYJRXNSYMJ:8
3T\\NYMY\TSJ\YTTQX
)FYF*]UQTWJW *FXNQ^HWJFYJHZXYTRN_JIWJUTWYXQNXYNSLYMJIFYFYMFYNXRTXYNRUTWYFSYYT^TZ
(ZXYTR5JJW,WTZUX(TRUFWJFLFNSXYFS^KFHNQNY^TWX^XYJRZYNQN_NSLWJUQNHFGQJ
XYFYNXYNHFQFSFQ^XNX

;NXNY2TIJWS-JFQYMHFWJ2JYWNHXHTR
FSIWJVZJXYFIJRT

24)*73-*&19-(&7*2*97.(8.8&5&793*78-.5'*9<**324)*73-*&19-(&7*&3)-*&19-(&7*2&3&,*2*395&793*78

<FSYYTXUJFP\NYMXTRJTSJFGTZY\MFY2TIJWS-JFQYMHFWJ2JYWNHXHFSITKTW^TZ$(FQQ

July 8, 2019 | Modern Healthcare 27

Your campaign is more
than just impressions.
It’s better health.

Get recognized for successfully leveraging your multimedia

campaign that helped advance quality, affordable and
accessible care.

Submit your work: ModernHealthcare.com/MktgImpact

Submissions close August 19!

