Editor's Note -
There are those who think our current health system, with its lax controls over private as well as public health care expenditures, is good for the American economy. The following clipping may dampen their enthusiasm, as The Congressional Budget Office joins mega-rich investor Warren Buffet (who once called the health care system a "tapeworm" in the gut of American business) in debunking that myth.
- SPC
The Government Just Admitted An Inconvenient Truth
Every now and then, federal officials admit some truths that are inconvenient to the corporations that own the government — and this latest admission is pretty explicit: Scrapping corporate health care and creating a government-sponsored medical system would boost the economy, help workers, and increase longevity.
Those are just some of the findings from the Republican-led Congressional Budget Office (CBO) in a new report that implicitly tells lawmakers just how the existing corporate-run health care system is immiserating millions of Americans — and how a Medicare for All-style system could quickly fix the catastrophe.
If that sounds like hyperbole, consider the analysis in its own words. The CBO reports that under a single-payer health care system:
- “Households’ health insurance premiums would be eliminated, and their out-of-pocket health care costs would decline… Administrative expenses in the health care sector would decline, freeing up productive resources for other sectors and ultimately increasing economy-wide productivity… Longevity and labor productivity would increase as people’s health outcomes improved.”
- “Workers would choose to work fewer hours, on average, despite higher wages because the reduction in health insurance premiums and (out-of-pocket) expenses would generate a positive wealth effect that allowed households to spend their time on activities other than paid work and maintain the same standard of living.”
- “That wealth effect would boost households’ disposable income, which they could then split between increased saving and nonhealth consumption. Although hours worked per capita would decline, the effect on GDP would be offset under most policy specifications by an increase in economy-wide productivity, an increase in the size of the labor force, an increase in the average worker’s labor productivity, and a rise in the capital stock.”
- “States could respond to the (ensuing) budget surplus by growing their rainy-day funds (at least temporarily), reducing state tax rates, increasing spending on government purchases or public services, or a combination of all three.”
The report’s findings tacitly admit that the existing employer-based, corporate-run health care system locks the non-rich into toiling more and more hours just to be able to afford ever-higher costs for insurance coverage and medical care.
Indeed, CBO declares that under a single-payer system, households would “retire at younger ages” and “hours worked would be lower for most households across the income distribution.” Under the five single-payer scenarios the agency evaluated, a “reduction in hours worked would be largest among lower- and middle-income households because those groups would see the largest percentage increase in wage rates and reductions in (out-of-pocket) expenses and premiums.”
CBO’s report seems to cast these forecasts as a warning — but they should be welcome news. Studies have long shown that on average, Americans work more hours than their counterparts in other industrialized nations, and they receive among the fewest hours for vacation and paid family leave.
CBO is effectively admitting that the corporate health care system is intensifying that problem.
One health care option evaluated by the CBO includes more robust coverage for home- and community-based care services, which provide patients with long-term assistance with daily living activities such as bathing or dressing. In addition to increasing eligibility and expanding those services for patients, the report notes that increased funding would create a 7 percent pay increase for home health care workers, who are among the lowest paid workers in the economy.
And yet for all the single-payer health care benefits outlined by CBO, Medicare for All remains stalled in a political system where stakeholders in the existing corporate health care system are spending hundreds of millions of dollars to buy elections and public policy.
That political influence was on display in the most recent presidential election, when Joe Biden kicked off his campaign with a fundraiser with a health insurance CEO, and then vowed to veto Medicare for All legislation if it came to his desk. He instead touted his proposal of building upon the Affordable Care Act with a public health insurance option.
But Biden hasn’t pushed that public option plan as president — he even omitted it from his budget plan last year. He and Democratic leaders have instead adopted proposals from health insurance lobbyists to put more Americans on subsidized for-profit health insurance plans.
More recently, California’s attempt to create a first-in-the-nation single-payer system failed after corporate interests won the day in a state where an overwhelming majority of voters believe the governor and legislature should prioritize working toward guaranteeing all residents health insurance coverage. The single-payer bill was killed by Democratic lawmakers just after their party received a $1 million check from a major private health insurer.
Despite those setbacks, the new CBO report is a loud alarm about the establishment’s sociopathic hostility to commonsense health care policy - and it comes from an important source.
