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Roche, GE Project Brings New Spin To Clinical Decision Support

Posted on January 10, 2018 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

The clinical decision support market is certainly crowded, and what’s more, CDS solutions vary in some important ways. On the other hand, one could be forgiven for feeling like they all look the same. Sorting out these technologies is not a job for the faint of heart.

That being said, it’s possible that the following partnership might offer something distinctive. Pharmaceutical giant Roche has signed a long-term partnership deal with GE Healthcare to jointly develop and market clinical decision support technology.

In a prepared statement, the two companies said they were developing a digital platform with a difference. The platform will use analytics to fuel workflow tools and apps and support clinical decisions. The platform will integrate a wide range of data, including patient records, medical best practices and recent research outcomes.

At least at the outset of their project, Roche and GE Healthcare are targeting oncology and critical care. With a pharmaceutical company and healthcare technology firm working together, providing tools for oncology specialists in particular makes a lot of sense.

The partners say that their product will give oncology care teams with multiple specialists a common data dashboard to review, which should help them collaborate on treatment decisions. Meanwhile, they plan to offer critical care physicians a dashboard integrating data from patient’ hospital monitoring equipment with their biomarker, genomic and sequencing data.

The idea of integrating new and possibly relevant information to the CDS platform is intriguing. It’s particularly interesting to imagine physicians leveraging genetic information to make real-time decisions. I think it’s safe to say that we’d all like it if CDS systems could bring the rudiments of precision medicine to thorny day-to-day clinical problems.

But the truth is, if my interactions with doctors mean anything, that few of them like CDS systems. Some have told me flat out that they end up overriding many CDS prompts, which arguably makes these very expensive systems almost irrelevant to hospital-based clinical practice. It’s hard to tell whether they would be willing to trust a new approach.

However, if GE and Roche can pull off what they’re pitching, it might just provide enough value it might convince them. Certainly, creating a more flexible dashboard which integrates data and office workflows is a large step in the right direction. And it’s probably fair to say that nothing like this exists in the market right now (as they claim).

Again, while there’s no guaranteed way to build out useful technology, bringing a pharma giant and a health IT giant might give both sides a leg up. I wonder how many users and patients they have involved in their design process. Let’s see if they can back up their promises.

Hospital Mobile Strategy Still In Flux

Posted on January 8, 2018 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

The following is a look at how hospitals’ use of communication devices has changed since 2011, and what the patterns are now.  You might be surprised to read some of these data points since in some cases they defy conventional wisdom.

The researchers behind the study, communications tech provider Spok, Inc. surveyed about 300 healthcare professionals this year, and have tracked such issues since 2011. The report captures data on the major transitions in hospital mobile communications that have taken place since then.

For example, the report noted that in 2011, 84% of staffers received job-related alerts on pagers. Sixty-two percent are using wireless in-house phones, 61% desk phones, 77% email on their computers, 44% cell phones and 5% other devices.

Since then, mobile device usage in hospitals has changed significantly. For example, 77% of respondents said that their hospital supports smartphone use. The popularity of some devices has come and gone over time, including tablets and Wi-Fi phones (which are nonetheless used by 63% of facilities).

Perhaps the reason this popularity has risen and fallen is that hospitals are still finding it tricky to support mobile devices. The issues include supporting needed infrastructure for Wi-Fi coverage (45%), managing cellular coverage infrastructure (30%), maintaining data security (31%) and offering IT support for users (about 30%). Only 11% of respondents said they were not facing any of these concerns at present.

When the researchers asked the survey panel which channels were best for sharing clinical information in a hospital, not all cited contemporary mobile devices. Yes, smartphones did get the highest reliability rating, at 3.66 out of five points, but pagers, including encrypted pagers, were in second place with a rating of 3.20. Overhead announcements came in third at 2.91 and EHR apps at 2.39.

The data on hospitals and BYOD policies seemed counterintuitive as well. According to Spok, 88% of facilities supported some form of BYOD in 2014, or in other words, roughly 9 out of 10.  That percentage has fallen drastically, however, BYOD support hitting 59% this year.

