iProtean

Next Generation ACOs (NGACO) have been associated with model-wide reductions in spending without declines in quality, according to a new report from CMS. Based on their first performance year (2016), the participating NGACOS reduced Medicare spending by approximately $100 million.

According to a recent analysis of the 2016 Medicare Shared Savings Program (MSSP) results, Track 1 ACOs that earned shared savings still incurred a $31 per member per month (PMPM) loss on average, equating to $5.2 million in losses for an average organization.

Hospital merger & acquisition (M&A) activity in the second quarter of 2018 decreased by nearly 50 percent from the first quarter according to a M&A tracking company. Analyses by other companies that track M&A activity reported a similar decrease.

Proposed OPPS rule change increases outpatient rates 1.25% but cuts provider-based clinic payments to 40% of outpatient rate, saving Medicare $760M.

The head of CMS outlined the agency’s policy shift to competition and choice in a recent interview. Seema Verma noted that all levels of CMS should drive a system where providers compete for patients . . .

The recently released massive Medicare physician proposed payment rule included a surprise projection that alternative payment model (APM) participation may decline . . . MGMA will ask CMS to reverse the declining enrollment by creating more APM options for clinicians.

A recent survey of hospital/health system CEOs by a national healthcare consulting company reported that cost control is their top priority. CEOs responding to the survey noted innovative approaches to expense reduction as the second leading priority . . .

Hospitals/systems may be considering the pro’s and con’s of growing their service lines, even as they grapple with cost reduction strategies. Experts have noted the many benefits including increased patient volumes, improved health outcomes, increased market share and improved physician loyalty . . .

A new analysis of the Hospital Readmission Reduction Program (HRRP) reports the program is not increasing the number of observation stays. The Medicare Payment Advisory Commission (MedPac) analysis noted that there is no evidence of an increase in observation stays because of HRRP.

Operational and funding flexibility in a changing healthcare environment, and the ability to grow or contract when needed, will be crucial to overall credit quality and financial sustainability. (From Moody’s Investors Service Sector-in-Depth)

Evolving industry pressures will require hospitals/systems to focus on their business strategies and prudent allocation of limited capital and financial resources. Financial viability and competitiveness will require expanded patient access, digital efficiencies, top talent and financial flexibility. (From Moody’s Investors Service Sector-in-Depth)