fah hospital policy blog

Perspectives on health policy affecting America’s hospitals and the patients we serve.

Category Archives: transparency

FAH President & CEO Keynotes HIMSS Summit, Celebrates National Health IT Week

October 09, 2015 | FAH Hospital Policy Blog Team

Category: Affordable Care Act, HIT, Medicaid, Medicare, Transparency

On Wednesday, FAH President & CEO Chip Kahn gave the keynote speech at the HIMSS Policy Summit during National Health IT Week. Healthcare IT News spotlighted Kahn’s health care expertise in a piece this week: 8 healthcare insights from a longtime Washington insider. Kahn offered key observations on challenges facing the industry both politically and internationally:

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FAH Recommends FTC Re-Examine Anticompetitive Effects of Corporate Practice of Medicine Doctrine

June 05, 2014 | FAH Hospital Policy Blog

Category: Transparency

The letter submitted by the FAH in response to the Federal Trade Commission’s March 2014 Examining Health Care Competition workshop centers on price and quality transparency. It also includes our recommendations on a third, critically important issue: the corporate practice of medicine. The FAH believes the FTC should reexamine the anti-competitive effects of the corporate practice of medicine doctrine.

Defined as “the practice of corporations hiring physicians for purposes of generating profits”, state corporate practice of medicine restrictions have been in place since the turn of the 20th century. While these restrictions are intended to protect the public from corporate interference with medical care and restrictions on physicians’ autonomy and discretion, they also prevent the development of new competitive models of care delivery.

Given the changes in the health care landscape, the need for and effectiveness of corporate practice of medicine protection are increasingly being called into question. With the rise of managed care and the advent of increasingly integrated care delivery, we must examine whether the public benefit of ensuring greater physician autonomy outweighs the public benefit of enabling providers the flexibility to form more effective care models.

In many instances, state corporate practice of medicine policies contain exceptions or unintended loopholes that cannot be justified as creating a public benefit when weighed against the costs. These exceptions and loopholes create a very uneven playing field among competing providers, that doesn’t add up to sound public policy

At the same time, the corporate practice restrictions that originally drew the FTC’s attention to the doctrine in the 1970s largely remain in place. They continue to create significant and unwarranted anticompetitive effects and obstacles to innovation. More broadly, they raise a fundamental question: whether old regulatory models serve the goals of modern reform.

Health care providers actively are implementing the “Triple Aim” imperatives of increasing quality, lowering costs, and improving access. Yet in certain states, these goals are stymied by a corporate practice of medicine doctrine that is archaic, outdated, and which stifles market competition and innovation.This is why we believe this doctrine should be reevaluated and deserves the renewed attention of the FTC.

Refocusing attention on this issue will help promote competition and innovation through:

* Flexibility in creating better models of care delivery;

* Innovation in creating new payment models;

* A level playing field for providers; and,

* Better care for patients.

As healthcare markets evolve and move increasingly toward greater integration and more managed care systems, providers must have the freedom to evolve with the marketplace. Stipulations put in place ostensibly to protect consumers but which ultimately drive competition out of the marketplace must be reassessed and revised. Consumers are best protected by marketplace-based competition and innovation allowing the transition to a new healthcare system and its potential to bring better, more efficient and value-driven care to patients.

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Chip Kahn Q&A with Nathaniel Weixel of Bloomberg BNA

May 30, 2014 | FAH Hospital Policy Blog

Category: Media, Transparency

The FAH has been very active in the past few weeks, as current FAH Chairman David T. Vandewater (President and CEO of Ardent Health Systems) and FAH Chair-Elect Keith B. Pitts (Vice Chairman of Tenet Healthcare Corporation) participated individually in separate panel discussions. Both of these panels were based primarily upon critical policy journal articles addressing hospital realignment and market competition and authored by several academicians also participating as panelists.

Additionally, FAH President and CEO Chip Kahn recently was interviewed for a Q&A feature article by reporter Nathaniel Weixel of Bloomberg BNA. The Q&A, published today, covers a broad number of pertinent topics in health care including SGR reform, mounting cuts to hospitals and transparency.

When asked about his biggest concern for the coming year, Kahn emphasized “enough is enough” when it comes to hospital cuts:

“We support SGR reform. We think it would be good policy. . . All that being said, enough is enough from a hospital standpoint. Since [the Affordable Care Act was passed] it’s now up to almost $122 billion that’s been taken from hospitals over 10 years. We gave at the office…In terms of pay-fors, they need to look elsewhere. We believe that further cuts to hospitals would be completely counterproductive and not in the interest of access to services of Medicare beneficiaries at this point”

In response to a question about paying for SGR reform, Kahn continued to highlight that cutting hospital payments to pay for SGR reform is bad policy that punishes hospitals for a problem they did not create:

“Personally, I think the notion of robbing Peter to pay Paul to fund programs is a problem and not good public policy. . . This problem of (the) SGR wasn’t created by hospitals, home health or [Medicare] Part D. It was created by Congress.

Finally, when asked about transparency and hospital charges, Kahn supported transparency but cautioned that releasing information that is not useful to the consumer is counter-productive to the goal of transparency, a distinction that the FAH reiterated recently in a letter to the Federal Trade Commission.