HEALTHCARE MARKETING
IMPACT AWARDS 2019
 Leading a transformation
Dr. Rick
to move beyond acute care
Gilfillan
CEO
Trinity
Health
Last week, Dr. Rick Gilfillan stepped down as CEO of
Trinity Health, a Catholic not-for-profit system with 93
hospitals in 22 states that reports $18 billion in annual
revenue. Gilfillan took over in 2013 and led the system
through a $250 million transformation that he counts as
his boldest move.
WHAT WAS YOUR RISKIEST DECISION? Implementing
our 2020 strategy. We created a strategy to build a people-
centered health system and deliver acute-care population-
health management, community health and well-being. It
also included an initiative to build a common Trinity Health
operating platform that would make us a much more
integrated system rather than a collection of hospitals.
WHY WAS THAT MOVE RISKY? One, the potential distraction
for an organization that is just focused on delivering great
clinical care. Doing that well is more than a full-time job.
Two, the obvious threat of destroying demand for acute-
care services. Our goal was to have 75% of our revenue flow
through alternative payment models. Three, we needed new
people with new skills. They were in short supply. And again,
we had to do all that while we still providing great care. So
there was a lot of execution risk. Fourth, we did it across
the entire system. We felt, because each system has its own
special dynamics, that rather than piloting in one market at a
time, we made a commitment to have an ACO and bundled-
payment programs in every one of our ministries in the
space of one year from 2014 to 2015.
WHAT WAS THE RESPONSE FROM THOSE INVOLVED?
There was excitement, surprise, concern, disagreement,
and passive and active resistance. It varied across our
different ministries because we had to sign 19 regional health
To other CEOs considering transformation,
I would say: be bold. Look for alternate
payment models that support and reward
you for managing total quality and costs.”
ministries and what we call three national health ministries
that were accountable for delivering the results for each of
their businesses. Today our CEOs and our clinical leaders
are committed to this transformation. We’ve had significant
leadership turnover, of course. But we have been certain that
new CEOs understand and are committed to the strategy
because transformation at this level can only be driven by the
most senior leaders engaged in making the change.
ADVICE TO EXECS IN SIMILAR POSITIONS: I’m hesitant to
offer advice, but I will say this … Americans are delaying care
because they can’t afford it. Our board believes that access
to healthcare is a right, not a privilege, and as healthcare
leaders, we’re the ones best-positioned to create a system
that’s affordable and accessible and high quality to all. To
other CEOs considering transformation, I would say, and
hope, that they would be bold. Look for alternate payment
models that support and reward you for managing total
quality and costs. You could adapt the rest of your business
over time. There’s ambient growth in the marketplace
because of the aging baby boomers. Healthcare spending
will double over the next 10 years or so. So begin. Get on the
path. Invest, not just marginally, but with a commitment
to move as much of your revenue as possible into alternate
payment models. It’ll take longer than you think.
DESCRIBE YOUR LEADERSHIP STYLE: I aspire to be a
humble servant leader who’s open, accessible, curious,
team-based and inclusive in decisionmaking with high
expectations that our team members are close to their
business, accountable for results, aligned with our strategy,
guided by our values, and supportive of our team. I’m not
there yet, certainly, but that’s my model.
HOW WOULD OTHERS DESCRIBE IT? Initially they would
say, “Why does he have so many questions? He seems not
to trust us. He may be a micromanager.” That was early on.
Frankly, I got that feedback from a coach who surveyed our
team. But I think they’ve come to understand that I’m not
micromanaging. I want to make sure that we are all aligned
and that we’re operating effectively as a team. I think a
lot of our team members have become similarly curious,
questioning and probably closer to the business over time. l
July 8, 2019 | Modern Healthcare 29
Isolating measles patients before they
can hit the emergency department
By Jessica Kim Cohen
LATE LAST YEAR, an ambulance
brought a sick child to the emergency
department at Montefiore Nyack Hospi-
tal in New York. Providers began evalu-
ating the patient’s symptoms, including
a pretty bad fever and rash, working to
diagnose the unidentified viral syn-
drome—and soon, the team made an
unfortunate discovery.
“It turned out to be measles,” said Dr.
Jeffrey Rabrich, the hospital’s medical
director for emergency medicine. “As a
result of that, we had some exposure of
people who happened to be in the emer-
gency department at the same time.”
Measles cases, which in May hit their
highest level nationwide since 1992, con-
tinue to tick upward, with five counties
in the U.S. suffering from ongoing out-
breaks. That includes Rockland County,
N.Y., home of Montefiore Nyack. There
have been at least 275 confirmed cases of
measles in the county since the outbreak
began last year, according to the Centers
for Disease Control and Prevention.
That places a huge responsibility on
local hospitals and clinics, with provid-
ers tasked with caring for measles pa-
tients while working to reduce exposure
to the virus. Healthcare facilities are one
of the most common points of exposure
for measles, according to Dr. Matthew
Zahn, chair of the Infectious Diseases
Society of America’s public health com-
mittee. “Even casual contact in the same
closed air space to a person potentially
spreads that virus,” he said.
That has both medical and cost impli-
cations for the broader region.
Public health agencies in New York
City spent nearly $400,000 on efforts to
control a measles outbreak in 2013, ac-
cording to a study published last year
in JAMA Pediatrics. The measles out-
break in question involved 58 reported
cases of measles.
To battle the problem, Rabrich had
30 Modern Healthcare | July 8, 2019
The Twiage app helps EMS alert the hospital fast if a measles patient is on the way.
an idea: build a measles alert directly
into Montefiore Nyack’s pre-hospital
communication system, an IT system
that enables emergency medical ser-
vices to send patient data—including
text, photo and video documentation—
to the ED in real-time while en route to
the hospital using an app.
Montefiore Nyack began using the IT
system, developed by a company called
Twiage, a year and a half ago.
With the measles outbreak in mind,
Rabrich approached Twiage CEO John
Hui about integrating a new feature that
would prompt first responders to as-
sess whether a patient exhibits measles
symptoms in the ambulance—and just
a few weeks later, Montefiore Nyack’s
pre-hospital communication system
went live with a new measles alert.
Now, once EMS identifies a likely
measles case, they can deliver an alert
about the potential infection directly to
Montefiore Nyack’s charge nurse in the
ED. Armed with this data, ED staff can
arrange to transfer an incoming patient
to the department’s isolation room as
soon as the ambulance arrives.
Since its launch this past spring, the
alert has already been activated a few
times, Rabrich said.
Twiage has since reached out to other
hospitals it contracts with to offer ac-
cess to the measles alert, and about a
half-dozen hospitals—including Good
Samaritan Hospital, also based in Rock-
land County—have signed up for it to
date, Hui said.
The project is one reason Hui was a fi-
nalist in the Heritage Provider Network’s
Healthcare Innovation Awards this past
spring, an annual awards ceremony the
managed-care organization hosts in
partnership with Modern Healthcare’s
sister publication Crain’s New York
Business to recognize innovators im-
proving access to and quality of care in
the New York metro area.
To continue to reduce risk, Zahn said,
hospitals must also establish a plan of
action for when a potential measles pa-
tient arrives—that can mean directing
a patient to an isolation room like at
Montefiore Nyack, waiting to see them
at the end of the day, or even evaluating
a patient outside the walls of the facility,
away from closed air environments.
“To make sure that you avoid these
inadvertent healthcare exposures to
measles, there’s a lot of layers and a lot
of different parts of a plan that need to
be put together,” he said. l
 CFO concerns
Chief financial officers who participated in a recent roundtable discussion (See p. 20) mentioned
value-based purchasing, labor costs and bad debt as areas of focus.