Not surprisingly, clinicians are getting the most leeway when it comes to using their own devices on campus. In 2017, 90% of respondents said they allowed their clinicians to bring their own devices with them. Another 69% supported BYOD for administrators, 57% for nurses and 56% for IT staffers. Clearly, hospital leaders aren’t thrilled about supporting mobility unless it keeps clinical staff aligned with the facility.

To control this cacophony of devices, 30% said they were using enterprise mobility management solutions, 40% said they were evaluating such solutions and 30% said they had no plans to do so. Apparently, despite some changes in the devices being used, hospitals still aren’t sure who should have mobile tools, how to support them and what infrastructure they need to keep those devices lit up and useful.

Hospitals Puts Off Patient Billing For Several Months During EMR Rollout

Posted on January 6, 2018 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

Here’s something you don’t see every day. A New Hampshire hospital apparently delayed mailing out roughly 10,000 patient bills going back as far as 11 months ago while it rolled out its new EMR.

According to a report in the Foster’s Daily Democrat,  members of Frisbie Memorial Hospital’s medical staff recently went public with concerns about the hospital’s financial state. Then a flood of delayed patient bills followed, some requesting thousands of dollars, the paper reported.

Hospital officials, for their part, said the delay was planned. Hospital president John Marzinzik said Frisbie needed time to implement its new Meditech EMR and didn’t want to send out incorrect bills during the rollout.

In fact, Marzinzik told Foster’s, under the previous system, records generated during doctor visits weren’t compatible with forms for hospital billing.

Rather than relying further on this patchwork of incompatible systems, Marzinzik and his staff decided to wait until the process was “absolutely clean” for patients. The hospital decided to have a staff member validate every balance shown on a statement before sending them out, he says.

Previously, in December of last year, anonymous Frisbie medical staff members sent Foster’s a letter to share concerns about the hospital and its administrators. The criticisms included skepticism about the over-budget implementation of the $13.5 million Meditech system, which they named as one of the reasons they lack confidence in the hospital administration. The staff members said that this cost overrun, as well as other problems, have undermined the hospital’s financial position.

As is always the case in such situations, hospital leaders took the stage to deny these allegations. Frisbie Senior VP Joe Shields told the paper that the hospital is in sound financial condition, and also said that the only reason why the Meditech project went over budget by $1.5 million was that the administrators delayed the implementation by seven weeks to give the staff holiday time off.

Hmmm. I don’t know about you, but to me, some parts of this story look a little bit bogus. For example:

* I appreciate accurate hospital bills as much as anybody, but the staff was going to check them manually anyway, why did it take 10 or 11 months for them to do so?

* The holidays take place at the same time every year.  Did administrators actually forget they were coming to an event that necessitated an almost 10% cost overrun?

Of course, only a small number of people know the answers to these questions, and I’m certainly not one of them. But the whole picture is a little bit odd.

The Anti Moonshot Conference – Focusing on Practical #HealthIT Innovation

Posted on January 5, 2018 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

We all love to hear about and read about healthcare IT companies with massive visions that are making big bets on some moonshot idea. In fact, there’s a lot of value in thinking about and having moonshot ambitions that could disrupt healthcare as we know it. However, what’s unfortunate is that it seems like every healthcare IT conference out there is far too focused on these moonshot ideas that they miss talking about and collaborating on ways to innovatively deal with the real life challenges hospital IT professionals face every day.

This is the genesis behind why I finally pulled the trigger and launched a new healthcare IT conference called Health IT Expo. I’ve talked to far too many hospital IT professionals that go away from a health IT conference totally empty and in some cases upset that a conference could be so disconnected from the true healthcare IT challenges and realities they face in their hospitals and health systems.

As I’ve discussed this new conference with people, some get the wrong impression about what we’re trying to accomplish. Some suggest that we’re shunning healthcare innovation. I’d argue quite the opposite. At Healthcare IT Expo, our goal is to embrace the full spectrum of innovation and not just those innovations that might be considered “disruptive” or “breakthrough” innovations.

