N8's LinkedIn Posts
Hey Ivory Tower Researchers - Put Down Your Clip Boards
Try Running a Health System; See if you can Come Up
With a Better Pricing Model
According to CMS, the cost of running hospitals increases by 2.5% per year. Since 2014, the blended rate increase for health systems from all payers was about 1% per year:
A. 31% of gross revs. are from commercial payers averaging a 2.5% negotiated rate increase per year (if lucky;)
B. 21% of gross revs. are from Medicaid/self-pay that pays 65% of cost with no increase over the past five years; and
C. 48% of gross revs. are from Medicare that pays about 80% of cost averaging 1.5% increase per year.
And please stop with the “hospitals can breakeven on Medicare” nonsense! CMS overestimates health system margins using data from the HOSPITAL Medicare Cost Report which excludes essential costs HEALTH SYSTEMS incur including the cost burden of physician employment (necessitated in part by the stingy 0-1% annual increases in the Medicare Physician Fee Schedule over the past decade.)
As Steve Jobs noted, “people who make recommendations without the experience of actually working in that
business are extremely limited because they never really get a full understanding of that business and its
Just sayin’…~ n8 Follow Nathan Kaufman on LinkedIn 9/23/19
The Killer B’s in Physician-Health System Collaboration
The primary job of health system executives is to take care of the people who take care of patients. If most of the practicing physicians answer “b” to any of the following three questions, it is time to rethink your culture and your leadership style:
1. Do most of the practicing physicians describe the management style of the health system towards doctors as:
a) participatory management through relationships and influence; or
b) “command and control;”
2. Who would the practicing physicians say has more control in the organization:
a) the physician leadership; or
b) HR and compliance?
3. While the practicing physicians and administration do not always agree, would you say that the practicing physicians believe that most of the senior system leadership:
a) care and seek out the opinions of practicing physicians and give their opinions a fair hearing; or
b) don’t know and/or discount what the practicing physicians think?
No amount of disruptive innovation, population health, value-based care, or blah blah blah can compensate for the under-performance caused by the Killer B’s.
Just sayin’…~ n8 Follow Nathan Kaufman on LinkedIn 9/9/19
North Carolina, a Leader in Healthcare Innovation?
C’mon Man – Premature Infatuation
Last week the industry was bubbling about NC HHS Secretary Cohen’s efforts to transform health care, encouraging hospitals to participate in NC Blue Cross’ Blue Premier, a program reimbursing health systems based on value vs FFS.
Here are the facts:
1. Per the CDC, NC has one of the highest cigarette use rates in the country and one of the lowest
2. Smoking-Attributable Healthcare Expenditures in NC are estimated to be well over $4 Billion.
3. North Carolina is one of the few states that have yet to expand Medicaid.
4. Retread ACO-like efforts, such as Blue Premier have not produced independent peer-reviewed
material benefits to consumers (self-promoted results maybe.)
a) Navigant found ACOs that received shared savings still lost money due to reduced
Medicare FFS revenue, i.e., the net benefit went to the payer.
b) HFMA et al. research found “penetration of value-based models is not yet having an
impact on curbing growth in total cost of care.”
NC officials should stop self-promoting and focus on:
1. Expanding Medicaid
2. Reducing tobacco use; and
3. Develop truly innovative win-win payer-provider collaborations that do more than recycle failed
Just sayin’…~ n8 Follow Nathan Kaufman on LinkedIn 9/2019
Last week the industry was bubbling about NC HHS Secretary Cohen’s efforts to transform health care,
Costs Health Systems Hundreds of Millions Health systems continue to lose millions following the advice of panacea peddlers promoting ‘magical thinking’ solutions using heartwarming stories and cool PowerPoint presentations. Quantitative analysis, a second opinion and due diligence would save these health systems a fortune by demonstrating that the “innovative” recommendations they embraced were not feasible. Examples of such recommendations include provider-based health plans, direct contracts, various loose affiliations, deep discounting in exchange for volume, etc. To protect from becoming prematurely infatuated with an idea or strategy, apply the infatuation test.
The Infatuation Test:
For a similar health system(s) that implemented this strategy:
Were the fully allocated financials positive after three years?
What is the ROI?
Did market share increase?
What is the measurable impact on patients?
What do practicing physicians think?
If we spend on this, what do we go without, and is the trade off worth it?
If the answers are positive, then embrace the idea, if not, then you may want to invest elsewhere. Remember, unlike the person with the cool PowerPoint, you have to live with the results.
Just sayin’…~ n8 Follow Nathan Kaufman on LinkedIn 8/2019
Who is the Fox and Who is the Chicken Coop?