Value-based purchasing bonus/penalty, 2017 Bonus/penalty by total

Bonus/penalty by number of beds, per state number of beds, 2017
ME Of the more than
Minnesota had the largest value-based 2,400 reported value-
AK purchasing bonus, at $1,027.61 per bed
VT NH based payment bonuses
or penalties ...
WA MT ND MN WI MI NY MA RI
610 had a bonus
of more than
ID WY SD IA IL IN OH PA NJ CT
$550 per bed
OR NV CO NE MO KY WV MD DE DC
723 had a bonus
CA AZ UT KS AR TN VA NC of up to $550
The District of Columbia
had the largest value- per bed
NM OK LA MS AL SC based purchasing penalty,
at $1,027.25 per bed
HI TX GA
729 had a penalty
$550 to $1,100
FL of up to $550
$0 to $550 per bed
$0 to -$550
-$550 to -$1,100
342 had a penalty
No Data of more than
$550 per bed

Median bad debt

For more than 450 systems
$40
($ in millions)

$39.11
35
$36.32
$34.79

$34.75
$33.31

30
$31.86

Average operating revenue per 25

full-time equivalent employee
20
($ in thousands)
$184.4
$176.9

15
$172.4
$165.5

$150
$161.1
$163.4

10

5
100
0
2012 2013 2014 2015 2016 2017

50

Note: Operating revenue and value-based purchasing data is from cost reports
reporting complete fiscal years for acute-care hospitals.
Sources: Modern Healthcare Metrics, Modern Healthcare Annual Health System
0
2012 2013 2014 2015 2016 2017 Financials database

July 8, 2019 | Modern Healthcare 31

‘With anything truly
transformational, it
takes time to educate
the consumer’
Three years ago, Piedmont Healthcare tapped Katie Logan—then the Atlanta-based the business side for our
health system’s vice president of marketing and physician outreach—as its first-ever vice patient portal and all of the
president of experience. Logan, who joined Piedmont nearly 10 years ago after working functionality that comes
as a management consultant with KPMG, has since led efforts to increase patient with that. Ultimately we
convenience and make access to care easier throughout Georgia, rolling out projects like want to get into more
online scheduling, telemedicine and other services that create a “digital front door” to the customer service and more
health system. Logan spoke with Modern Healthcare technology reporter Jessica Kim of that human interaction.
Cohen about how she scales these projects across the 11-hospital system, from the initial
implementation to evaluating success or failure. The following is an edited transcript. MH: What you would say a
digital front door is and what is
MH: What does experience patients and their families as well as partnering with driving patient interest in it?
mean for Piedmont and what to access and navigate the operations and other areas
responsibilities fall under your health system. Under that of the business to deploy Logan: That phrase intrigues
purview in that role? umbrella, we think about it and make it a reality. We me because I think what’s
program development and think about everything driving us to talk about a
Logan: The experience for execution. So it’s a little from online scheduling, to digital front door is this
Piedmont is about creating bit of the innovation and partnering with revenue expectation that we should
a one-of-a-kind interaction technology and digital cycle on patient billing be able to access goods
and making it easier for our solutions to support that, statements, to owning and services right in the
palm of our hands and
that healthcare should
Piedmont requires 25% advance payment for self-pay patients be no different. But at the
Amid Piedmont Healthcare’s increased costs, including sending patients price same time, it’s really about
focus on improving the patient estimates prior to most services. meeting people where
experience, the system unleashed a bold Piedmont has increased its same- they are and putting that
policy: The not-for-profit system now store, upfront collections by about convenience out there.
requires patients who’ll be on the hook 500% since 2014 through revenue cycle And so when I think of
for all their bill to pay one-quarter of it improvements, said Brian Unell, vice the digital front door from
before receiving non-emergent services. president of revenue cycle. The system a Piedmont Healthcare
Katie Logan, Piedmont’s vice has also expanded its back-end patient perspective it’s a lot about
president of experience, was interviewed financing options, including moving more the tools and programs
before the change was unveiled, and she toward monthly payments. The system to make it easier for folks
declined to discuss it afterward. doesn’t offer discounts to patients who to access our services. So
The new payment policy applies to agree to pay in a lump sum right away. it’s online scheduling, it’s
uninsured self-pay patients and those Unell, described Piedmont’s revenue- a mobile app that’s useful
with high-deductible commercial plans. cycle work as a journey and said the and keeps people coming
Leaders from Piedmont’s revenue- system is constantly evolving based on back. But it goes beyond that
cycle team said the policy is the latest new information. “None of this is easy,” as well, to the point about
phase in five years of improved patient Unell said, “and by no means do we have meeting people where they
education around out-of-pocket it figured out.” —Tara Bannow are. If you want to make a
phone call, we want to be

