Publications

Post-COVID-19 Future of U.S. Health Care – Trustee Insights

The pandemic has been, and will continue to be, a catalyst that accelerates change further and faster than we have previously seen in health care. By understanding and anticipating these ongoing developments, trustees can help ensure their organizations successfully transition to this emerging environment. This article explores three such areas of fundamental change: Population health, Cross-vertical competition, and Capital-driven modernization.

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November 12th, 2021|Publications|

Toxic Individualism and Its Impact on Our Healthcare System

COVID-19 exposed competing forces within the missions of many standalone hospital systems. These forces include a rugged American individualism on one hand and the desire to efficiently meet the healthcare demands of their communities on the other. Both are valid considerations, but they are often in conflict. By definition, individual entities stand outside the safety of the collective, forging their own distinct paths to their own unique destinations. Efficiency, however, is most often associated with uniformity, consistency, scale, and centralized decision making. This article explores that tension and considerations for hospital boards as they work to best position their organizations in an evolving industry.

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November 4th, 2021|Publications|

What Will a Biden Presidency Mean for U.S. Healthcare?


Key Takeaways

  • A split Senate limits legislation to what can pass through budget reconciliation and gain support of all 50 Democrats
  • Anticipate Biden to expand Obamacare and Medicare instead of introducing new programs, like a “public option”
  • The selections of Harris for VP and Becerra for HHS Secretary signal continued tight anti-trust enforcement
  • Expect increased and well-financed PE-backed disruption

 

A Joe Biden-Kamala Harris administration has significant implications for U.S. healthcare.  While it is instructive to review candidates’ platforms related to the industry, they tend to be better predictors of priority than the ultimate shape of policy or legislation. Biden’s boldest plans will be challenging to achieve, even with Vice President Harris serving as the tiebreaker in the evenly-split Senate.

Democrats are not unified behind sweeping expansion of federal health coverage like the public option, as we saw during the 2010 ACA debate. With little hope of GOP support for most liberal healthcare policies, it is unlikely that any significant legislation will receive the required 60-vote approval in the Senate to bypass the filibuster. Experts agree that Biden will have to rely on the budget reconciliation process- which requires only a simple majority- to pass healthcare legislation. Yet there are parameters to

January 18th, 2021|Publications|

What if Trader Joe’s Ran Hospitals?

In 2018, Freakonomics co-author Stephen Dubner posed the question: “Should America be run by Trader Joe’s?”  He suggested “the quirky little grocery chain with California roots and German ownership has a lot to teach all of us about choice architecture, efficiency, frugality, collaboration, and team spirit.”

Mention efficiency in the context of a health system and one’s mind immediately jumps to cost savings. For years, people have espoused the benefits of scale to lower supply costs, bolster liquidity, improve access to capital, raise credit ratings and the like.  While all true, those miss the point.  Hospitals rarely enter partnerships based on raw efficiency and the ability to cut costs.  Instead, the priorities are most often improving the consumer experience, serving more of the community, positioning the organization as a community cornerstone and prioritizing quality– the same values for which Trader Joe’s is known.

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December 12th, 2020|Publications|

What If Trader Joe’s Ran Hospitals?

In 2018, Freakonomics co-author Stephen Dubner posed the question: “Should America be run by Trader Joe’s?”  He suggested “the quirky little grocery chain with California roots and German ownership has a lot to teach all of us about choice architecture, efficiency, frugality, collaboration, and team spirit.”

Mention efficiency in the context of a health system and one’s mind immediately jumps to cost savings. For years, people have espoused the benefits of scale to lower supply costs, bolster liquidity, improve access to capital, raise credit ratings and the like.  While all true, those miss the point.  Hospitals rarely enter partnerships based on raw efficiency and the ability to cut costs.  Instead, the priorities are most often improving the consumer experience, serving more of the community, positioning the organization as a community cornerstone and prioritizing quality– the same values for which Trader Joe’s is known.

Read more. 

December 2nd, 2020|Publications|

Evaluating Opportunities for Government-Sponsored Hospitals

The COVID-19 pandemic is straining hospital and governmental resources. It is also serving as a catalyst for a major evolution of our nation’s healthcare delivery system, the likes of which we have never before seen. With this confluence of factors, local governments and the hospitals they support are presented with a unique chance to evaluate the sustainability of their relationship.