The office is hardly some bastion of left-wing utopianism, and in a money-drenched political system, the federal government rarely ever admits such scathing truths about the status quo — especially truths that underscore how much better life could be with the kinds of reforms other nations long ago made.
https://www.dailyposter.com/the-government-just-admitted-an-inconvenient-truth/
What Physicians Need to Know About Private Equity Deals
The sale of medical practices to private equity (PE) and related investors continues to be the trend in 2022. The primary reason private practices are so interested in selling to PE is that they typically will offer a much higher purchase price compared with either hospitals or other physician buyers.
However, the sale to any buyer comes at a cost to the physician-sellers as well, and this is something with which many physicians continue to struggle.
A PE's standard investment strategy is to acquire a practice with an existing footprint and reputation, and then grow the practice through the acquisition of additional smaller practices or by hiring more physicians. Typically, the structure of the transaction is such that the nonclinical assets of the practice are sold to a business entity owned by the PE (or a related entity) and the clinical assets are transferred into a professional entity owned by a physician, which may or may not be the physician-sellers.
The reason for this structure is that many states have a "corporate practice of medicine" doctrine, which prevents unlicensed people from owning professional entities or employing licensed providers. The PE controls the ownership and conduct of the physician-owned professional entity through written agreements, instead of directly, in order to comply with the law.
Corporate practice of medicine laws were created with the intent to avoid commercialization of medicine and to make sure physicians could exercise their own professional opinions without outside influence. Many states also have developed specific guidance in this area. Generally, to comply with the legal doctrine, documents in any kind of PE transaction are carefully written to promise providers freedom over clinical decision-making and ensure that true clinical decisions are left to physicians.
To operate a medical practice, the PE's business entity acts as a management company by providing all the nonclinical assets it just acquired and everything else the practice needs to operate: space, equipment, nonprofessional personnel, billing and collection services, et cetera. A management fee is paid by the professional entity to the management company, thus drawing profits to the PE investors.
The more efficiently and profitably the practice is run, the greater the profit that is pushed up to PE investors. Therefore, there is a clear incentive to the professional entity to be as profitable as possible.
The problem that arises in these kinds of transactions is that management decisions can directly affect the practice of medicine and clinical outcomes. In negotiating PE transactions, I fight hard on behalf of my physician clients to maintain control over the items that they feel impact patient care. This can include hours of service, staffing levels/type of staff, equipment and products available, amount of time that can be spent with patients, employee compensation and benefits, and cost of services and other similar issues.
Unfortunately, these are battles that typically cannot be won, and the PE buyer will insist these are pure management decisions. The PE's position, of course, is that it needs to control these factors in order to grow profitability and efficiency of the practice. Arguably, this is the same position taken by hospitals, and even private practices, in running their business operations.
What management items and services cross the line in their impact on clinical care? We may soon have a clearer answer to this question. Recently, a group of emergency medicine physicians sued Envision Health Care, alleging that it violated California laws that bar corporations from practicing medicine. Envision owns and/or partners to operate hundreds of emergency medicine groups across the country. In the lawsuit filed by the American Academy of Emergency Medicine Physician Group (a unit of the American Academy of Emergency Medicine), it is alleged that the PE is interfering with the way the medical practices are being run.
Examples given include increasing billings to patients, insurers, and third party-payers for physician services, leading to excessive billing. Additionally, the lawsuit argues that Envision profited by reducing physician compensation, increasing the number of patients that physicians see per hour, and increasing the utilization of physician assistants to replace costlier physician coverage. Envision also is alleged to track physician medical decision-making to provide practice improvement feedback reports, which are designed to "educate" physicians to practice medicine and make decisions that increase the amounts charged to patients.
It is hard to know whether a court will agree that any of the factors mentioned in the Envision case directly impact professional decision-making. However, this decision is being watched closely as it could affect PE deals, as well as a variety of other healthcare arrangements and transactions in those states that enforce the corporate practice of medicine doctrine.
In transactions in which I am involved, we are already discussing these issues and trying to find ways to allow for more physician input on some business decisions. Physician advisory boards and regular meetings on designated issues can sometimes help to alleviate conflicts on these issues.
For practices that may be entering into PE transactions or thinking about doing so, it is important to fully understand what power is retained and/or sold in any such transaction. Once sold, the practice no longer belongs to the physicians, and there always is an inherent conflict between providing the most thorough clinical care and achieving top profitability and efficiency.
In every transaction, both sides must understand and agree on their roles and whether they can live with the deal they are trying to consummate.
