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Wednesday, May 3, 2023

Health Care Reform Article - May 3, 2023

 Editor's Note -

The following article about private equity firms is relevant to health care because they are aggressively moving into buying health care institutions (such as nursing homes and hospice services), but also doctor's practices, such as emergency room physician practices. 

Batten down the hatches!! The "fun" has just begun.

- SPC

Opinion | Private Equity Is Gutting America — and Getting Away With It

Brendan Ballou -NYT- April 28, 2023

Mr. Ballou is an attorney and the author of the forthcoming “Plunder: Private Equity’s Plan to Pillage America,” from which this essay is adapted.

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“Private equity” is a term we’ve all heard but which, if we’re honest, few of us understand. The basic idea is simple: Private equity firms make their money by buying companies, transforming them and selling them — hopefully for a profit. But what sounds simple often leads to disaster.

Companies bought by private equity firms are far more likely to go bankrupt than companies that aren’t. Over the last decade, private equity firms were responsible for nearly 600,000 job losses in the retail sector alone. In nursing homes, where the firms have been particularly active, private equity ownership is responsible for an estimated — and astounding — 20,000 premature deaths over a 12-year period, according to a recent working paper from the National Bureau of Economic Research. Similar tales of woe abound in mobile homes, prison health care, emergency medicine, ambulances, apartment buildings and elsewhere. Yet private equity and its leaders continue to prosper, and executives of the top firms are billionaires many times over.

Why do private equity firms succeed when the companies they buy so often fail? In part, it’s because firms are generally insulated from the consequences of their actions, and benefit from hard-fought tax benefits that allow many of their executives to often pay lower rates than you and I do. Together, this means that firms enjoy disproportionate benefits when their plans succeed, and suffer fewer consequences when they fail.

Consider the case of the Carlyle Group and the nursing home chain HCR ManorCare. In 2007, Carlyle — a private equity firm now with $373 billion in assets under management — bought HCR ManorCare for a little over $6 billion, most of which was borrowed money that ManorCare, not Carlyle, would have to pay back. As the new owner, Carlyle sold nearly all of ManorCare’s real estate and quickly recovered its initial investment. This meant, however, that ManorCare was forced to pay nearly half a billion dollars a year in rent to occupy buildings it once owned. Carlyle also extracted over $80 million in transaction and advisory fees from the company it had just bought, draining ManorCare of money.

ManorCare soon instituted various cost-cutting programs and laid off hundreds of workers. Health code violations spiked. People suffered. The daughter of one resident told The Washington Post that “my mom would call us every day crying when she was in there” and that “it was dirty — like a run-down motel. Roaches and ants all over the place.”

In 2018, ManorCare filed for bankruptcy, with over $7 billion in debt. But that was, in a sense, immaterial to Carlyle, which had already recovered the money it invested and made millions more in fees. (In statements to The Washington Post, ManorCare denied that the quality of its care had declined, while Carlyle claimed that changes in how Medicare paid nursing homes, not its own actions, caused the chain’s bankruptcy.)

Carlyle managed to avoid any legal liability for its actions. How it did so explains why this industry often has such poor outcomes for the businesses it buys.

The family of one ManorCare resident, Annie Salley, sued Carlyle after she died in a facility that the family said was understaffed. According to the lawsuit, despite needing assistance walking to the bathroom, Ms. Salley was forced to do so alone, and hit her head on a bathroom fixture. Afterward, nursing home staff reportedly failed to order a head scan or refer her to a doctor, even though she exhibited confusion, vomited and thrashed around. Ms. Salley eventually died from bleeding around her brain.

Yet when Ms. Salley’s family sued for wrongful death, Carlyle managed to get the case against it dismissed. As a private equity firm, Carlyle claimed, it did not technically own ManorCare. Rather, Carlyle merely advised a series of investment funds with obscure names that did. In essence, Carlyle performed a legal disappearing act.

In this case, as in nearly every private equity acquisition, private equity firm benefit from a legal double standard: They have effective control over the companies their funds buy, but are rarely held responsible for those companies’ actions. This mismatch helps to explain why private equity firms often make such risky or shortsighted moves that imperil their own businesses. When firms, through their takeovers, load companies up with debt, extract onerous fees or cut jobs or quality of care, they face big payouts when things go well, but generally suffer no legal consequences when they go poorly. It’s a “heads I win, tails you lose” sort of arrangement — one that’s been enormously profitable.

