Our research team breaks down this week’s top healthcare news.
In an age of unprecedented change, staying current has never been more important. Our team at Chartis is curating news most relevant to the healthcare industry and tracking the topics that are trending on seven key issues: high reliability care, digital and advanced technology, financial sustainability, health disparities, the health ecosystem of the future, partnerships, and the provider enterprise. Each week, we break down what’s happening and why it matters.
Last week President Biden signed legislation that established Juneteenth as the 11th national holiday. Celebrated on June 19th, Juneteenth commemorates the end of slavery in the United States, two years after the Emancipation Proclamation was signed, when enslaved men and women in Texas were freed by executive decree. Acknowledgment and observation of the holiday is an important step, but more must be done as inequity persists and impacts the health of Black Americans.
In 2020, the Centers for Disease Control and Prevention (CDC) and the American Medical Association (AMA) declared racism a public health crisis, and noted that racism — not race — is a social determinant of health and impedes optimal care. As Dr. Nichola Davis, Vice President and Chief Population Health Officer at NYC Health + Hospitals, stated, “Although race does not beget worse health outcomes by default, the lived experiences of Black and brown communities do often lead to poorer health, as made clear during the pandemic.” Many providers and healthcare organizations utilized the holiday to examine their anti-racism efforts and the role their organizations can play in addressing health disparities.
Because racism is a public health threat, focusing on anti-racism in healthcare is imperative to positively impact disparities. Here are three steps healthcare organizations can take:
Address leadership in healthcare. Healthcare organizations are often lacking diversity in their C-suite, specifically Black leadership. A recent analysis by Chartis of 100 leading hospitals in the United States found that only 18 percent had at least one Black leader in the most common C-suite roles. Continued evidence shows that greater diversity leads to higher performing teams, including a 2017 study from over 1,000 companies that found more culturally and ethnically diverse teams were over 30 percent more likely to achieve above-average profitability. This means leaders must commit to mentoring, developing, promoting, and providing leadership training to underrepresented groups.
Address disparities in clinical trials. Clinical trial enrollment is often predominantly male and white with consistent underrepresentation of Black and Hispanic patients. Trials should seek greater, more representative recruitment and use the disease population as a goal for enrollment demographics rather than the overall population. Recruitment may require “going where the patients are” and seeking participants beyond the walls of academic medical centers, like community health systems and networks.
Address access to care in Black and brown communities. A record 20 rural hospitals closed in 2020, and communities near those hospitals experienced disproportionate fatalities. Researchers from the University of North Carolina at Chapel Hill found that rural hospitals serving a higher percentage of Black patients had a greater risk of closure. Financial and reimbursement mechanisms should be considered to ensure critical access hospitals can survive and provide necessary care to all rural communities.
LifePoint Health, a for-profit healthcare provider with 87 hospitals as well as networks of outpatient sites and physician groups, announced this week that it will acquire Kindred Healthcare, a for-profit healthcare company specializing in post-acute and complex care, with long-term acute care hospitals, inpatient rehabilitation units and facilities, and behavioral health facilities. The two combined will form a national health system.
Also announced this week, Select Medical, a for-profit operator of long-term acute care hospitals and rehabilitation facilities, will add seven critical illness recovery hospitals and eight outpatient clinics to its network through a series of transactions, many of which are joint ventures and involve a not-for-profit acute care hospital or health system, such as Ascension Saint Thomas.
Horizontal integration across the care continuum — in the examples above between acute care health systems and post-acute providers — has been touted as one of the keys to providing quality care more consistently, improving patient outcomes, reducing healthcare expenditures, and effectively managing the health of the population. All these elements are crucial to succeed under value-based contracts, which are not as widespread as was originally predicted after the passing of the Affordable Care Act and pressure to “bend the cost curve” with incentives through Centers for Medicare & Medicaid Services programs designed to contain healthcare spending.
However, these models are gaining renewed interest, which may be in part driving further horizontal integration. It should be noted that aligning and integrating across the care continuum does not necessarily mean a single common ownership (though that is a tight form of alignment); other partnership models or aligned networks can also achieve these outcomes. NEJM Catalyst recently published an article profiling a health system that created a “preferred” (but not owned) home health network for its accountable care organization (ACO), resulting in better coordinated care, improved quality standards, and higher cost savings.
These recent partnerships and merger and acquisition transactions may indicate that providers foresee the market is shifting further toward value-based care models, and they are organizing and integrating their provider networks in order to reap the potential economic benefits. These providers may also aspire to vertically integrate — forming a venture with a payor or offering an insurance plan themselves to capture more of the healthcare dollar.
On the other hand, this could be a clever growth and diversification strategy. Mergers of like entities — such as two large acute care health systems — can face anti-trust challenges, objections from competitors, and push-back from local communities who may believe the cost of care will increase with consolidation. Michigan-based Beaumont Health and Spectrum Health, for example, announced an intent to merge last week, an announcement already being met with criticism and skepticism. A reporter from Crain’s Detroit Business stated in Detroit’s National Public Radio Station WDET that while the two health systems’ geographies don’t overlap too much, “… as someone that’s covered lots of mergers over the years … that seems sort of [like] a pipe dream.”
However, merging or connecting non-like entities across the healthcare continuum can offer opportunities to improve patient care and outcomes, and won’t likely face the same level of opposition. It enables the participating entities to grow their patient bases, expand geographically, and diversify the assets within their health system or their affiliated network — better positioning themselves for the future, even if value-based reimbursement models continue to face headwinds for the foreseeable future.
LifePoint Eyes Vertical Expansion with Kindred Deal
Decades of research provides ample evidence of the worsening problem of health disparities in the United States. What will it take for healthcare organizations to promote social justice and reduce health disparities in the communities they serve? Our new report, maturity model, and original analysis highlight what healthcare organizations can do to work toward eliminating these disparities.
Many hospitals and health systems are considering integrated partnerships more urgently than they have in the past — and perhaps with partners that have historically been considered unlikely.
Non-traditional entities are capturing the value void through innovative models, partnering with funding entities to receive compensation for addressing needs. What activities and strategies should health systems consider?