Justice Dept. Sues to Block $13 Billion Deal by UnitedHealth Group
The agency’s lawsuit against the deal for a health technology company is the latest move by the Biden administration to quash corporate consolidation.
by David McCabe - NYT - February 24, 2022
WASHINGTON — The Justice Department on Thursday sued to block a $13 billion acquisition of a health technology company by a subsidiary of UnitedHealth Group, in the latest move by the Biden administration to clamp down on corporate consolidation.
The agency argued that a deal by UnitedHealth to buy the health tech firm Change Healthcare would give UnitedHealth sensitive data that it could wield against its competitors in the insurance business. The suit was filed in U.S. District Court for the District of Columbia. New York and Minnesota also joined the lawsuit.
A spokeswoman for Optum, the UnitedHealth subsidiary, said in a statement that the Justice Department’s “deeply flawed position is based on highly speculative theories that do not reflect the realities of the health care system,” and added that the company would “defend our case vigorously.” A spokeswoman for Change Healthcare said it was still “working toward closing the merger as we comply with our obligations under the merger agreement.”
The deal is the latest transaction to run into opposition from the Biden administration, which has made countering corporate consolidation a central part of its economic agenda. President Biden signed an executive order last year to spur competition in different industries. He also appointed Lina Khan, a prominent critic of the tech giants, to lead the Federal Trade Commission and Jonathan Kanter, a lawyer who has represented large companies, as chief of antitrust efforts at the Justice Department.
Since then, the F.T.C. has blocked Lockheed Martin from buying a maker of missile propulsion systems and the chip giant Nvidia from purchasing the design firm Arm. Even before Mr. Kanter was confirmed, the Justice Department sued to block the merger of two major insurance brokers; the purchase of Simon & Schuster by the publisher Penguin Random House; and a deal that would have married some of JetBlue’s operations with American Airlines’.
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“It’s part and parcel of this effort to make sure that markets truly are competitive,” said William Baer, who previously served as the head of the Justice Department’s antitrust division.
In a statement, Attorney General Merrick B. Garland said the agency “is committed to challenging anticompetitive mergers, particularly those at the intersection of health care and data.”
Optum said last year that it would buy Change Healthcare, a company that offers technology services to insurers. UnitedHealth is one of the largest health corporations in the country, with $287.6 billion in revenue in 2021. In addition to its health care information technology business, its Optum unit owns physician practices, a large chain of surgery centers and one of the nation’s largest pharmacy benefit managers.
At the center of the Justice Department’s lawsuit is the data that Change Healthcare gathers when it helps process insurance claims. The department argued that the deal would enable UnitedHealth to see the rules that its competitors used to process claims and undercut them. UnitedHealth could also crunch data about patients at other insurers to gain a competitive advantage, the agency said.
The lawsuit claims that, according to a UnitedHealth estimate, more than half of American medical insurance claims “pass through (or touch)” Change Healthcare’s systems. It says that UnitedHealth’s former chief executive saw the tech company’s data as the “foundation” of the reasoning behind the deal.
The lawsuit also argued that UnitedHealth could withhold Change Healthcare’s products — which other insurers use — from its rivals or save some of its new innovations for itself. The Justice Department added that the deal would give UnitedHealth a monopoly over a type of service that was used to screen insurance claims for errors and speed up processing.
The companies have said the acquisition will improve efficiency in the industry. They also explored selling the part of Change Healthcare that the Justice Department said would give UnitedHealth a new monopoly.
Lawmakers and regulators have increasingly worried that big businesses could use troves of data to hurt their rivals. A congressional committee has investigated whether Amazon uses data from outside merchants who use its platform to develop competing products, for example. Critics of Facebook have also argued that the company’s having years of user data makes it difficult for an upstart service to challenge its dominance.
Since Mr. Kanter joined the antitrust division at the Justice Department, critics have said he should not oversee cases against companies whose rivals he represented while in private practice. According to a financial disclosure form he filed last year, he once represented Cigna, a major insurer that competes with UnitedHealth, and the remote health care company Teladoc.
Mr. Kanter has not participated in the lawsuit against UnitedHealth, a person familiar with the Justice Department’s case said.
https://www.nytimes.com/2022/02/24/business/doj-antitrust-lawsuit-unitedhealth.html
The Maine Millennial: Don’t blame nurses’ wages for our health care system’s ills
A call by Reps. Pingree, Golden and 200 of their colleagues to investigate nurse staffing agencies could have unintended consequences.
by Victoria Hugo-Vidal - Portland Press Herald - February 25, 2022
At the end of January, under the radar, Rep. Chellie Pingree, Rep. Jared Golden and 200 other members of Congress took a look at the wreckage of the current American health care system and decided that the problem is that some nurses are making too much money.