But it isn’t just that firms benefit from the law: They take great pains to shape it, too. Since 1990, private equity and investment firms have given over $900 million to federal candidates and have hired an untold number of senior government officials to work on their behalf. These have included cabinet members, speakers of the House, generals, a C.I.A. director, a vice president and a smattering of senators. Congressional staff members have found their way to private equity, too: Lobbying disclosure forms for the largest firms are filled with the names of former chiefs of staff, counsels and legislative directors. Carlyle, for instance, at various times employed two former F.C.C. chairmen, a former S.E.C. chair, a former NATO supreme allied commander, a former secretary of state and a former British prime minister, among others.

Such investments have paid off, as firms have lobbied to protect favored tax treatments, which in turn have given them disproportionate benefits when their investments succeed. The most prominent of these benefits is the carried interest loophole, which allows private equity executives to pay such low tax rates. The issue has been on the national agenda since at least 2006, and three presidents have tried to close the loophole. All three have failed.

Most recently, in 2021, as part of his first budget, President Biden proposed to end the benefit for people with very high incomes. But as he made his pitch, private equity opposition surged, and the largest firms each spent $3 million to $7 million on lobbying that year alone. One firm, Apollo Global Management, employed the former general counsel to the House Republican caucus, a former senior adviser to a past speaker of the House, a former chief of staff to another speaker and a former senator, plus more than a dozen other former officials.

As the plan wound its way through Congress, it grew weaker, and by the fall of 2021, the proposal to end the benefit was no longer a part of Mr. Biden’s budget negotiations. Instead, Congress approved an amendment that largely exempted small and midsize companies owned by private equity firms from a new corporate minimum tax. It was an obscure but important consideration, and with it, private equity firms managed not just to protect a preferred tax advantage — the carried interest loophole, which benefited people like Blackstone’s Stephen Schwarzman, whose income in 2022 was 50 times that of the chief executive of Goldman Sachs — but also to win a new one.

The story further explains why the actions of private equity firms often have such sorry consequences for everyone except themselves. By protecting favored tax benefits, firms receive disproportionate gains when their strategies succeed. But, insulated from liability, they face little consequence if those plans fail. It’s an incentive system that encourages risky, even reckless behavior like that at ManorCare, and is designed to work for private equity firms and no one else.

But if private equity firms are powerful, so too are ordinary people, who’ve had surprising success confronting firms regarding unaffordable prison phone calls and surprise medical bills, among other issues. Even if we’re unlikely to fix our tax code soon, activists and others can still push to update our laws and hold private equity responsible for its actions. Congress can clarify that firms can be sued for wrongs committed by companies they effectively control. States and cities can do the same when portfolio companies are based in their jurisdictions. By making private equity firms responsible for their own actions, we can build a better — and fairer — economy, and make tragedies like that at ManorCare less likely. All we need is the courage to act.

https://www.nytimes.com/2023/04/28/opinion/private-equity.html

 

Nearly a third of nurses nationwide say they are likely to leave the profession

By Jaclyn Diaz - NPR - May 2, 2023

Close to a third of nurses nationwide say they are likely to leave the profession for another career due to the COVID-19 pandemic, a new survey from AMN Healthcare shows.

This level is up at least seven points since 2021. And the survey found that the ongoing shortage of nurses is likely to continue for years to come.

About 94% of nurses who responded to the AMN Healthcare survey said that there was a severe or moderate shortage of nurses in their area, with half saying the shortage was severe. And around 89% of registered nurses (RNs) said the nursing shortage is worse than five years ago.

Nurses aren't optimistic about the future, either. At least 80% of those surveyed expect that to get much worse in another five years, the report shows.

Unions representing nurses have long warned about the problem facing the profession, said National Nurses United President Deborah Burger and President of SEIU Healthcare 1199NW Jane Hopkins. Both women are also RNs.

"It's a critical moment in our time for nurses. The country needs nurses. We are very short and we are feeling very worried about the future of their work," Hopkins said. 

The COVID-19 pandemic certainly exacerbated problems, but short staffing was an issue even before then, Burger and Hopkins said.