For some government health systems, this may mean exploring opportunities to grow their footprint, often by supporting less-resourced 501(c)3 hospitals within or adjacent to the municipality they serve. For others, it means assessing the long-term durability of their governmental status and, in some cases, considering a conversion to an independent, non-profit entity.

Understanding the impact of government sponsorship on the hospital’s ability to meet its objectives is critical.  Our latest article highlights several key issues hospital leaders and elected officials should take into consideration when evaluating governmental sponsorship and common advantages and drawbacks to each.

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Dealmaking in the Sunlight: Navigating Public Hospital M&A

Public hospitals have a uniquely open relationship to the communities they serve, which invites a level of transparency as they consider potential mergers and acquisitions. So what kind of M&A deal activity options are out there for public hospitals dealing with financial pressures, and how can parties navigate regulatory, financial and public opinion to get the deal done?

In this two-part Collaborative Transformation podcast series, Rex Burgdorfer, Partner, Juniper Advisory joins Megan Rooney, Partner, McDermott Will & Emery, to discuss important considerations related to government-sponsored hospital partnerships.

 

 

Part I 

  • The major trends driving public hospital M&A
  • How M&A can strengthen hospitals financially and the regulatory and external challenges contributing to financial pressures
  • Unique regulatory and financial challenges faced by public hospitals
  • Benefits of privatization in the hospital industry
  • The role public sentiment can play in public hospital transactions

Click here to listen to the podcast. 

Part II 

  • Key issues that hospital boards, senior leaders and partners must address to secure transaction approval
  • Strategies for identifying and educating stakeholders about the proposed transaction, including competitive benefits and tax and political implications
  • Choosing a deal structure that will work for all

Assessing Hospital Preparedness for COVID-19 by Affiliation Status

Overview

System hospitals tend to have more ICU beds, higher case mix indices and are more likely to be a part of physician integration networks compared to like-sized standalone hospitals. These attributes are particularly important findings during the COVID-19 pandemic, where ICU beds are at a premium; experience managing complex cases is essential; and the ability to care for patients in appropriate settings is of utmost importance.

We reached these conclusions by analyzing CMS Medicare Cost Report data, the most comprehensive set of financial and clinical data available for comparisons of U.S. hospitals. We used this data set to create regression models which can be found here. These regressions allow us to assess the impact of independence on ICU beds, CMI and ACO/CIN membership. We performed this analysis on a subset of all hospitals, namely those with 80 or fewer ICU beds. Intuitively, facilities with more than 80 ICU beds tend to be ‘hub’ facilities and there are almost no independent hospitals with greater than 80 ICU beds. Further, by excluding these ‘hub’ facilities, we review a data set where both system and standalone hospitals are well distributed and lower the

Provider Realignment Post-Pandemic 2.0

Calling 2020 a challenging year for the country as a whole and for providers in particular would be a vast understatement. Disruption reigned across global, national, and local industries. The healthcare industry found itself at ground zero of the disruption. Extended elective service moratoria, patient reticence to seek treatment, capacity and equipment shortages, staff facing crushing demand and unprecedented risk, and a flood of federal relief funding are but a few of the major, previously unthinkable, products of the pandemic. As we look back, providers have much to be proud of in their resilience and response.

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May 28th, 2020|Publications|

Provider Realignment Post-Pandemic

The COVID-19 crisis exposed the high cost of fragmentation within the healthcare industry and will serve as the seminal event that ushers in an era of greater provider integration and concentration. COVID-19 will accelerate U.S. healthcare’s transformation toward a future characterized by the blurring of traditional lines between care delivery and financing. There will be no going back to the industry as it existed, only a going through to a stronger, more hardened, and, in some cases and in some geographies, a materially scaled healthcare system.

Three phases are anticipated as the industry moves forward:

  • A turbulent restart through the remainder of 2020, marked by initially sluggish M&A activity as at-risk providers seek the shelter of cautious buyers.
  • A shake-out will follow over the next couple of years, characterized by strong regional systems, insurers, and private equity-backed disruptors seizing the opportunity to drive performance and efficiency through scale.
  • In a final phase, rise of the titans, national mega-systems will emerge, dwarfing today’s largest systems. These behemoths will compete directly with scaled, non-traditional, ambulatory-centric networks (e.g., integrated insurance companies) a marketplace that no longer adheres to traditional delivery vs. financing distinctions. These organizations will