Welcome to The Donut Hole’s weekly summary. The news doesn’t stop. Lucky for you, we are here to help you take in the week that was in the business of healthcare.
A Surgeon So Bad It Was Criminal
Given the recent release of Dr. Death on Peacock, we wanted to re-share the fascinating and disturbing ProPublica article from 2018. If you have the time, please do read the article and / or watch the show. The story highlights some of the moral challenges within our healthcare system where both for-profit and non-profit hospitals are more incentivized to grow revenues than improve quality.
Medical practices working with startup Aledade saw big financial wins in 2020 despite COVID-19 turmoil
This story is a little technical, but it illustrates the financial success that well-run Accountable Care Organizations (ACOs) can achieve. Simply put, ACOs are networks of providers (e.g. specific health systems, large independent primary care practices, etc.) that coordinate patient care and become eligible for bonuses when they deliver that care more efficiently. ACOs have been particularly relevant to innovation models in traditional Medicare (e.g. the Medicare Shared Savings Program).
Aledade is a start-up that provides technology, population health tools, and other support services to ACOs and other providers to help them succeed in value-based arrangements. The article details the company’s success in generating shared savings for its provider customers under these new payment models. Aledade’s ACOs have saved nearly $830M in unnecessary healthcare spending over the past seven years, and independent primary care practices that work with Aledade are expected to receive more than $120M in direct savings payments across all payors this year.
Potential impact on you: We sound like a broken record at this point, but this is further evidence that value-based care is here to stay. The savings for well-run, forward thinking, high quality provider groups are significant. Groups like Aledade also offer a way for independent practices to remain competitive and participate in these shared savings programs.
Startup backed by a16z, Jonathan Bush aims to help patients compare hospital prices
Turquoise Health, a start-up that aims to help patients explore prices for healthcare services before they show up for treatment, announced a new financing round led by majors VC firms. Jonathan Bush, the cofounder and former CEO of athenahealth and cousin of former President George W. Bush, and Golden State Warrior Klay Thompson also participated in the round.
The company ties into a new rule from CMS that requires hospitals to post online payer-negotiated rates and meet other price transparency thresholds. Currently, only ~5% of hospitals are compliant with the rule, fueling a call for increased financial penalties for hospitals that don’t make their prices public.
Potential impact on you: Turquoise itself is less impactful to you than the price transparency rule. Theoretically, it will help patients make more informed decisions around where to receive care. The effects remain to be seen, though. How many patients will actually look up prices? If they do look up prices, will most be able to navigate the tangled web that is their own health plan structure (copays, deductibles co-insurance, etc.) to understand how much a given procedure or visit should cost them? Will clinicians face an pressure to lower prices to be more competitive and attract more patients? However it turns out, it is worth keeping a close eye on.
Radiation therapy 'under attack' from CMS cuts, professional body warns
Here’s some news from the reimbursement world. CMS recently proposed changes to its radiation oncology model. The American Society for Radiation Oncology (ASTRO), which has long opposed the model due expected payment cuts, is up in arms again and pointed out that program could reduce reimbursement for treatment by $160M.
The model updates comes on the heels of CMS’ proposed 2022 Medicare Physician Fee Schedule. ASTRO estimates the new schedule will cut radiation oncology services fees by 8.75% and is pushing for Biden and Congress to intervene. The organization wants to reform the radiation oncology model and at least have the physician fee schedule cuts phased in over time.
Cowen analysts have said radiation oncology company Accuray views the value-based plan as a net positive for its business, while equipment manufacturers including Varian, ViewRay and Hitachi have expressed concerns. Siemens and Elekta are among companies that could also be affected by the reimbursement changes.
Potential impact on you: CMS’ radiation oncology model will clearly have a large impact on those of you in that field, but more generally this story is a good example of how fickle the business of healthcare could be. Physicians, equipment manufacturers, and health systems were all making investments and plans under one set of reimbursement assumptions. Now all stakeholders need to adjust those plans for a world of lower payments.
Medical debt overtakes nonmedical as largest source in collections. COVID-19 may be making it worse.
Americans' medical debt reached $140B last year, significantly higher than past estimates and outweighing all other types of personal debt in the U.S., according to a new study published in JAMA. Researchers analyzed a tenth of all credit reports from rating agency TransUnion and found that ~20% of Americans had medical debt in collections in June last year. Not surprisingly, debt was significantly more concentrated in states that have not expanded Medicaid under the Affordable Care Act. The analysis reflects care provided prior to COVID-19, but early data suggests the pandemic has likely only exacerbated medical debt problems.
Potential impact on you: As we’ve previously discussed, patient cost sharing and medical debt is a major problem in this country, especially for the underinsured and uninsured. Medical debt has two main consequences. First, the fear of debt could cause some patients to delay seeking needed medical care or filling prescriptions, harming long term outcomes. Second, if health systems know that some percentage of their provided care will go unpaid for, they will charge those who can pay more to make up the difference. One step we could take to improve the situation in part is to have all states expand Medicaid, but that is a thorny political issue (see the linked Missouri story below).
Other news you may like:
Growing cyberattacks on hospitals may soon hit bottom lines, patient care: Fitch
VA pauses embattled Cerner EHR rollout for 6 months in major revamp
Hospital lobbies back COVID-19 vaccine requirements for healthcare workers
Hillrom branches further into surgical communications with new launch
Anthem, Humana team with SS&C on new claims management joint venture
Bon Secours Mercy Health invests in Trilliant Health as part of larger push into analytics
Merck, Evidation to test if smartphone data can be used to detect early Alzheimer’s
Have a great week!
— Hannah and Caleb Bank, Co-founders
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