Let’s consider some of the areas that hospital and health system professionals would really like to see innovation and find answers:

  • How can I more effectively manage and secure my desktop and mobile device infrastructure?
  • What’s the right approach to virtualization in my organization? Is it really cost effective? What are the pitfalls I should be aware of?
  • How do I deal with all these legacy applications?
  • What’s the appropriate steps to take when a security breach occurs? (Yes, I already know a security breach is going to occur)
  • How can I ensure the data in my EHR is high quality data that’s useful in analytics applications?
  • What’s the best way to get data out of my EHR so I can use it for [insert project here]?
  • What actionable things can I do to “secure” my biggest security risk: people?
  • How can I streamline my 15 communication systems?
  • In what ways can I improve my EHR training and ensure my users are performing at optimum levels even with inevitable turnover?
  • What should I really be doing with my portal that’s effective for patients and providers?
  • How can I cost effectively handle my support desk so it can handle level 1, level 2, and level 3 support issues 24/7/365 without alienating the wide variety of users we need to support?
  • Do I need a data center? How should I approach my existing server infrastructure and new cloud options?
  • How can I improve patient identification and patient matching across all of my IT systems?
  • What can I do to improve patient registration?
  • Is single sign-on really possible and what can I do to better handle user provisioning?
  • Have I done a proper HIPAA risk assessment? What’s the right way to do remediation? Have I done remediation of any HIPAA risks found?
  • That’s great that you want to user virtual reality, but how am I going to secure it?
    How are we going to clean it? What’s the product lifecycle going to look like?
  • What’s the proper way to do penetration testing?
  • Where can I find real time analytics that are ready to be implemented today?
  • How can I better manage the hundreds of forms across my organization?
  • etc etc etc

I could go on and on and these are just touching the surface of the challenges. No doubt there are a hundred more challenges that don’t get covered at most healthcare IT Conferences because they have the wrong focus and the wrong people attending.

We all want to talk about AI, but what’s the point if I’m still trying to make sure the data is clean and that it’s stored in something other than a PDF or some inaccessible archaic system? Health IT Expo is focused on practical innovation.

If you’re a healthcare IT professional dealing with these real challenges and are looking for practical innovations that will help you and your organization, please join us at Health IT Expo. We want as many in the Healthcare Scene community to join us in New Orleans, so you can also get $300 off your registration (Only $395 to attend after the discount) for Health IT Expo by using the promo code hcscene on the normal registration page. We’re certain you’ll find no other conference out there that provides as much value for the price.

Plus, the Call for Speakers is still open if you have a practical innovation you can share. We even have options for 15 minute sessions if your innovation is useful and impactful, but doesn’t require a speaking degree to share.

Sorry for the sales pitch, but as you can tell I’m excited by Health IT Expo. I think we’ve created a unique conference that will help many hospital IT professionals find a more satisfying conference experience. As someone who’s attended hundreds of healthcare IT conferences, I’ve seen first hand the good, the bad, and the ugly of conferences. We’re taking all of those learnings and packing them into Health IT Expo.

What do you think of this approach? What do you think of Health IT Expo? What other problems do you have that you think we should cover? We’d love to hear from you in the comments or on our contact us page.

Merged Health Systems Face Major EHR Integration Issues

Posted on January 2, 2018 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

Pity the IT departments of Advocate Health Care and Aurora Health Care. When the two health systems complete their merger, IT leaders face a lengthy integration process cutting across systems from three different EHR vendors or a forklift upgrade of at least one.

It’s tough enough to integrate different instances of systems from the same vendor, which, despite the common origin are often configured in significantly different ways. In this case, the task is exponentially more difficult. According to Fierce Healthcare, when the two organizations come together, they’ll have to integrate Aurora’s Epic EHR with the Cerner and Allscripts systems used by Advocate.

As part of his research, the reporter asked an Aurora spokesperson whether health systems attempt to pull together three platforms into a single EHR. Of course, as we know, that is unlikely to ever happen. While full interoperability is obviously an elusive thing, getting some decent data flow between two affiliated organizations is probably far more realistic.

Instead, depending on what happens, the new CIO might or might not decide to migrate all three EHRs onto one from a single vendor. While this could turn out to be a hellish job, it certainly is the ideal situation if you can afford to get there. However, that doesn’t mean it’s always the best option. Especially as health system mergers and acquisitions get bigger and bigger.

To me, however, the big question around all of this is how much the two organizations would spend to bring the same platforms to everyone. As we know, acquiring and rolling out Epic for even one health system is fiendishly expensive, to the point where some have been forced to report losses or have had ratings on the bond reduced.

