The Affordable Care Act prohibits construction of new doctor-owned hospitals if those institutions want to accept Medicare or Medicaid patients, because government officials worry that the doctors’ financial interests in such institutions encourages more tests and procedures.

In the meantime, though, physician-owned hospitals, which, for the most part, specialize in heart and orthopedic surgeries, are winners in health reform provisions that reward hospitals for quality. Nine of the ten hospitals getting the largest bonuses are owned by physicians.

Typical scenario

Jaan Sidorov, MD, a consultant and member of Managed Care’s editorial advisory board, says that for the most part clinician executives at health plans don’t like doctor-owned hospitals. “The typical scenario is that Acme Managed Care Insurance has, say, two hospitals in a region and along comes a third, a specialty hospital devoted to high-volume and high-margin cases that can really hurt a medical loss ratio,” says Sidorov. “Even though the third hospital typically promises to do the same cases for a lower DRG — competition is theoretically good — versus the two other competitors, what they lose in payment is made up by internal efficiencies and more patient throughput. Plus they create their own preference-sensitive demand. The latter is the problem.”

R. Blake Curd, MD

“If you have one hospital in town and that’s the only place people can get care, it’s pretty easy for that institution to drive the purchase price,“ says R. Blake Curd, MD, of Physician Hospitals of America.

As might be expected, R. Blake Curd, MD, the vice president of Physician Hospitals of America, doesn’t agree, saying that doctor-owned hospitals increase competition, and that competition is good. “We certainly throw another variable into the mix,” says Curd. “If you have one hospital in town and that’s the only place people can get care, it’s pretty easy for that institution to drive the purchase price. That’s basic economics. If you have only one provider, what choice do you have? In every study that I have seen, physician-owned hospitals in their marketplace are either the number one hospital in that market, or certainly within the top three.”

Insurers should not be overly concerned that doctor-owned hospitals might charge higher rates based on performance, says Curd. “In general, the payers sets the rates and then in most instances you either accept them or you don’t get access to their patient population.”

But Richard G. Stefanacci, DO, MBA, associate professor of health policy at the University of the Sciences in Philadelphia and member of Managed Care’s editorial advisory board, says that “the concern for managed care and Medicare is the ability for self-referrals and increased costs associated with that behavior.”

Nevertheless, Curd views the ACA’s restrictions on doctor-owned hospitals as undermining competition. “In many markets the health care system doesn’t change because it’s monopolized by these monolithic health care institutions that have been around for a long time. The not-for-profits frequently don’t change the way they do business until they’re forced to by some kind of competition.”

Managed Care’s Top Ten Articles of 2016

There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

They bring a different mindset. They’re willing to work in teams and focus on the sort of evidence-based medicine that can guide health care’s transformation into a system based on value. One question: How well will this new generation of data-driven MDs deal with patients?

The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.