Seriously. They signed an open letter about it. The letter, written by Vermont Democratic Rep. Peter Welch (a New Englander who should have more common sense) and Rep. H. Morgan Griffith, R-Va., would be hilarious if it weren’t so stupid. Their target is travel nurses and the nurse staffing agencies that employ them.
“Travel nurses,” for the unfamiliar, go from hospital to hospital for short-term contracts, wherever they are most needed. If a nurse who works in a hospital has to go out on maternity leave for a few months, for example, the hospital might bring in a travel nurse as a replacement. Travel nurses make good money, and they deserve it: Nursing is hard, moving around constantly is hard. Hospitals often rely on them because, while a travel nurse might cost more per hour than a nurse on staff, hospitals don’t have to make the commitment of providing them benefits, or keeping them around all year, even if the patient load drops. Travel nurses are also less likely to unionize. There’s not a lot of slack in the American health care system, as many people discovered during the pandemic, when patients flooded hospitals, non-COVID procedures were canceled and ER patients stayed overnight in hallways. Travel nurses were able to hop from hot spot to hot spot, serving through wave after wave.
The letter, addressed to Jeffrey Zients, the White House COVID-19 response coordinator, expresses shock and dismay that “certain nurse-staffing agencies are taking advantage of these difficult circumstances to increase their profits at the expense of patients and the hospitals that treat them.” No shoot, Sherlock. Literally every for-profit actor in our health care system does that, including many for-profit hospitals, which, at the end of the day, answer to their investors, who expect a particular rate of return. The representatives write that they “have received reports that the nurse staffing agencies are vastly inflating price, by two, three or more times pre-pandemic rates.” The important phrase here is “pre-pandemic.” When the pandemic hit, more people than usual got sick, so the demand for nursing went up. The supply of nurses went down, which means what, kids? That’s right! The price of a nurse’s labor went up!
You reap what you sow. Our government decided to privatize our health care system and let capitalism run wild. And in capitalism, some people get to make lots of money at the expense of others. Now they’re mad that some women are making money. Yes, I’m alleging the stink of sexism here: Nursing, as a profession, is 90 percent female. Meanwhile, 64 percent of physicians are male. You will notice that nobody is complaining about doctors making too much money. (There also are “travel doctors,” aka “locum tenens physicians,” but an industry survey found that the cancellation of elective surgeries meant that hospitals’ demand for them dropped during the pandemic.)
Payroll is the biggest expense for any business, and lots of hospitals and other medical facilities, particularly for-profit ones, would like to see nurses making less money. But nurses are pretty universally beloved, for good reason, and no politician is going to be dumb enough to say they think nurses need a pay cut. Travel nurses and travel nurse agencies make an excellent scapegoat. Capping rates of pay for travel nurses is a clever way to get a foot in the door of capping pay for all nurses and driving down wages overall. After all, folks who travel from place to place every few months are hard to organize into a constituent voting bloc and aren’t likely to have the opportunity to build community political power.
I’m surprised that so many representatives signed on to this letter. After all, Democrats like to say they support health care workers, and Republicans like to say they are pro-business and free market. My mom is a mystery writer, and when we are trying to figure out a mystery or puzzle, she likes to say, “Cui bono? Who benefits?”
Who benefits from cracking down on travel nurse agencies? It sure isn’t staff nurses. See, travel nurse agencies play an important role in the health care economic ecosystem: They provide a bargaining chip to keep staff nurse wages high. If a nurse feels she isn’t being paid what she’s worth (and, generally speaking, she probably isn’t), she can leave her hospital to work for a travel agency, and make more money while seeing the world! This helps keep wages high. My fear is that a crackdown on travel nurse agencies will cause nurse wages across the board to be lowered. Cui bono? Certainly not patients. Do you want your catheter inserted by an exhausted, overworked nurse who’s worrying about how she is going to pay rent?
I don’t expect much from politicians, but I did expect better from Chellie Pingree and Jared Golden. Pingree and Golden should retract their signatures of support.
If they would like to target price-gouging at the expense of patients, I have plenty of suggestions. My friend Lindsey’s dad has cancer. Specifically, myelodysplastic syndrome-induced leukemia. He has a $10,000 copay for his chemotherapy drug. No, that’s not a typo. He has to come up with $10,000 or die. Where’s his outraged letter to the White House?
https://www.pressherald.com/2022/02/20/the-maine-millennial-nurses-wages-arent-whats-hurting-our-health-care-system/An Essayist Navigates the Labyrinth of American Health Care. Barely.