My guess is that the leaders of the two organizations are counting often-cited merger benefits such as organizational synergies, improved efficiency and staff attrition to meet the cost of health IT investments like these. If this academic studies prove this will work, please feel free to slap me with a dead fish, but as for now I doubt it will happen.

No, to me this offers an object lesson in how mergers in the health IT-centered world can be more costly, take longer to achieve, and possibly have a negative impact on patient care if things aren’t done right (which often seems to be the case).

Given the other pressures health systems face, I doubt these new expenses will hold them back from striking merger deals. Generally speaking, most health systems face little choice but to partner and merge as they can. But there’s no point minimizing how much complexity and expense EHRs bring to such agreements today.

Hospitals Excited By Telehealth, Consumers Not So Much

Posted on December 29, 2017 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

When telehealth first emerged as a major commercial phenomenon, consumers were the main market targeted by providers, especially direct-to-consumer models like Teladoc and American Well. But if a new research report is right, the dynamics of the telehealth market have changed substantially, with hospitals and health systems investing heavily in telehealth and consumers hanging back.

The study, which was conducted by telehealth solutions provider Avizia, found that while hospitals and health systems are making increasingly large bets on telehealth, including infrastructure, training and process re-engineering, patients aren’t matching their enthusiasm.

Consumers who do access telehealth seem happy by what they find. When Avizia asked them to rate their telehealth experiences on a scale from 1 to 10, with 10 rating it as a “great experience,” nearly two-thirds ranked their experiences between 8 and 10. Also, consumers who were using telehealth said that they like the time savings and convenience it could offer (59%), cost savings due to a lack of travel expenses and lower wait times to see clinicians (55%).

That being said, many consumers haven’t gotten on board yet. In fact, roughly eight out of 10 consumers told Avizia that they weren’t well versed in accessing telehealth, nor did they know whether their insurer would pay for it.

Providers, for their part, have ambitious plans for telehealth use. According to the study, the top one was the ability to reach or expand access to patients (72% of respondents). However, they face several obstacles, the study notes, including problems with getting reimbursed by health plans (41%), program expenses (40%) and resistance from clinicians (22%).

The Avizia results suggest that hospitals are still wrestling with many of the problems they’ve faced over the past few years in implementing telemedicine.

For example, a study by KPMG released in mid-2016 noted that about 25% of the 120 providers it studied had implemented telehealth and telemedicine programs which have achieved financial stability and improved efficiency. Thirty-five percent of KPMG respondents said that they didn’t have a virtual care program in place, though 40% had said they had just implemented a program.

Another study, released earlier this year by Reach Health, notes that 50% of hospitals and health systems are beginning to shift department-based telehealth programs to enterprise-based programs, which suggests that they no longer see virtual care as an experimental technology. They still aren’t rolling out these larger programs yet.

Still, the fact that hospitals are continuing to push ahead with telemedicine, and even make meaningful investments, makes it clear that they’re not going to be put off by current telemedicine obstacles. When the reimbursement tide floods the gates, I’m betting that hospital telemedicine programs will go from “not unusual” to “omnipresent.”

Breaking Bad: Why Poor Patient Identification is Rooted in Integration, Interoperability

Posted on December 20, 2017 I Written By

The following is a guest blog post by Dan Cidon, Chief Technology Officer, NextGate.

The difficulty surrounding accurate patient ID matching is sourced in interoperability and integration.

Coordinated, accountable, patient-centered care is reliant on access to quality patient data. Yet, healthcare continues to be daunted by software applications and IT systems that don’t communicate or share information effectively. Health data, spread across multiple source systems and settings, breeds encumbrances in the reconciliation and de-duplication of patient records, leading to suboptimal outcomes and avoidable costs of care. For organizations held prisoner by their legacy systems, isolation and silo inefficiencies worsen as IT environments become increasingly more complex, and the growth and speed to which health data is generated magnifies.

A panoramic view of individuals across the enterprise is a critical component for value-based care and population health initiatives. Accurately identifying patients, and consistently matching them with their data, is the foundation for informed clinical decision-making, collaborative care, and healthier, happier populations. As such, the industry has seen a number of high-profile initiatives in the last few years attempting to address the issue of poor patient identification.

