Volume 23

SCOTUS Kicks the Can on Mifepristone

Last Friday, the Supreme Court issued a 7-2 decision allowing a frequently utilized abortion pill to remain available for purchase pending further judicial review. So, for now, the majority of the Court has affirmed the Food and Drug Administration's (FDA) power to endorse and oversee medications. This ruling temporarily suspends a Texas district court's earlier verdict that would have required the pill to be withdrawn from the market. The case will now go back to an appellate court, which will determine if the pill can continue to be sold. That verdict should come within the next month.

So What’s the Big Deal? Because the Supreme Court punted the decision back down to the lower court, medication abortion rights continue to hang in the balance. As I have discussed at MedPage Today, this issue isn’t just about Mifepristone, however. The ultimate decision could upend the role of the FDA in approving medications and therefore threaten future drug investment.

Abortion Ban States are Losing OBGYN Physicians

According to the Association of American Medical Colleges, there was a 10.5 percent decrease from 2022 to 2023 in applicants for obstetrics and gynecology (OB-GYN) residencies in states that have implemented abortion restrictions. This decline could have lasting consequences on the accessibility of OB-GYN care in the south and midwest in particular since medical residents frequently opt to remain and practice in their training locations.

So What’s The Big Deal? Beyond limiting immediate access to abortion, the bans are likely to have a long-term effect on the availability of all women’s health services. Studies show residents tend to stay close to the place they completed their residency. In regions where abortion access is limited, low-income women and/or women belonging to racial minorities are the ones most prone to experiencing adverse health and socioeconomic impacts right away.

Long-Term ROIs Are Out, Short-Term ROIs Are In

In today's challenging operational landscape, hospitals are cutting back on non-critical expenditures but continue to invest, albeit with increased scrutiny and a focus on businesses that can quickly reduce costs or generate income. Numerous healthcare systems are experiencing financial difficulties. In fact, approximately 50 percent of U.S. hospitals ended 2022 with negative margins. Consequently, hospitals that previously allocated resources based on anticipated improvements in clinical outcomes or revenue expansion are now concentrating on solutions that demonstrate a confirmed return on investment.

So What’s The Big Deal? Innovators and start-ups who target hospitals with hospital-based solutions must understand the lack of appetite for high capital investments with unproven track records or long-time horizons for ROI. As such, innovators must tread carefully, creating products or services with near-immediate cost savings.

Hospitals’ COVID Relief Fund Allocations Under Scrutiny

The U.S. House Committee on Oversight and Accountability recently initiated a probe into the distribution of COVID-19 relief funds to hospitals. Some lawmakers argue the U.S. Department of Health and Human Services (HHS) directed billions in taxpayer money toward highly profitable hospitals as rural hospitals struggled with bankruptcy. In an April 11 letter addressed to HHS Secretary Xavier Beccera, the committee demanded all documents and correspondence concerning the HHS' decision-making process about the allocation of COVID-19 relief funds to specific hospitals and providers.

So What’s The Big Deal? The inconsistency in allocation rate can be partially attributed to the method used by the Trump administration to determine assistance for hospitals. Instead of basing allocation on COVID-19 case numbers or financial strain, which is how the Biden administration makes determinations, the Trump administration used revenue as a measure of a hospital or healthcare system's size. This decision permitted high revenue hospitals to get more funding. It’s unclear how Congress and HHS will handle the disparity fund allocation; however, it’s an important space for healthcare executives to watch.

For HCA, Revenues Are Up

During the first quarter, HCA Healthcare experienced a surge in revenues, volumes, and workforce, resulting in a profit of $1.36 billion. This reading led the for-profit behemoth to raise its forecasts for all of 2023. The health system, based in Nashville, posted first-quarter revenues of $15.6 billion, marking a 4.1 percent increase in revenue compared to the initial quarter of 2022. Expenses climbed from $13.13 billion in the first quarter of 2022 to $13.67 billion, primarily due to a year characterized by rising costs, salaries, and inflation.

So What’s The Big Deal? Patient volumes are rising and staffing expenses appear to be stabilizing as hospitals are moving away from contingent labor. Earnings data show year-over-year admissions at the same facility increased by 4.4 percent, while equivalent admissions at the same facility saw a 7.5 percent rise compared to the previous year. Regarding expenses, contract labor costs were down 21 percent compared to the previous year and constituted 7.1 percent of the quarter's salaries, wages, and benefits expenditures. Executives credited this reduction to ongoing initiatives aimed at enhancing employee retention and recruitment.

