ASC/OBS Industry Awareness
Incentivizing Physicians to Use ASCs
Market forces are energizing physicians and patients to use ASCs/OBSs/OBLs for inpatient surgeries. Insurers are developing steering mechanisms to move cases to ASCs as lower-cost settings than HOPDs. A quick state-by-state look at ASC v. HOPD average cash prices for knee replacement surgeries tells the tale. Physician-owned cardiovascular surgery centers have opened in several states, including Pennsylvania, where recent regulatory changes make it possible. The market advances that galvanize ASCs are also stimulating investments in ASC real estate. However, government incentives can be perverse and unfortunately for ASCs, they are. CMS is looking at a 4.42% physician pay cut for 2023, which, when combined with inflation, is a rich revenue crunch. On the contrary, the CMS proposed rule for 2023 adds 2.7% for ASCs. Inpatient movement toward ASCs, however, is starting to push hospitals to reduce or discontinue inpatient care.
Relieving Prior Authorization Choke Points
ASCs are seeking a path to relieve prior authorization bottlenecks, along with most healthcare providers. The American Medical Association (AMA) is reminding all players that tackling unwieldy prior authorizations is a function of patient-first care, which is an ASC/OBS/OBL priority and competitive advantage. Thirty-four percent of providers in the AMA’s annual prior authorization physician survey reported that prior authorization has led to a serious adverse event for a least one of their patients. After years of wrangling to reduce prior authorization creep and over-growth, Medicare prior authorization reform is advancing slowly. CMS is also calling back a 2022 prior authorization planned addition of knee and back braces.
Healthcare Industry/Trends
Staff Shortages Top List of Patient Safety Concerns
Staff shortages are constraining providers in the US healthcare system. Workforce shortages are having a significant impact, even on orthopaedics. Hospitals are under the most severe staffing strains, suffering lingering effects of the COVID-19 pandemic. As a US industry, healthcare had the second highest percentage of job cuts over the last year, lagging only behind the automotive sector. Both clinical and non-clinical jobs (such as RCM and IT) have been negatively affected. Hospitals are getting creative, embracing flexibility to retain workers and honing their time management efforts.
Safety from Violence for Healthcare Workers
Another huge and unfortunate safety concern for hospitals in particular this summer, is worker safety. Violence against healthcare workers has not received the attention that school violence has, but it is a mounting concern. A patient stabbing in Las Vegas, an armed patient in Irving, Texas, a worker in New Jersey charged with assault rifle possession, and an attack on a nurse in Raleigh, NC have prompted several previously unimaginable actions. Those actions include recommendations for how hospitals should respond to mass shootings, calls to end the “epidemic of violence,” and the opening of the Safety from Violence for Healthcare Employees bill in the US Congress.
Healthcare Digital Transformation Watch
Healthcare IT Market Poised for Growth despite Bumps
The healthcare IT market is expected to more than double in value by 2028. Advances in automation are reducing human error, increasing productivity, and being utilized to create better patient experiences. However, in the short run, healthcare IT is undergoing some challenges. Healthcare CIOs are noticing a tight tech labor market at the same time some hospitals are laying off tech workers and, in some cases, offshoring those jobs. We are still in the middle of a significant digital health reset, creating both trials and opportunities for HiT leaders. Due to the digital health reset, the healthcare CIO role is evolving to support healthcare systems more intricately in all departments.
Healthcare M&A, Valuation, Revenue Cycle
Q2: Insurance Profit Rises, Hospital Volume Drops
Aetna’s Q2 revenue rose 11%. Cigna’s $1.6B Q2 net income beat Wall Street expectations. Aetna and Cigna joined the group of five of the largest seven healthcare insurers that saw Q2 profits rise even as hospital volumes and profits declined. Hospital management company, Community Health Systems (CHS), posted a $326M loss. For-profit hospital organizations HCA Healthcare, Tenet Healthcare, Universal Health Services, and CHS all reported lower net income this Q2 compared to 2021’s Q2 on lower admissions volumes. Orthopaedic medical device manufacturer, Zimmer Biomet, fared well, posting 8% growth in year-over-year net earnings.
Legal
2023 Projected Health Benefit Cost Trends
From the office of Jon Sistare, JD, Attorney at Law
In an unusual set of circumstances, health benefit costs, while still on the rise, are actually less than the overall inflation rate going into 2023. However, this may be that health costs lag, at least when applied to a health insurance plan as they are projected a year ahead of when premiums are paid. US employers expect health benefit costs to rise nearly 6% on average in 2023, significantly higher than 2022 projected cost increases, but far below the current 9% overall inflation, professional services firm, Mercer, reported Thursday.
Health insurance plans typically have multiyear contracts with medical providers, so the full effect of price inflation has not been felt yet. The cost increases will be phased in over the next few years as contracts come up for renewal and providers negotiate higher reimbursement levels, Mercer said.
The expected increase of 5.6% per employee in 2023 includes changes that employers plan to make to hold down costs, Mercer said. However, the majority of employers will not make cost-saving measures that shift expenses to employees, such as raising deductibles or copayments, the survey found.
Most large, self-insured employers that pay claims directly have a good sense of 2023 costs, but many smaller, fully insured employers that buy plans from insurers have not yet received renewal rates, which may be higher as insurance carriers hedge their bets in today’s volatile healthcare market.
At a Glance
Exchange Denied 18% of All In-Network Claims in 2020
Healthcare.gov Lacks Clarity on Why Denial Rate Is so High
In Sign of Market Strength, UHC/Optum Cutting Some Lab Testing
Dropping “Unnecessary” Tests to Reduce Cost
Hospitals’ Revenue and Volume Bump Not Enough
Margins Are Still Weak for Many (but not all) Hospitals
Baby Giraffe at San Diego Zoo Gets Custom Leg Braces
Correction for Hyperextended Joints at Birth
Pennsylvania ASCs Experience Welcome Bureaucratic Relief
New Bill Loosens Restrictions on Outpatient Procedures
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