Category Archives: Health.Care

Medicare Overpayments To Private Plans, 1985–2012: Shifting Seniors To Private Plans Has Already Cost Medicare $282.6 Billion

Source: Ida Hellander, David U. Himmelstein, and Steffie Woolhandler, International Journal of Health Services, Vol. 43 no. 2, 2013

From the press release:
A study published online today finds that the private insurance companies that participate in Medicare under the Medicare Advantage program and its predecessors have cost the publicly funded program for the elderly and disabled an extra $282.6 billion since 1985, most of it over the past eight years. In 2012 alone, private insurers were overpaid $34.1 billion. That’s wasted money that should have been spent on improving patient care, shoring up Medicare’s trust fund or reducing the federal deficit, the researchers say….

Medicare has contracted with private insurance plans – previously referred to as Medicare HMOs and now called Medicare Advantage plans – since 1985. Such plans, most of them for-profit, currently cover about 27 percent of Medicare enrollees and have been growing at a fast clip. UnitedHealth and Humana are among the largest players in this market, and together operate about one-third of such plans.

Medicare pays these privately run plans a set “premium” per enrollee for hospital and physician services (averaging $10,123 in 2012) based on a prediction of how costly the enrollee’s care will be. The authors find that private insurers have four strategies that make them more costly than the traditional Medicare program.

1. Private plans cherry-pick healthier beneficiaries who cost less to care for, guaranteeing large profits. Although private plans must accept all seniors who choose to enroll, they cherry-pick by selectively recruiting the healthiest seniors through advertising, office location, etc. They also induce sicker ones to disenroll by making expensive care inconvenient.

2. They recruit otherwise healthy seniors with very mild (and inexpensive) cases of sometimes serious conditions – automatically triggering higher premiums for these beneficiaries from the risk-adjustment scheme implemented in 2004, but escaping payments for expensive care. For instance, many seniors have very mild cases of arthritis, heart failure and bronchitis that require little or no treatment.

3. They enroll patients who get most of their care free at the Veteran’s Administration.

4. They heavily lobby Congress to raise their reimbursement. The insurance industry successfully induced Congress and the Bush administration to add bonus payments to Medicare Advantage premiums beginning in 2003.

Social Impact Bonds in Nonprofit Health Care: New Product or New Package?

Source: Mark Pauly, Ashley Swanson, National Bureau of Economic Research, NBER Working Paper No. 18991, April 2013
(subscription required)

From the abstract:
This note considers a relatively new form of financing for social services, the “Social Impact Bond.” Proponents of Social Impact Bonds argue that they present a solution to several problems in funding social services, including performance measurement and the distribution of risk. Using a simple model, we demonstrate that Social Impact Bonds have many features present in standard financing arrangements. They will lead to greater program success when investors’ effort can positively influence outcomes, but are unlikely to do so otherwise. We conclude that the value of this funding innovation will be strongly context-dependent.

$500K Savings: Escambia To Privatize School Nurses, Health Techs

Source:, May 7, 2013

The Escambia County School District is set to privatize school health services next school year due to cutbacks at the Escambia County Health Department. School nurses and health technicians in Escambia County schools have been outsourced through the health department for years. But beginning next year, the district plans to outsource medical staff through a private company, PSA Healthcare….

Some contractors find success in state and local work

Source: Marjorie Censer, Washington Post, April 21, 2013

Many government contractors view state and local work as a waste of time involving small dollars and difficult, ever-changing regulations. But for several area companies, this business is proving fruitful, particularly as federal spending shrinks. Herndon-based DLT Solutions, which is known as a reseller of computer hardware and software but also provides professional services, saw double-digit revenue growth in 2012. … At Reston-based Maximus, state and local work provided a boost, too. The company has long depended significantly on this business, which makes up about 65 percent of its revenue. Health insurance exchanges and Medicaid program expansion and modernization are a key source of growth, said Bruce L. Caswell, president and general manager of the company’s health services segment. Maximus specializes in managing health and human services programs, from processing applications to providing job placement support….