The premature end of CHIME’s National Patient ID Challenge last month should be a sobering industry reminder that a universal solution may never be within reach. However, the important lesson emanating in the wake of the CHIME challenge is that technology alone will not solve the problem. Ultimately, the real challenge of identity management and piecing together a longitudinal health record has to do with integration and interoperability. More specifically, it revolves around the demographics and associated identifiers dispersed across multiple systems.

Because these systems often have little reason to communicate with one another, and because they store their data through fragmented architecture, an excessive proliferation of identifiers occurs. The result is unreliable demographic information, triggering further harm in data synchronization and integrity.

Clearly, keeping these identifiers and demographics as localized silos of data is an undesirable model for healthcare that will never function properly. While secondary information such as clinical data should remain local, the core identity of a patient and basic demographics including name, gender, date of birth, address and contact information shouldn’t be in the control of any single system. This information must be externalized from these insulated applications to maintain accuracy and consistency across all connected systems within the delivery network.

However, there are long-standing and relatively simple standards in place, such as HL7 PIX/PDQ, that allow systems to feed a central demographic repository and query that repository for data. Every year, for the past eight years, NextGate has participated in the annual IHE North American Connectathon – the healthcare industry’s largest interoperability testing event. Year after year, we see hundreds of other participating vendors demonstrating that with effective standards, it is indeed possible to externalize patient identity.

In the United Kingdom, for example, there has been slow but steady success of the Patient Demographic Service – a relatively similar concept of querying a central repository for demographics and maintaining a global identifier. While implementation of such a national scale service in the U.S. is unlikely in the near-term, the concept of smaller scale regional registries is clearly an achievable goal. And every deployment of our Enterprise Master Patient Index (EMPI) is a confirmation that such systems can work and do provide value.

What is disappointing, is that very few systems in actual practice today will query the EMPI as part of the patient intake process. Many, if not most, of the systems we integrate with will only fulfill half of the bargain, namely they will feed the EMPI with demographic data and identifiers. This is because many systems have already been designed to produce this outbound communication for purposes other than the management of demographic data. When it comes to querying the EMPI for patient identity, this requires a fundamental paradigm shift for many vendors and a modest investment to enhance their software. Rather than solely relying on their limited view of patient identity, they are expected to query an outside source and integrate that data into their local repository.

This isn’t rocket science, and yet there are so few systems in production today that initiate this simple step. Worse yet, we see many healthcare providers resorting to band aids to remedy the deficiency, such as resorting to ineffective screen scraping technology to manually transfer data from the EMPI to their local systems.

With years of health IT standards in place that yield a centralized and uniform way of managing demographic data, the meager pace and progress of vendors to adopt them is troubling. It is indefensible that a modern registration system, for instance, wouldn’t have this querying capability as a default module. Yet, that is what we see in the field time and time again.

In other verticals where banking and manufacturing are leveraging standards-based exchange at a much faster pace, it really begs the question: how can healthcare accelerate this type of adoption? As we prepare for the upcoming IHE Connectathon in January, we place our own challenge to the industry to engage in an open and frank dialogue to identify what the barriers are, and how can vendors be incentivized, so patients can benefit from the free flow of accurate, real-time data from provider to provider.

Ultimately, accurate patient identification is a fundamental component to leveraging IT for the best possible outcomes. Identification of each and every individual in the enterprise helps to ensure better care coordination, informed clinical decision making, and improved quality and safety.

Dan Cidon is CTO and co-founder NextGate, a leader in healthcare identity management, managing nearly 250 million lives for health systems and HIEs in the U.S. and around the globe.

Hospital Strategic Partnerships Avoid Mergers, But Create Other Pain Points

Posted on November 21, 2011 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

This is one of those periods in health biz history when M&A looks especially attractive.  What CEO wouldn’t give a second thought to getting acquired and picking up a bundle of cash when they’re struggling to survive?

In fact, one attorney with a national health care law firm argues that that as many as 50 to 60 percent of doctors and hospitals are looking for partnership opportunities of late, in part because health reform encourages consolidation.

