Private Equity Market Intelligence: Physician/Hospital Quarterly Report – Q4
Key Findings –
..ACA enrollment reached 11.3 million by the end of the third open enrollment period, surpassing HHS expectations. Three-quarters of the enrollees were from the 38 states that use the healthcare.gov enrollment platform.
Please see full Newsletter below for more information.
1. Key Findings
• ACA enrollment reached 11.3 million by the end of the third open-
enrollment period, surpassing HHS expectations. Three-quarters of the
enrollees were from the 38 states that use the healthcare.gov enrollment
• Ohio’s Medicaid spending was $23.5 billion, nearly $2 billion less than
expected for the fiscal year that ended in June, despite expansion of the
• Medicaid expansion reduced uninsured hospital stays, due to increased
access to physicians and cost-related barriers to care being cut down.
• The FTC appears to be paying added attention to large
hospital mergers after attempting to block a trio of proposals
in Illinois, Pennsylvania and West Virginia. The regulator argued
the proposed mergers would create a dominant provider of
general acute care inpatient services in the local markets.
• Despite high-profile cyberattacks, the U.S. healthcare
industry still falls short on adequate data protection. In
2016, hackers may seek to capitalize by releasing
ransomware for medical devices and
• Health insurers selling Medicare
Advantage plans can expect larger
pay bumps in 2017. The CMS
released a key metric for 2017
Medicare Advantage payment
rates showing the Medicare fee-for-
service baseline rate will increase by
3.1% in 2017.
Health Care Market Intelligence
Table of Contents
1. Key Findings
2. Industry News
– Physician Practices
2. Industry News
• Researchers found that Medicaid expansion significantly reduced uninsured hospital stays in
2014, due to increased access to physicians and cost-related barriers to care being cut down,
with the largest effects occurring in the 29 states that expanded Medicare by the first quarter of
• At $23.5 billion, Ohio’s total Medicaid spending was nearly $2 billion (7.6%) less than expected
for the fiscal year that ended in June, despite more newly eligible enrollees under an expansion
of the program.
• The HHS reported that improved patient safety saved 87,000 lives, nearly $20 billion and
reduced hospital-acquired conditions across the U.S. by 17% from 2010 to 2014. Patients also
experienced 2.1 million fewer hospital-acquired conditions during the studied period.
• Premier Health and Humana teamed up on a Medicare Advantage initiative and are partnering
on a value-based agreement, giving Humana’s Medicare Advantage members in southwest Ohio
access to Premier Health’s facilities and physicians.
• Ohio State University’s Wexner Medical Center affiliated with Hocking Valley Community
Hospital. Hocking Valley remains independent, but will work with Ohio State to develop care
options to keep patients closer to home.
• Lakewood city council reached an agreement with the Cleveland Clinic and the Lakewood
Hospital Association that would see the hospital end inpatient services on Feb. 5 and
construction of a $34-million family health center will begin in the fall of 2016.
• Several healthcare systems are increasingly selling health insurance plans. Such “provider-led
plans” can be popular with consumers, but analysts say it remains to be seen how many will
succeed long-term as insurers. Many health systems have long sponsored insurance plans,
including Kaiser Permanente, Geisinger Health System and Intermountain Healthcare.
• A Health Care Incentives Improvement Institute Report Card found most states received a failing
grade for providing information to consumers on the quality of physician care for the third year in
a row. Although it passed, Ohio received a D in the report.
• An AMA report assessed physician participation in medical homes and Medicare ACOs. More
than half of physicians are using alternative payment models. It also found that: participation
in medical homes and ACOs varies with practice type; many physicians are unaware if they are
part of a medical home or ACO; and ownership structure plays a role in practices that are part of
a medical home or ACO.
• Telemedicine is failing to reach its full potential, largely due to restrictive policies in some
states that make it difficult to practice and pay for, such as requiring patients be accompanied
by a health professional during sessions and some states, including Ohio, that limit Medicaid
coverage to patients who live a minimum distance from providers.
Physician/Hospital Quarterly Report–Q4
• Thirteen states, including Ohio, New York and California, reached agreements with CMS under
the ACA to develop programs that would improve care for dual-eligible patients while saving
the health system money, in part by keeping more people out of nursing homes.
• A total of 758 hospitals across the U.S. faced penalties under the Hospital-Acquired
Condition (HAC) Reduction Program. CMS reduces Medicare payments by 1% for hospitals
ranked in the worst-performing quartile of those receiving HAC scores, which for fiscal year
2016 included seven facilities in Northeastern Ohio. This is the second year for the HAC
program after 724 hospitals were penalized in fiscal year 2015. Approximately half of those
penalized so far in 2016 are repeat-offenders.