…But many contractors have had bad experiences with state and local work. Some of the most prominent troubled contracts have been with this type of business. McLean-based Science Applications International Corp., for instance, settled its way out of CityTime, a time-keeping program it ran for New York City but was labeled “a massive and elaborate scheme to defraud the city” by the U.S. Attorney’s Office for the Southern District of New York. Falls Church-based Northrop Grumman had its own troubles when Virginia’s information technology infrastructure — managed through a partnership with Northrop — went down for almost a week, hitting state services from driver’s licenses to tax refunds….

Medical transcriptions to be outsourced

Source: Olivier Uyttebrouck, Albuquerque Journal, April 12, 2013

The University of New Mexico Hospital plans to outsource its medical records transcription services and told 57 workers that their employment with the hospital will end in June. A hospital spokesman also said its contract requires Nuance Technologies to hire any UNMH transcriptionists who want to work for the firm….She and other transcriptionists also expect that employees who choose to work for Nuance likely will receive a reduction in pay and benefits package. A full-time transcriptionist at UNMH now makes about $16 an hour, C’ De Baca said….

The Governance of Nonprofit Hospitals

Source: Uwe E. Reinhardt, New York Times, Economix blog, April 12, 2013

Go to the Web site of any publicly traded profit-making corporation – e.g., the Hospital Corporation of America – and click on the tab “Investor Relations.”

You will find tabs for annual reports to shareholders and the mandatory filings made to the Securities and Exchange Commission. Among them are 10-K’s, annual reports that are detailed and audited. There is also great detail on the criteria by which executive performance is evaluated by the board of directors, along with dollar figures of actual compensation paid.

Is there anything like this transparency and public accountability in the nonprofit sector? Indeed, who actually owns these entities? To whom do they render account for the sizable real resources and finances under their control? And what benefits do they deliver in return for the exemption from income taxation they enjoy?…

Aramark to move ReMedPar to Charlotte headquarters

Source: Brendon Nafziger, DOTmed News, April 4, 2013

Aramark Healthcare Technologies is moving ReMedPar to its Charlotte, N.C., headquarters, DOTmed News has learned. The clinical services company said over the next year it would pack up its subsidiary, which sells medical imaging equipment parts, from its 110,00-square foot facility outside Nashville. …

…ReMedPar, which Aramark bought from a private equity firm in 2011 along with third-party service firm Masterplan, has made its home in Goodlettsville, Tenn., since it was founded in 1987. In March 2012, Aramark merged the Masterplan brand with its own clinical services division, to create its current incarnation, Aramark Healthcare Technologies. Aramark says it’s one of the biggest independent providers of biomed and diagnostic imaging equipment services on the continent. The health technology firm’s parent company, Aramark Corp., also makes uniforms and provides food services to hospitals, schools and prisons. The Philadelphia-based business had about $13 billion in sales for fiscal 2011, according to the company’s website. …

Vultures in the E.R.

Source: Nicole Aschoff, Dollars & Sense, no. 304, January/February 2013
(subscription required)(print only)

Private-equity (PE) firms target the U.S. health-care industry…. Health care is a particularly popular sector for PE firms. After a decline following the 2008 financial crisis, PE investment in health care has rebounded, both in the United States and globally. In particular, medical technology, pharmaceuticals, and medical services (like hospitals and nursing homes) are seeing sharp increases in PE investment. According to a report by Bain, the value of global private-equity deals in health care was over $30 billion in 2011, double the investment of 2012. … PE investors are betting on new profit opportunities from the growing needs of the baby-boomer generation and from the Affordable Care Act, which will dramatically expand health-insurance coverage. … A PE firm’s return on investment has little relation to whether the acquired hospital succeeds through improved patient care or increased cash flow. Instead, PE firms recoup their investment through fees from both the acquired firm and outside institutional investors. … So even if the PE firm’s investment fails to yield the imagined profits, the PE firm still earns a profit, or loses little or no money, because the risk is shouldered by outside investors [like pension funds], and in many cases, the acquired firm itself….