The question is whether the institutions can put aside their differences long enough to talk business — particularly if they have dueling missions (such as religious charity vs. profit). Not only that, it’s not clear whether partnerships will meet their needs for long, as we’ll discuss below.

Given their druthers, many institutions would prefer to stick it out on their own and do things their own way. And despite the urge to merge, many hospitals are keeping their independence through strategic partnerships, notes Becker’s Hospital Review.

It’s hard to argue that partnerships can have their advantages, as the Becker’s piece notes. Hospitals can cut overhead costs by sharing services and staffing, while expanding on their local reach and adding services they might lack.

Partners can also come together to shore up specific service lines without having to invest heavily on their own. That was the purpose of a recent agreement between Saint Vincent Health Center in Erie, PA and the Cleveland Clinic, which are teaming to further boost the reputation of their already high-profile organizations in cardiac and neurological services, according to the Becker’s piece.

And hospital partners can save big bucks by rolling out the all-but-mandatory EMR system together, too.  Not only do the hospitals save bucks on staffing and technical expenses, they also end up sharing clinical data by default. Ideally, they’ll provide higher-quality care and save money by avoiding duplicate services.

Hospital partnerships may make it easier to build an effective Accountable Care Organization, too. After all, it’s easier to share data and coordinate treatment if you already have a trusting relationship in place, particularly if you’re already integrated clinically.

That being said, partnership building comes with its own set of frustrations. Take last year’s relationship struck by Reston, WA-based Providence Health & Services and Seattle-based Swedish Health Services.

To get along, the two parties had to set up a complicated structure letting Providence’s 27 hospitals keep their Catholic mission, while the five Swedish hospitals stayed non-religious. The two will work together using the Epic EMR to work together on shared best practices and population health.

And that’s far from their biggest headache. Ultimately, hospitals won’t save the kind of money they’d like to save, nor build new business the way they’d hope to, without completing a real merger. At that point, things can get expensive and even more complicated, as individual IDNs or facilities fight to keep key partners of their strategy in place.

Meanwhile, the hospitals in question may find that merging doesn’t meet regulatory approval. Hey, look at what happened when ProMedica Health System of Toledo and nearby St. Luke’s Hospital decided to get hitched. The $1.7B ProMedica chain, has 11 hospitals in Ohio and Michigan, came riding to the financially-ailing St. Luke’s rescue with a $35 million investment in August 2010.

Since then, though, the FTC has cracked down hard on ProMedica, arguing that the deal unfairly monopolizes the Toledo market,  in particularly by raising its share of the inpatient obstetrical services market to 80 percent. (Hey, ask your friendly editor and I have to admit that the FTC’s argument has some merit.)

So, where can hospitals turn if they want to thread their way through the current hospital business climate?

Well, at least one model — promoted by organizations like Paradigm Physician Partners and the LHP Hospital Group — have rolled out a model in which, as privately held companies, they form joint ventures with and sink capital into non-profit hospitals and health systems. LHP, which holds joint interest in some or all of the hospital’s operations through an LLC,  recently closed a deal with Pocatello, ID-based Portneuf Medical Center.

I predict that hospitals will find new ways to take in investment without giving up equity or their non-profit status. If new models pop up on my viewscreen I’ll let you know — I think this’ll be a hot new transaction strategy.

 

Hospital M&A Getting Tough (But Misguided) Scrutiny From Lawmakers

Posted on November 7, 2011 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

As us in “the biz” know, the pace of hospital M&A isn’t going to slow down anytime soon. Hospitals are huddling together to scale up for countless reasons.

The reasons for hospital consolidation are just about unstoppable, of course, as they include  a) well-founded fears regarding reform, b) trouble carrying the capital capital costs involved in scaling up health IT infrastructure, c) long-term trends squeezing hospital margins and d) the need to participate effectively  in ACOs, HIEs and other alphabet soup organizations.

Unless the government takes over the entire healthcare system and spends these factors away, they’ll push execs into the arms of their peers regardless of what federal policies roll out.  Yes, the FTC can put mergers on hold, and notably, has gone medieval on a few mergers just to prove it can, but let’s not pretend it has the resources to slow hospital consolidation dealflow much either.