32 Modern Healthcare | July 8, 2019

“Anything we set out to do, we set key indicators (of) success.”
able to provide you that it worked and then started
same great experience on to scale across the rest of the
the phone or online. physician network. So just
standing it up, turning it on,
MH: How do you roll out these iterating and learning as we
projects to all of your different go. And that’s true for all of
hospitals in different areas? our programs.
There are definitely
Logan: We have 11 hospitals, regional differences.
and we’ve nearly doubled in We have a lot of online
size over the last five years scheduling in metro Atlanta
through acquisitions. And but not as much in more
we’ve gone from a pretty rural parts of the state.
central radius in north We have a hospital up in
Georgia to a true statewide northeast Georgia in the
presence, so deploying mountains. We don’t have
programs like this at scale as much utilization there
is probably one of the most so it helps us understand
challenging things. how we educate the
In an example like online consumer and start to
scheduling, we started with a have the conversation
group of interested providers differently in those
and went live with them, got markets. With anything
some data points that proved truly transformational in
nature like this, it takes time
to educate the consumer
that this is now something
they can expect and have
as part of their healthcare
experience.
MH: Any there particular
metrics you’re looking at as
benchmarks of success?
Logan: Anything we
set out to do, we set key
performance indicators
(of) success. With online
scheduling, some of those
metrics are utilization of the
different channels—mobile
app versus patient portal
versus website.
How do we then rethink
the messaging and
deployment strategy?
We use some of those
indicators. A few years
ago, we launched virtual
visits. You can talk to our
providers over a mobile
app and get your diagnosis
and potentially get a
prescription and be on your
way. Lots of conversation
about it in the industry, lots
of prediction that this is the
way it was going to go. We
launched the product and
nobody’s used it. And so we
had to completely reassess
our thought process around
virtual visits and do we
work on bringing it in-
house and using our own
physicians? Do we keep at
it? Even though adoption is
not really material, do we
potentially outsource it to
another third-party vendor?
That’s the way we went,
because I think there’s still
an expectation that it’ll
take off. l

H E A LT H C A R E
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AND DESIGN D I R EC TO RY

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ISSUE CLOSE design decision-makers about your firm’s solutions!

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July 8, 2019 | Modern Healthcare 33

Largest professional liability carriers
Ranked by direct premiums written in the U.S., 2018
DIRECT PREMIUMS PERCENTAGE MARKET SHARE
($ IN MILLIONS) CHANGE FROM PERCENTAGE
RANK COMPANY LOCATION 2018 2017 2017 2018

1 Berkshire Hathaway Insurance Group Omaha, Neb. $1,550 $1,079 43.7% 16.9%

2 Doctors Co. Napa, Calif. 690 680 1.4 7.5

3 CNA Insurance Cos. Chicago 512 474 8.2 5.6

4 ProAssurance Birmingham, Ala. 475 476 (0.2) 5.2

5 Coverys Boston 446 414 7.9 4.9

6 NORCAL Group San Francisco 342 332 2.8 3.7

7 MCIC Vermont Burlington 340 335 1.6 3.7

8 MagMutual Atlanta 287 266 7.6 3.1

9 Hospitals Insurance Co. White Plains, N.Y. 219 174 25.8 2.4

10 Physicians’ Reciprocal Insurers Roslyn, N.Y. 174 186 (6.4) 1.9

11 Liberty Mutual Insurance Co. Boston 172 166 3.5 1.9

12 Constellation Edina, Minn. 166 144 15.2 1.8

Controlled Risk Insurance Company

13 Burlington 159 151 5.0 1.7
of Vermont

14 ISMIE Mutual Insurance Co. Chicago 153 158 (3.1) 1.7

15 Chubb INA Group Atlanta 152 145 5.2 1.7

16 Alleghany Insurance Holdings New York 128 116 10.0 1.4

17 Medical Mutual Group-North Carolina Raleigh 126 139 (9.4) 1.4

18 State Volunteer Mutual Insurance Co. Brentwood, Tenn. 120 126 (4.6) 1.3

19 W.R. Berkley Insurance Group Greenwich, Conn. 101 90 12.6 1.1

20 Medical Mutual Group-Maryland Cockeysville 100 118 (15.0) 1.1

Note: Figures are rounded.