"The staffing crisis didn't just happen. It's been around for years. Unions have been sounding the alarm that organizations were putting profits before patients," Hopkins said. Employers "had cut staffing so bad, that there was no room for flexibility."

She said she hears from members that they rarely have time to eat lunch or use the bathroom during their shifts.

Low staffing has a dangerous trickle-down effect, Burger said. It leads to a heavier workload, more stress and burnout for the remaining staff, as well as a negative impact to patient care.

The AMN Healthcare survey findings indicated younger generations of nurses were also less satisfied with their jobs compared to their older counterparts.

But even before the pandemic, the younger generation had signaled they were done with nursing, Hopkins said. "First and second year nurses were leaving the profession at a higher rate because it's not what they expected. This escalated during the pandemic," she said.

Across generations, a higher percentage of nurses also reported dealing with a greater deal of stress at their job than in previous years, the survey said. Four in five nurses experience high levels of stress at work — an increase of 16 points from 2021.

Similarly, a higher level of nurses reported feeling emotionally drained from the 2021 survey — up at least 15% in two years (62% to 77%).

One source of that stress? Nurses are also experiencing an increasing level workplace violence in the hospitals, Burger said.

"Nurses don't feel safe in many of the hospitals around the country. And we've heard horrendous stories. That also gets tied back into short staffing," she said.

Nurses have been fighting for better working conditions

This discontent among staff has deeper implications for hospitals and other organizations across the country.

In January, around 7,000 nurses in New York went on strike over a contract dispute with hospitals in the city. The nurses were looking for higher wages and better working conditions. This strike forced several hospitals to divert patients elsewhere.

Vox reported in January that nurses and other healthcare workers have frequently gone on strike in recent years. In 2022, eight of the 25 work stoppages involving 1,000 or more workers in the U.S. were done by nurses.

National Nurses United has issued a number of its own reports and surveys about the current state of the profession, which have come to similar conclusions to the AMN survey. The union has lobbied Congress hard to pass legislation that address staffing ratios and improve workplace safety provisions.

The AMN Healthcare survey similarly recommended that health care providers create safer working environments and broader regulatory changes to make meaningful differences.

Burger was more direct.

"Stop studying it and start actually legislating. Congress knows that they need to do something," Burger said.

"It's concerning that there's a lot of hand wringing," she said, but nothing is being done. 

https://www.mainepublic.org/npr-news/npr-news/2023-05-02/nearly-a-third-of-nurses-nationwide-say-they-are-likely-to-leave-the-profession 


 

Maine Legislature may restrict ‘facility fees’ charged by hospitals

The legislation was drafted after a Press Herald investigation revealed that some health care providers add the fees without disclosure or explanation. 

 by Joe Lawlor - Portland Press Herald - April 28, 2023

Maine lawmakers will consider a bill to strictly regulate – in some cases ban – so-called facility fees that are sometimes tacked onto medical bills and can add hundreds of dollars to the cost of routine hospital visits.

The charges are controversial, with consumer advocacy groups arguing that they unfairly shift costs onto patients without warning and hospitals maintaining that the fees are needed to support an array of uncompensated services they provide.

Senate President Troy Jackson, D-Allagash, and House Speaker Rachel Talbot Ross, D-Portland, are sponsoring the bill, indicating it’s a priority among Democratic leadership.

Jackson drafted the bill after a Press Herald investigation revealed that health care providers are adding – and sometimes hiding – surcharges called facility fees to patients’ bills, often charging hundreds of dollars simply because an outpatient procedure or test was performed in a hospital. The newspaper’s investigation, published last August, reported that patients are surprised, confused and frustrated by such charges, and that insurance companies are not covering them, leaving patients stuck paying the bill.

In one example, a Portland patient complained of being charged a $510 facility fee for a few minutes of care for a sliced finger at Northern Light Mercy Hospital in Portland.

Jackson said Thursday that the legislation will help make health care more affordable and accessible.

“The goal is to clamp down on so-called facility fees and protect patients from being nickeled-and-dimed at every turn,” Jackson said. “We need to make sure that our health care system centers patients, not profits. Prohibiting unwarranted facility fees would mark a step in the right direction.”

