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Gail Wilenski on the sale of Geisinger to Kaiser
No deal in healthcare is bigger than Kaiser Permanente’s acquisition of Geisinger. It emerges out of nowhere, leading to the formation of new national megasystems of integrated healthcare systems. Naturally, people want to know which dominoes will fall next to this organization called Risant Health. But a more fundamental question always comes to the fore. Why?
A key driver behind Geisinger has been the constant consolidation of competitors, particularly UPMC and Highmark, Geisinger board member Gail Wilensky told me in an interview. This is an answer that may indicate which systems are eager to participate.
“There have definitely been a lot of acquisitions and mergers. UPMC has been very aggressive,” said Wilensky, who was also a former CMS administrator under President George HW Bush. “For Geisinger, it was really a cultural question of what was important to the organization. How do you find like-minded groups that you might consider partnering with?”
Read on for a full conversation that answers Wilensky’s many questions about why he made this deal, concerns about integration, and whether “value-based care” is silly.
The last week was jam-packed with calls about healthcare earnings. It also included a major home care merger between Option Care Health and Amedisys. But I wanted to highlight two quotes from healthcare executives that sum up some big themes in the air.
Signa: The company is making huge profits thanks to Express Scripts, a pharmacy benefits manager it acquired a few years ago. A king of corporate jargon, his CEO David Cordani (he said the word “value” 25 times on earnings calls) said his 20% of Express Scripts’ pre-tax earnings came from rebates and spread prices. said it was due to That percentage has declined over time, and Cordani believes Cigna will be ready if Congress passes his PBM reforms.
“We are confident that we will be able to be quick and flexible when needed. We also want to ensure that we remain an advocate for employers so that we continue to work to preserve choice in .”
Community health system: Hospital chains lost even more in the first quarter, and management made sure to point out that the Medicare Advantage Plan was a nuisance to them. The number of patients increased and most of that increase was due to his MA patients. Some studies suggest that MA plans pay providers at “almost the same” rates as traditional Medicare, while other studies show MA plans pay up to 8% less than traditional Medicare. It suggests that you pay the provider at a fee. Comments from CFO Kevin Hammons fit the latter view, suggesting that MA plan costs may now be reduced further.
“MA patients pay 85% to 90% compared to Medicare’s paid services.”
Several non-profit hospital systems also reported first-quarter results last week. Some trends can be seen. Revenue is increasing as patient numbers are back. Costs are higher as hospitals increased wages for their employees and needed more supplies to account for the increased volume. Contract labor is definitely not that important. Wall Street investment is doing very well again.
- BayCare Health System: Patients flocked to this Florida-based system that operates 16 hospitals. The operating margin (4.6%) actually declined slightly year-on-year as BayCare recorded higher labor costs.
- Indiana University Health: The academic system is back in the black, posting much higher returns from Wall Street investments. He also revealed that he plans to issue more than $750 million in new debt this year. Surgery increased more than 16% year-on-year across his IU health this quarter.
- Sanford Health: In Sanford’s first quarter of the year, inpatient and outpatient visits bucked the trend, while ER visits and surgeries increased slightly. Sanford is still in the process of trying to merge with Fairview Health Services.
- Sutter Health: This California-based behemoth posted a 5.1% net profit, making it significantly less profitable than other hospital systems of similar size.
- University of Louisville Health: Anthem is the primary source of revenue for this profitable academic system. A periodic footnote in the financial documents repeats that U of L Health’s contract with Anthem includes “automatic renewal with negotiated annual payment renewals.”
put the MRI in the card, thank you
The Consumer Financial Protection Bureau’s most comprehensive report on medical credit cards was released last week. And the situation looks bleak for patients who use plastic or apply for loans to pay off their treatments.
Many cards and loan programs advertise no interest, but may charge “deferred interest” instead when the promotional period ends. People know he racks up over $300 million in deferred interest on medical credit cards each year. Hospitals and clinics may also offer credit cards and loans to patients when they need to provide financial assistance or charity care.
“In fact, these products may cause confusion and difficulty for some patients,” wrote a CFPB official. Read the full report.
Industry odds and ends
- Last week’s newsletter mentioned that New Hampshire’s Frisbie Memorial Hospital has ghosted its CMS. The hospital, owned by HCA Healthcare, sent the following statement:
sContact the hospital through CMS. A series of oversights later prevented the hospital from verifying several voicemails from her CMS. After becoming aware of the issue, he immediately worked with CMS to resolve the issue. “
- Eli Lilly’s first data on Alzheimer’s drugs adds pressure to how Medicare handles coverage for this controversial class of drugs, says my colleague Rachel Cohrs. are reporting.
- Kauffman Hall, a consulting firm that regularly makes headlines in the hospital industry, has acquired Ponder & Company, a firm that advises hospitals on mergers and acquisitions. Kaufman-Hall has been shopping for years (acquiring Gist Healthcare and Claro Healthcare, and a minority investment from Vizient).
- Anyone interested in redeciding Medicaid is encouraged to bookmark this tracker from KFF.
- A new report from Pharmaceutical Strategies Group interviewed 182 leaders in employer benefits, health plans and unions on specialty medicines. Only 42% of companies say he receives all rebates on specialty drugs from PBM with minimal guarantees. About 16% said they would receive all rebates, but there is no guarantee. And it was a crushing victory for PBM.