COST OF LIVING
Essays
By Emily Maloney
The illness narrative, ending in financial ruin and decreased quality of life, has become one of the classic 21st-century American stories. In her debut essay collection, Emily Maloney documents the complex intersections of money, illness and medicine. For Maloney, the primary experience of receiving health care is not merely a bodily or spiritual event but always, also, a financial one. She understands on a granular level the relationship of money to being ill, to developing a drug, to housing and caring for patients and, of course, to managing an unfathomable amount of debt. Her broad perspective is hard won; at different times she has been a multiply diagnosed chronically ill patient, an E.M.T., an emergency room medical technician, a drug rep, a data analyst, a medical writer, a medical debtor and an American citizen who has — so far — survived the ongoing catastrophe of for-profit medical care.
The precipitating event in “Cost of Living” is the author’s psychiatric hospitalization at 19: “It wasn’t that I had wanted to die, exactly. It was more that I just couldn’t keep living.” Maloney’s choice of a nearby, independent hospital’s emergency room over the bigger university hospital “where the state might pick up your bill if you were declared indigent” leads to the crushing debt at the heart of the book. “Sitting on a cot in the emergency room, I filled out paperwork certifying myself as the responsible party for my own medical care — signed it without looking, anchoring myself to this debt, a stone dropped in the middle of a stream. This debt was the cost of living.”
As Maloney pries deeper into the machine of American health care, she finds no central mechanism other than that of the eternal money-go-round. By the time she gets to the conference at which doctors are painstakingly comped for their attendance at brunches with “soggy pastries” amid “transfer of value” concerns, I had lost all hope for a ready solution to the problem — which, Maloney implies, is inseparable from the very structures of capitalism.
Each essay documents a different kind of structural failure, caused or complicated by capital and inevitably ending in harm to patients. In one, Maloney is prescribed 26 psychiatric medications for what turns out to be a vitamin D deficiency, hypothyroidism and a neurologically based developmental disorder. In another, as an E.R. tech she is trained to “bill up” — increasing charges if at all possible — but she secretly perfects the occult art of minimizing patient cost without tripping any corporate alarms.
Embedding herself into various corners of the bureaucratic medical machine, Maloney describes everyone she encounters with the same perspicacity. “There’s a fine line between a pain patient and a drug addict,” she writes, “and sometimes patients go back and forth across it.” “Elizabeth … was what we called a frequent flier, someone who was unable to make sense of the world she lived in and so she came to us instead, a kind of tent revival in our suburban hospital, for healing.” A medical student, meanwhile, is “a strange mix of sweaty and cavalier.”
Thanks to her experiences, Maloney is able to see the cracks in what a less informed patient might experience, simply, as care: “At my doctor’s office for a masked annual physical, my internist depression screens me. I know it’s because Epic, the online medical record system he uses, prompts him to do so. Northwestern Medicine is part of a program that uses an installation of Epic that depression screens everyone.”
While working as a medical publications manager at a pharmaceutical company, where she becomes a part of the conference circuit for the first time, she is struck by the sheer scale of the apparatus. “Yes, the research everyone does is important. Yes, the work to take a drug from preclinical stages to the market is huge and hugely expensive. But the rest — the advertising, the television commercials, the hamburger sliders, the endless catered lunches, the agency money, the plane tickets to Europe — are all, directly or not, contributing to this enormous cost.”
Maloney’s essays read as if they were begun in low light, with little sense of where they were going or how far. They start with a question and work things out on the page. They don’t seem concerned about arriving at a grand unified theory of anything. They notice everything and have nothing to prove. They don’t prematurely grasp at an ending. These qualities combine to elevate this collection far above the usual first-person essayistic fare. The challenges of Maloney’s background — familial trauma, poor medical care, occasional indigence — form part of the back story, but they are ultimately beside the point of this book. Her broad authority and the quality of the prose — astute, compassionate and lethally funny — are what make these essays remarkable. Maloney is an exceptionally alert writer on whom nothing is lost, who sees everything with excruciating clarity, including the unassailable fact that in this country, there is currently no tidy passage through the interconnected quagmires of illness, money and care.
https://www.nytimes.com/2022/02/25/books/review/cost-of-living-emily-maloney.html?