A spokesman for Gov. Janet Mills did not respond to questions about whether she supports the bill. But in comments last year, Mills said she is “determined” to “see what more can be done to protect Maine people” from surprise and hidden medical bills.

The bill would ban facility fees from outpatient clinics and other non-hospital locations. For certain procedures, hospitals also would be barred from charging facility fees.

The Maine Department of Health and Human Services would be required to create a list of services for which patients could not be charged facility fees. The list is not spelled out in the bill, but common screenings such as colonoscopies, blood tests, MRIs, mammograms and other routine care would likely be targeted. The legislation also would require DHHS to submit to the Legislature an annual report about facility fees.

Ann Woloson, executive director of Consumers for Affordable Health Care, which advocates on behalf of patients before the Legislature, said the fees are especially anti-consumer because they “are often unknowingly charged to patients.”

“(The bill) provides an initial but measured approach to limiting when and where facility fees can be charged, and requires reporting by hospitals that will help policy makers better understand this particular cost driver,” Woloson said. “If passed, the bill will also certainly help ease a portion of health care cost burden that Maine consumers face.”

Hospitals have contended that facility fees are needed to help recoup the costs of operating hospitals, including treating patients who don’t have insurance coverage or the ability to pay and Medicaid patients who are covered at lower reimbursement rates than patients with private insurance. Unlike hospitals, many private medical practices limit the number of uninsured or Medicaid patients they will care for.

Jeff Austin, vice president of government affairs for the Maine Hospital Association, said the bill would regulate rates, which the state is not set up to do for private insurance.

“We don’t have a (public utility commission) type body set up to do rate regulation,” Austin said. “We shouldn’t be regulating rates in one-off bills by the Legislature.”

Austin said where the state does regulate rates, in the combined federal-state Medicaid program, the state only pays 76% of the cost of hospital services.

“The state has a track record of setting rates that makes us nervous,” Austin said.

Austin said hospitals provide many money-losing services that independent outpatient centers can’t or won’t do, such as clinics in rural areas. Limiting fees could result in reduced access in parts of rural Maine, Austin said, as hospitals look to contain costs.

Proposals to regulate facility fees are in the early stages in most states, if they are being proposed at all. Connecticut was the first and, so far, only state to aggressively regulate hospital facility fees.

https://www.pressherald.com/2023/04/28/maine-legislature-may-restrict-facility-fees-charged-by-hospitals/