United Healthcare Keeps Breaking Revenue Records

In the first quarter of 2023, UnitedHealthcare (UHC) achieved an all-time high revenue of $91.9 billion, a 15 percent increase compared to the previous year and a number that surpassed experts’ predictions. The increase was largely attributable to significant expansion in both UnitedHealthcare, the insurer division, and Optum, the health services branch.

So What’s the Big Deal? Two things: Medicare Advantage and Expanding Physician Services. UHC is making a significant amount of money from their MA plans as membership enrollment continues. Additionally, Optum, the provider wing of UHC, continues to generate higher revenues and profitability. While this pay-vider and value based care model does have significant benefits, we must ask ourselves just how much of the patient care continuum should UHC control? Should the Federal Trade Commission and state attorneys general monitor possible anti-competitive activities – especially since UHC not only is the nation’s dominant insurer? (UHC’s integration also now creates more challenging negotiating conditions for non-Optum providers.)

AI: Is It the Answer to Staffing Shortages?

At the HIMSS Global Health Conference in Chicago this week, the spotlight was on generative artificial intelligence (AI) and its significance in the healthcare sector. The potential of AI to minimize paperwork and cumbersome administrative duties, allowing healthcare professionals to devote more attention to patients, has generated considerable enthusiasm so much so that corporations like Microsoft, Google, and Amazon are working with healthcare institutions to develop and introduce new tools.

So What’s The Big Deal? The recent announcement of ChatGPT’s AI integration into Epics’ electronic health records signals a transformative shift in healthcare. By streamlining administrative tasks, AI could significantly alleviate physicians' workloads and reduce paperwork, ultimately improving efficiency. Additionally, decreased error rates may lead to enhanced patient care. Despite the potential operational benefits, however, lawmakers must carefully consider ethical and HIPAA-compliant implementation.

Is A National Health Database on the Way?

Shortly after finalizing the $28.3 billion purchase of electronic health record firm Cerner, Oracle Chair Ralph Ellison announced his company’s intention to develop a nationwide health record database that would gather information from numerous hospital-based electronic health records (EHR) systems. Ellison’s announcement was greeted with doubt by interoperability specialists who have been working for years to develop technical "highways" to simplify access and exchange of health data.

So What’s The Big Deal? There are significant and long-standing obstacles to sharing health information as easily as consumers share financial data through banking apps. These challenges include a lack of collaboration among facilities and health systems, inconsistent technical standards that cause EHR systems to be unable to communicate with one another, and other technical, operational, and business impediments like conflicting privacy policies that dictate how EHR information is shared or utilized.

The Canary in the Coal Mine: Envision Eyes Bankruptcy

Envision Healthcare Corp., owned by KKR & Co., is contemplating Chapter 11 bankruptcy, which would result in the physician-staffing company being handed over to its creditors, according to sources familiar with the matter. As part of the 2018 KKR acquisition, which was worth $6 billion, Envision issued $1.2 billion in unsecured bonds that will mature in 2026. These bonds were recently valued at approximately 4 cents on the dollar, indicating investors are in for huge losses.

So What’s the Big Deal? There is a lot to unpack here. While we don’t yet know the final outcome for Envision, the company’s bleak outlook is in part the result of the expanding and growing influence private payers have in the viability of physician practices. The antecedent to Envision’s balance sheet problem is revenue declines from both private and governmental payers. While other companies in the physician services space may be better positioned currently, the trend lines certainly point in an unfavorable direction.

A Single Federal Medical License to Practice

Don’t get too excited: it is Canada that is discussing this option, not the United States. The Canada Medical Association is pushing for a single, federal medical license that would allow physicians to practice across borders. The rationale is simple: a single license would ensure clinicians could easily move between areas where the need is the greatest. How novel! And how needed since physicians who are ready and willing to work now must sit on the sidelines. Sadly, multiple license requirements even prevent clinicians from providing telehealth services to patients in other provinces. Sound familiar?

So What’s the Big Deal? We should have learned from COVID. But we haven’t. Administrative barriers to practice are bad for clinicians, bad for public health, and bad for patients. With varying times for licensure and different requirements for licensure by state, the system has created significant challenges and costs for allowing providers to work in more than one state. We can do better.

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Adam Brown

Volume 23

The Canary in the Coal Mine: Envision Eyes Bankruptcy

Volume 24

Volume 22