Source: A.M. Best Co.

For more information on the data used to compile this chart, contact A.M. Best Co.
Ambest Road, Olwick, NJ 08858; Christopher.Sharkey@ambest.com; 908-439-2200; www.ambest.com

Information in this chart may be subsequently revised at the discretion of the editor.
For more information on our research, contact Megan Caruso at 312-649-5471 or mcaruso@modernhealthcare.com.
FOR MORE charts, lists, rankings and surveys, please visit modernhealthcare.com/data.

34 Modern Healthcare | July 8, 2019

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CRAIN COMMUNICATIONS INC
MARKETING
Keith E. Crain Mary Kay Crain KC Crain Chris Crain
Katie Driscoll Integrated Brand 312-649-7849 kdriscoll@modernhealthcare.com Chairman Vice Chairman President Senior Executive
Development Director Vice President
Nadiia Dibrova Marketing Coordinator 312-280-3163 ndibrova@modernhealthcare.com *** ***
Lexie Crain Armstrong Robert Recchia
Colleen Dluzynski Marketing Coordinator 312-280-3155 cdluzynski@modernhealthcare.com Secretary Chief Financial Officer
*** ***
CREATIVE SERVICES G.D. Crain Jr. Mrs. G.D. Crain Jr.
Patricia Fanelli Creative Services 312-649-5318 pfanelli@modernhealthcare.com Founder (1885-1973) Chairman (1911-1996)
Director
Joanne Yj Kim Graphic Designer 312-649-5338 jykim@@modernhealthcare.com WHO WE ARE AND HOW TO REACH US - Modern Healthcare is the only weekly business news
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July 8, 2019 | Modern Healthcare 35

Sharing
real-life Laura Carroll,
shown with her

Medicaid husband, Jed, and

their son, credits
Medicaid for

success stories keeping their health

and family from
falling apart.

aura Carroll once thought it was impossible for her

L to get pregnant, but then she found herself with
a newborn son who needed emergency abdominal
surgery. Another curveball came when her husband, Jed,
was disabled after a car accident. All of this was covered
by Medicaid. Her son is now in school and Jed can take
short walks.
“One thing happens, and then it snowballs,” she
LaVerne
said. “If it weren’t for Colorado’s Medicaid program, our Jackson, who
health—our family—would have fallen apart.” was a Medicaid
Laura’s story is one of many on “That’s Medicaid,” an beneficiary in
online platform produced by the Robert Wood Johnson nursing school,
went on to
Foundation to tell personal stories highlighting the serve in the
critical role the government program plays. Find it at military and
thatsmedicaid.org. later earned a
doctorate.

“Health insurance coverage is a vital part of helping

When one of their sons required open-
heart surgery, Hannah and Martin
Simmons found they qualified for
Medicaid since Hannah had lost her
job. “Medicaid caught us and helped us
back on our feet,” Hannah said.
people maintain good health, which in turn helps
our nation thrive socially and economically,” said
Anne Weiss, managing director at the Robert Wood
Johnson Foundation, a public-health philanthropy.
Other stories include LaVerne Jackson, a mother
who was covered by Medicaid while in nursing school.
She’d later enlist in the U.S. Army Nurse Corps, where
she served as a captain. Retired from the military,
Jackson earned a master’s and a doctorate and now
promotes community health with consulting and
ministry work.
“Medicaid opened the door for my education and
propelled me into lifelong service for our country,”
she said. 

36 Modern Healthcare | July 8, 2019

Where is healthcare
marketing headed?
The answer is in the data.
Data holds the key to successful engagement with consumers. Learn how to
use your data to its full potential at the Strategic Marketing Conference.
This event is where healthcare marketers come to learn
what’s next in the ever-evolving marketing landscape.

November 5 | St. Louis

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