So, I must say I was sort of amused to learn that members of the  House Ways and Means Subcommittee on Health took a  stern look at hospital dealmaking and consolidation last month.  You know, to me it’s like standing in a flooded basement in a rainstorm and focusing on a few cracks in the wall — but I digress.

At the hearing, an economics and health policy professor named Martin Gaynor testified that consolidation was picking up speed. He also asserted that studies show hospital prices going up meaningfully whenever hospital markets consolidate.

Geez, Professor Gaynor, you say that like it’s a bad thing! Doesn’t classical economics allow for the supply side folks to work together too, without breaking the system? Whoops, I digress again.

The hearing, which took place in September, also included data from a Rand Corp. study noting that health plans were consolidating dramatically, and that these mergers were giving health plans too much power.  (Wow, imagine that — health plans having too much power?)

Oh, Lord, why does all of this seem beside the point?  Well, probably because it’s not going to help anyone.  Sure, knowing  what impact hospital M&A is having is part of a well-informed Health Subcommittee’s job description.  And I appreciate that the Subcommittee is trying to look at the bigger picture, one which includes both health insurers and hospitals.

But hearings like this, which assume that pricing indicators are the best way to decide whether the public good is being served, strike me as painfully uninformed. While I’m no economist, I have seen a few deals come and go, and some ill-considered attempts to control dealflow too. After following the health market for decades, I’m convinced that playing Whack-A-Mole and slapping down those “bad guys” who are overcharging/underpaying gets us nowhere.

 

FTC: This Merger Looks So Good, It Has To Be Illegal

Posted on August 29, 2011 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

If you’re as cynical as I am, it’s not hard to take a certain amusement in the goings-on in Toledo over the merger between an aggressive for-profit hospital chain and a suburban not-for-profit.

Over the past few months, the Federal Trade Commission seems to have developed a passionate interest in the merger between a formerly Lutheran-owned non-profit, St. Luke’s Hospital of Maumee, OH and ProMedica Health System of Toledo. ProMedica, which owns 11 hospitals in Ohio and Michigan — including four in the Toledo metro — is a swaggering giant with $1.7 billion in annual revenue.

What a sweet deal it was for ProMedica. According to Moody’s, the facility had very little debt ($8.3 million) and 412 percent cash-to-debt coverage as of November 30, 2009 (recently enough to matter).

Sure, as of early 2010 St. Luke’s had an operating cash flow deficiency of -2.0 percent and -9.8 percent operating margin, and at least according to Moody’s, had cut some cut-rate contracts with payors accounting for 22 percent of its operating revenues.

On the other hand, its miserably weak competitive market position which, as Moody’s noted in its downgrade report, included clashes with ProMedica, went away with the stroke of a pen when the two consummated their agreement. ProMedica sweeps in with its Aa3-rated borrowing capacity, invests a relatively slim $35 million and picks up the 10 percent market share SLH held at the time. I don’t know what 10 percent of the market is worth, but that has to be a fire sale.

Dig this if you can, cats and kittens:  According to the FTC,  the deal increases ProMedica’s market share in Toledo to 58 percent of inpatient services and (get this) 80 percent of high-margin inpatient OB services. Wow… Small wonder the FTC smells a rat.

Of course, in the sort of excess of confidence you always see in these deals, ProMedica’s executives are pretending the deal was good for the public and stuff.  I don’t know about you, but I find the following comment (made by ProMedica CEO Randy Oostra to the New York Times) to be preposterous:

“We could coordinate care,” Mr. Oostra said. “We could improve quality at St. Luke’s by adopting electronic health records and using clinical protocols to standardize the delivery of care. But the F.T.C. has stopped us in our tracks.” 

OK, let me get this straight, Mr. Oostra. You could only connect with St. Luke’s by buying it and forcing your EHR down its throat (after all, we know you’re not going to put St. Luke’s on Cerner if you use Epic)? You’re buying a hospital with tremendous upside largely because you think you can standardize care — because that will, of course, increase effectiveness and lower prices?  Oh, and as far as sharing data and coordinating care: have you ever heard of a health information network? Or an Accountable Care Organization?

Really, sir, if you want to impress the FTC with the public benefits of your transaction, you’re going to have to try a little harder. If you’re already phoning it in, to the Times no less, you’re not just arrogant, you’re stupid.