Expectant Mom Needed $15,000 Overnight to Save Her Twins

Column: Why you can’t find a primary care doc

by Ken  Dolkart - Valley News - November 21, 2022

Have you had difficulty finding care with a primary care clinician? If so, you’re not alone - it’s become more difficult to establish with primary care all across the country. Last summer in the Upper Valley where I live, after a million dollar rebranding, Dartmouth Health announced it was unable to accept new patients for primary care.  98 million now Americans live in a primary care shortage area, often in rural regions.
   Access and continuity with high-quality primary care is the bedrock of high-functioning health care systems. Primary care teams assure immunization, screenings for lead poisoning in children or cancer in adults, address health habits, mental health and numerous conditions like hypertension and diabetes, while coordinating care for an aging population. The National Academies of Sciences concluded that primary care is the only medical specialty of which more practitioners improves longevity, equity and the health of a population.  Broad societal solutions are required to remedy such social determinants of health as racism, inadequate housing, food insecurity and the opioid epidemic. However, improving primary care access is the sole responsibility of any effective medical system.
   US adults are least likely among developed nations to have regular primary care. The Association of American Medical Colleges projects a shortfall of 55,000 primary care clinicians in 10 years. Physician retirement accelerated from rising administrative burdens and after-hours spent on unwieldy electronic medical records. US surveys report poor work/life balance, stress and burnout among primary care doctors. Fewer doctors, nurse practitioners and physician assistants are electing to enter the field. Most other developed nations dedicate more expenditure on primary care services and work to integrate such services within communities. The US spends a declining 5-8% of total health dollars on primary care, while other nations allocate 14%.  Many other nations compensate generalists on par with hospital-based subspecialists, and their primary care clinicians deal with much less administrative burden. Here, career compensation for primary care/pediatrics remains half that earned by “proceduralists.” You get what you pay for:primary care docs constitute 45% of practicing physicians in France and 26% in the UK, versus 12% in the US.  Better health outcomes, reduced mortality amenable to medical care and greater longevity are related consequences. 
   There are many reasons US primary care has become secondary. A “Relative Value Scale Update Committee” (RUC) is convened by the AMA to set specialty reimbursement. The RUC has 32 voting members, of which 27 represent medical specialties, and recommendations of the RUC are implemented by Centers for Medicare and Medicaid Services (CMS.) The AMA is beholden to specialist societies and conflict of interest are rife within RUC. Importantly, health insurers are allowed to negotiate, behind closed-doors, with hospital-multi-specialty practices to set payment for services.  The consolidated mega-hospital systems strive to increase “market share”  of “covered lives” in their regions, so to command higher payments from insurers in such negotiations. (Higher costs of hospital service do not trouble the insurers - they make profit off a percentage of the premiums they set, so, when hospitals charge more, they just raise premiums to cover the costs, keeping a steady 20% for overhead and profit.) According to the Urban Institute, commercial insurance compensation for specialty services range 10% to 330% higher than Medicare rates, whereas rates for cognitive services via family medicine or psychiatry are barely above the CMS-set rates. Hospitals make the most revenue from elective surgical procedures.  Hence, all the ads for knee replacements. The hospital-multi-specialty megaliths view primary care as a “loss leader” and may value primary care accordingly.
   “Moral injury” as well as salary issues has impaired American primary care. With the rise of HMOs in 1990s, primary care docs were positioned in a professionally untenable role of “gatekeepers.” Group practices received fixed yearly reimbursement per patient from HMOs, so conflict of interest arose to limit care or procedures. That has abated, but Medicare Accountable Care Organizations are now piloted to be managed by private equity, which will recreate perverse incentives, but this time among patients who aren’t even aware they are enrolled in a Medicare ACO. Healthcare organizations have also misapplied business principles to transform doctors into efficient producers of healthcare “product lines.” Highly trained clinicians with fiduciary advocacy for their patients are morphed into “providers” clicking off check-boxes and diagnostic codes during abbreviated visits with increasingly older and complex patients.  
  Of interest, the word provider is extracted from commerce. It’s first medical usage was in 1965 Medicare legislation, referring to vendors  delivering health-related products or services. “Provider’ makes no reference to professionalism. Teachers and lawyers aren’t labeled as knowledge “providers” nor legal expertise providers, and we go to a barber, not a hair-shortening provider.  The highly profitable medical-industrial complex aims to transform healthcare from a public good to a commodity. In doing so, doctors became “providers” to support an engagement in a commercial transaction, rather than within a trusted, longterm, therapeutic doctor-patient relationship.
   Short of Medicare for All, here’s some options: Congress should legislate that CMS set fees based on advice from transparent public agencies that meet societal needs, rather than needs of over represented specialty groups in the AMA. So recommends the Government Accountability Office. Congress can shut the revolving door of administrators leaving CMS to become health industry lobbyists and back again.  Insurance “intermediaries” that market Medicare, Medicaid, employee-sponsored insurance, ACA and other tax-supported “products” must develop uniform forms and policies to lessen burden on practices and patients, and pay for community-integrated primary care teams rather than “providers delivering services.”  Un-taxed hospital-megaliths can be mandated to provide robust, equitable, high-quality primary care for the communities they serve. Incentives and tuition-reimbursement should be enhanced for clinicians who wish to enter primary care, especially in rural areas. 
   Lastly, statehouses can learn about our rampant “pricing failure” in health care and consider emulating Maryland’s all-payer system.  This transparent, state-wide negotiation sets uniform payments for hospital services from all types of insurances, such as Medicaid, Medicare and private insurance intermediaries, and involves all hospitals, big or small, urban or rural, profit or non-profit within the state. Via global budgets, it incentivizes improving outcomes within a health system’s community rather than promoting excess revenue for hospitals. According to the Maryland Hospital Association, it has also protected staffing during the pandemic, since global budgets are less subject to wild variations. It also protects those rural hospitals which cannot offer more lucrative specialty programs and serve relatively less-well reimbursed Medicare and Medicaid patients. We can ask our Congressional and state representatives, as well as local hospital board members, to research such actions, and fortify primary care -  our health depends on it.
 
 
 

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