Panel OKs hospital privatization bill

Source: Associated Press, March 16, 2013

Members of the Hawaii Senate Health Committee have approved a bill that would explore whether some of the state’s public hospitals should become private….

Panel endorses privatization for public hospitals
Source: Brian Perry, Maui News, February 15, 2013

The state Senate Health Committee recommended passage this week of a bill to privatize public hospitals, including Maui Memorial Medical Center, Kula Hospital and the Lanai Community Hospital. But the panel advanced the measure after deleting a provision that would have made hospital employees private instead of public civil service employees, according to West and South Maui Sen. Roz Baker, the committee’s vice chairwoman. … Last week, a House version of the same bill came under withering attack from public employees and union leaders who maintained that privatizing the state’s hospitals was a bad idea because a private entity would put profits ahead of public employees and health services.

Hospitals deal promising but tread carefully
Source: Editorial, Star Advertiser, February 16, 2013

Hawaii Legislature considers privatizing hospitals
Source: Anita Hofschneider, Associated Press, February 15, 2013

Bill to privatize public hospitals draws fire
Source: Brian Perry, Maui News, February 10, 2013

A bill to privatize public hospitals, including Maui Memorial Medical Center, came under fire last week from public union leaders and members, and two state House committees recommended establishing a nine-member task force to study the proposal’s feasibility.

During a hearing at the state Capitol on Wednesday, members of the House Health and Labor & Public Employment committees received written testimony from more than 135 testifiers, with 26 in support of House Bill 1483 and 110 opposed.

The bill seeks lawmakers’ approval of a measure to pave the way for turning management of Neighbor Island hospitals from the state’s Hawaii Health Systems Corp. to a private nonprofit. The bill doesn’t name Banner Health, one of the country’s largest nonprofit hospital systems, but the Hawaii Health Systems Maui Regional System Board of Directors has been in discussions with Banner since at least summer of last year….

Arizona nonprofit wants to take over 8 Hawaii public hospitals
Source: Keoki Kerr, Rick Daysog, HawaiiNewsNow, January 11, 2013

The state is in discussions with an Arizona nonprofit hospital chain that’s interested in taking over operations of eight public hospitals on Maui and the Big Island, Hawaii News Now learned Friday. It’s a development that could have major implications for medical care for tens of thousands of neighbor island residents and affect the employment of thousands of hospital employees.

Sources said the Phoenix-based nonprofit Banner Health has made an “initial conceptual offer” to the state to take over operations, including Maui Memorial Medical Center, Hilo Medical Center and Kona Community Hospital. Other hospitals whose operations could be transferred to Banner from the state are in Kau, Kohala, Hamakua, Kula and on the island of Lanai. …

…Sources said under the deal proposed by Banner, the company would not pay the state any rent for the hospital facilities and the state would guarantee an annual management fee to Banner. … Officials said under its initial offer, Banner wanted to continue receiving the eight hospitals’ share of subsidies from the state — worth tens of millions — for the first few years and transition to no subsidy after about seven or eight years. … Privately, some state officials question whether the deal is good for taxpayers, since sources said Banner Health wants the state to take on hundreds of millions of dollars to cover vacation, sick leave, and retirement benefits of existing hospital employees. ..

Custodians at Stanford Hospital express grievances with managers

Source: Brendan O’Byrne, Stanford Daily, March 12, 2013

…Their complaints are varied. Managerial abuses, increased workload and a hostile work environment top a long list of grievances. But regardless of the specific issue, they all focus on a particular set of managers: those who don’t work for Stanford….After Stanford hired the outside contractor Sodexo to manage their custodians in at least four buildings in the School of Medicine in 2007, those custodians say the jobs they had enjoyed for decades took a drastic turn for the worse. Workloads increased in 2008 due to a rough economy, and they increased again when the custodians’ contract was renegotiated in 2011. When several custodians brought up that a doubled workload may merit a pay increase, they were shut down….In addition to workload increases, several custodians detailed specific instances when they felt their Sodexo managers mistreated them….