“Transparency is a good thing. I think transparency needs to be designed in a way that’s actually useful for patients to make decisions or for their caregivers. I think you need information that can be digested, and releasing [hospital] chargemaster data, or even releasing physician data, I don’t know how helpful that is for any particular consumer.”

The FAH is grateful for having multiple opportunities to publicly present the perspective of the investor-owned hospital community when it comes to health care policy, and we are hopeful that these perspectives will contribute to a more comprehensive understanding of the landscape in which hospitals must operate.

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The FAH Weighs in on Health Care and Competition

May 29, 2014 | FAH Hospital Policy Blog

Category: Realignment, Transparency, Uncategorized

This afternoon, the National Academy of Social Insurance (NASI) hosted a panel featuring Keith Pitts, Vice Chairman of Tenet Healthcare Corporation and Chair-Elect of the Board of Directors of the Federation of American Hospitals. Pitts is the second FAH representative in just two weeks to have the opportunity to speak on a panel focusing on the important topic of competition in healthcare. The FAH is pleased that the voice of hospital systems and our esteemed leadership is included in these critical discussions.

With his extensive experience in financial and operational management of health care systems, Pitts was the only panelist with a view from inside a hospital’s doors. Hospitals are directly responsible for patient care, and as caregivers of last resort, we are reminded every day about the importance to community health care of extending and preserving access to care. This perspective is critical to better understanding the steps hospitals are taking to ensure delivery of high quality health care in the most efficient way possible.

In the evolving health care marketplace, hospital realignment often is an essential method of preserving access to care and improving health care quality and efficiency. Many of the other panelists presented only a partial picture of hospital realignment, overlooking the need to preserve access and basing presumptions and conclusions on common misconceptions and old data reflecting market conditions that were vastly different than what exists today.

Pitts painted the broader picture, emphasizing that a conversation surveying the last few decades is ineffective in understanding the current health care marketplace we are experiencing today. “The interesting thing about this discussion looking at the last 20 or 30 years, we are seeing a markedly different environment now…. We’re in a different world today. When we think about policy we can’t always use history to determine what we should do moving forward,” Pitts said.

The changing health care market landscape and is shifting towards a model of more integrated and coordinated care. Hospitals operate in an environment where dramatic public sector reductions in hospital funding make it difficult to adjust to this changing delivery system while investing in costly but important health IT systems. The reality is that hospitals must adapt to survive and continue serving their patients. Consolidation, mergers and other realignments can help achieve lower costs while increasing quality and improving access to care.

Earlier this year, the FAH commissioned a comprehensive review from the Center for Healthcare Economics and Policy to examine contemporary hospital consolidation, which reviewed 75 studies spanning the years 1996-2013, as well as 36 primary sources. The study found that the biased perception of hospital realignment stems from 20 year old data, and that current realignments provide significant benefits for patients and communities, including:

* Preserved and expanded access to essential medical care;

* Improved service offerings and quality of care;

* Sustained and necessary investment in technology, facilities and health IT;

* Sensible reduction in excess capacity; and,

* More competitive health care markets.

The report also found no consistent statistical relationship between realignment and hospital price increases and that, in some cases, without realignment there would be disruptions in emergency services, other service lapses and hospital closures.

The Federal Trade Commission (FTC) is active in reviewing mergers that could potentially have anticompetitive implications, yet the vast majority of mergers have been permitted over the last five years on the basis that they do not impede market competition. However, mergers are not rubber stamped. In fact, the Federal Trade Commission has successfully challenged recent mergers. Two such examples include:

* In April 2014, a federal appeals court ordered the unwinding of a 2010 merger between ProMedica, a nonprofit health-care system based in Toledo, Ohio, and St. Luke’s, an Ohio community hospital. The court agreed with the FTC that ProMedica’s dominance in the relevant markets would give it leverage to demand higher rates.

* In January 2014, a federal district court ordered the unwinding of St. Luke’s Health System’s 2012 acquisition of Saltzer Medical Group, Idaho’s largest independent, multi-specialty physician practice group.

In the Idaho case, the court recognized that the health care landscape is changing and suggested that although long-standing antitrust law prevented the court from deciding in favor of the merger, the best result in this case would be to allow the merger to proceed while monitoring the result.

The court’s message is clear: the new world order in health care requires greater flexibility to test new care delivery models to meet the needs of the current marketplace. Indeed, it may be prudent to take a cue from the court in St. Luke’s/Saltzer and allow mergers to proceed, while monitoring them for anti-competitive results. Wholesale changes in federal antitrust enforcement policy are not appropriate at this time.

In a further step acknowledging the changing landscape, the FTC recently held a comprehensive public workshop, Examining Health Care Competition, to solicit the views of policymakers and the public. The FAH recently sent a letter in response to this workshop, to outline our perspectives and flag the aforementioned study for the FTC’s review.

As the health care landscape continues to evolve, it is important to present the topic of hospital realignment and health care competition more holistically and to address the total landscape, rather than just discussing pricing impact without the broader context of why realignments are necessary in today’s marketplace.

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