• City of Cleveland and hospital officials announced that emergency rooms in the city would
start accepting all patients transported by ambulances, regardless of traffic volumes, by Feb.
15, 2016. The agreement makes Cleveland one of the few U.S. cities where hospitals don’t
close ERs to incoming ambulance traffic.
• A computer coding error caused about 4,200 random physicians and other healthcare
providers in Ohio to be notified they had been dropped from the state’s Medicaid program.
Medicaid officials contacted the affected providers to inform them of the error.
• The FTC increased its focus on large hospital mergers after attempting to block a trio of
proposals in Illinois, Pennsylvania and West Virginia. The regulator argued the proposed
mergers would create a dominant provider of general acute care inpatient services in the local
markets, which it said would lead to increased healthcare costs and reduced quality of care.
• Health insurers selling Medicare Advantage plans can expect larger pay bumps in 2017. The
CMS released a key metric for 2017 Medicare Advantage payment rates showing the
Medicare fee-for-service baseline rate, which measures traditional Medicare spending, will
increase by 3.1% in 2017.
• The HHS released proposals aimed at reducing Medicare drug expenditures by cutting
payments to hospitals that purchase pharmaceuticals under the federal 340B discount
• Beginning in 2016, health insurers can incur fines for inaccurate Medicare physician
directories that include non-Medicare providers. New regulations allow CMS to fine insurers
up to $25,000 per Medicare beneficiary for errors in Medicare Advantage plan directories and
up to $100 per beneficiary for mistakes in plans sold on HealthCare.gov.
2015Health Care Market Intelligence
Physician/Hospital Quarterly Report–Q4
• Akron, Ohio-based Summa Health and Cincinnati-based Mercy Health agreed to invest
$100 million over three years to form a “network of networks” called Advanced Health Select.
The clinically integrated network will be the largest in Ohio and will aim to improve chronic care
management, reduce costs and shift to a value-based system.
• Medical Advantage Group and the Ohio State Medical Association formed a partnership
to collaborate on optimal practice models, population management, electronic medical
records and better patient engagement.
• Cleveland Clinic assumed full ownership of Akron General Health System. Cleveland
Clinic became a minority owner of Akron General in a 2014 agreement, then exercised an
option to take on full ownership in 2015. Akron General’s EMR will be replaced with an Epic
system as part of the deal.
• Summa Health formed an accountable care agreement with Humana designed to
coordinate care for the insurer’s 55,000 Medicare Advantage members in Northeast Ohio.
• Anthem Blue Cross and Blue Shield and Kettering Health Network launched BCBS’
Enhanced Personal Health Care program at Kettering-owned practices in Ohio. The program
is a patient-centered care model offering providers value-based compensation and Kettering-
owned practices are eligible to share savings if they meet quality benchmarks.
• Mercy Health-Cincinnati acquired Cardiac, Vascular & Thoracic Surgeons for an
undisclosed amount. One of the Cincinnati area’s largest physician groups, CTVS’ 10 surgical
specialists join Mercy Health Physicians, bringing it to 318 physicians in total.
• DeAngelis Diamond Healthcare was awarded a $12.9-million contract to build an adult
psychiatry facility in Columbus and the general contractor started construction on the
43,000-square-foot, 40-bed adult psychiatry addition to the Ohio Hospital for Psychiatry.
The facility will provide services to patients suffering from depression, bipolar disorder,
addiction, cognitive disorders and other mental health issues.
• HealthSouth Corporation and Mount Carmel Health System signed an agreement to
build an inpatient rehabilitation hospital in Westerville, Ohio. The 60-bed hospital will be a joint
venture and provide specialized rehabilitative care to patients who have experienced stroke,
trauma, brain and orthopedic injuries or other major illnesses or injuries. Construction on the
60,000-square-foot hospital is expected to be completed by Q1 2017.
• Ten groups with more than 200 physicians in total joined the Independent Physicians
Collaborative, which eight groups in the Cincinnati area founded in January 2015. The
collaborative now includes 439 physicians and 3,480 full-time employees.
• Goold Health Systems, a healthcare management company focusing on Medicaid services,
was selected as Ohio’s Pharmacy Benefit Manager to provide the Ohio Department of
Medicaid with pharmacy claims adjudication, prior authorizations, rebate management,
preferred drug list and related clinical pharmacy services. The contract’s initial term runs
through June 30, 2017, with three additional two-year renewal options.
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