United Health just made headlines that from 2013 to 2017 inpatient hospital prices grew by about 4.5% per year offset by a 5% reduction in utilization (sounds revenue neutral to me.) AND IF THOSE [EVIL] HOSPITALS HOLD DOWN THEIR PRICES, PRIVATELY INSURED INDIVIDUALS CAN SAVE BILLIONS.
Note: in 2017 Moody’s stated that the hospital industry had their worst financial year in a decade. (BTW If hospitals hold down prices as suggested, it is probable that services will be eliminated, and communities
will be under-served).
During this same period, when adjusted for increases in deductibles, insurance premiums also increased
by about 4.5%. Unlike hospitals, most health insurance companies recently reported record profits. Hmm…
What do hospitals do with most of their funds?
They maintain state of the art services,
Stay open 7/24,
Treat the indigent and grossly underfunded government patients,
Maintain a sufficient supply of physicians to meet the community need, etc.
And insurance companies like United...
If one is going to address the cost crisis, the problem is far more complex than per-unit pricing, it is counterproductive to puke on hospitals when we should be collaborating on new delivery models.
Just sayin’…~ n8 Follow Nathan Kaufman on LinkedIn 8/2019
New Rule: Every Time an Interview with a Health System Executive
is Published, Require a Footnote Summarizing Their System’s
3-Year Financial Performance
I recently read two interviews with health system executives chock full of advice. Then I realized that under both CEOs, their health systems’ performance deteriorated significantly. Given this context, I now view their advice in a whole different light, (like maybe one should do the opposite.) To ensure we are getting information from true achievers vs. ‘third basers’ (people who were hired on third base and think they hit a triple), I suggest that when a senior industry executive is interviewed or quoted, the article include a footnote summarizing their system’s performance trend.
Just sayin’…~ n8* Follow Nathan Kaufman on LinkedIn 8/2019
*n8 last worked as an executive in a health system in the mid-1980s. He now works in a small office in San Diego with his deaf Italian greyhound “Whiskey” who, by definition, does not listen to him.
Can Anyone Guess Why Many Physicians Don’t Trust
Many Health System People (Not All)?
Just sayin’…~ n8*
Follow Nathan Kaufman on LinkedIn 8/2019
It's the Doctors Stuipid!
With all the hype about prices, disruptive innovation, scale, consumerism, etc. What is fact is that patients need an adequate supply of quality doctors in their community. Surveys from Merritt Hawkins, MGMA and AAMC show some startling statistics:
• In the next decade, 20% of physicians will reach retirement age.
• By 2036 the doctor shortage could be 121,000.
• A survey of final year residents shows: o 66% received 51+ solicitations o 1% prefer rural markets o The vast majority want to be employed, 43% by hospitals
• In ’18 comp. for new ED docs was up 40% to over $200K and cardiologists was up 21% to over $400K
• In ’18 comp for all physicians was up 4.4% reflecting huge demand and limited supply Contrary to the conspiracy theories, economics are forcing independent practices (and hospitals) to consolidate.
Physicians who are not in an ancillary-rich subspecialty e.g., orthopedics, cannot afford to remain in private practice and many request an employment lifeline from their health system.
Hey, researchers ask employers a real-life question: If paying your local health system less than its current multiple of Medicare means long waits for doctors or your employees will have to travel for care are you willing to pay the current rates?
Just sayin’…~ n8* Follow Nathan Kaufman on LinkedIn 6/2019
Thank You, Captain Obvious
Rand finds that hospital prices are 241% higher than Medicare and “If hospital prices paid by employers
and health plans ...were reduced to Medicare rates.... healthcare spending would have been reduced by approximately $7.7 billion, or 50%.”
How about this knuckleheads -- if the hospitals were paid ½ Medicare rates, then healthcare spending
would have been reduced by $15.4 billion!! Have you successfully run a hospital on just Medicare and Medicaid rates? Probably not; because it's impossible in most cases! So you can save billions but you put
the hospitals out of business. It must be nice to sit on the sidelines and make these overly simplistic hypothetical observations and conclusions while health systems struggle daily to survive dealing with thousands of regulations, grossly underfunded government reimbursement, escalating drug expenses, physician shortages, payer oligopolies, EMTALA etc., etc.
Meanwhile, the fundamental cost problem in our health system is not per unit prices, but the fact that 5%
of the population accounts for almost 55% of the healthcare costs requiring fundamental delivery system redesign – PS what about the 18 cents out of every dollar of the premium that the payers take for their services and profits?
Just sayin’…~ n8* Follow Nathan Kaufman on LinkedIn 5/2019