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    October 1, 2020

    Two Bits, Four Bits…Eleven Billion Bits

    In 1929, Justin Ford Kimball, a hospital executive in Dallas, came up with a nifty idea to help teachers.  Noticing that his hospital had a lot of unpaid bills, many of them from educators, he came up with a plan that allowed them to pay $0.50 a month and in exchange they would be covered for up to 21 days of hospital care if they needed it. It was a smashing success as 75% of Dallas teachers enrolled.  Other industries wanted in and thus was born what would eventually become the Blue Cross and Blue Shield Association (BCBS).

    Here is where old people show their stripes.  If you here said something like, ‘well back in my day, things cost ___,’ then you are old.

    Did you do it?

    Be honest.

    Yep, you did.

    You are old.

    I am not even going to break out the spreadsheet and pretend to do the math on the annual rate of growth required to go from a daily cost of $3.50 to whatever astronomical number the average hospital day costs today, but that I even thought about it…yep, I am old.

    If you are not old, ‘two bits’ is a quarter.  Hold on to that math as you’ll need it later to make today’s post title make sense.

    It is easy to see why, for so long, The Blues were viewed as the cuddlier of the health insurance plans (granted, that was in comparison to relative porcupines and saguaro cacti), them being all local and non-profit and for the people and all.

    Well, like hospital prices, things have changed a little.

    The 36 ‘affiliated’ (air quotes signal ironic foreshadowing) BCBS plans cover about one in three Americans, almost as many as Medicare and Medicaid combined.  Some of the plans are still small and local, but The Blues Club also includes Anthem and its $65 billion market cap.

    We point out the supposed affiliation idea of The Association, as its members like to call themselves, because they recently negotiated a $2.7 billion (do the bits math…about 11 billion of them) antitrust settlement with their customers because their practices limit competition.  The settlement is not final and still has to be approved by the member plans and the judge.  And there is a still pending parallel suit from providers which alleges they used their ‘affiliated’ power to reduce payments.

    In addition to the cash, the settlement would eliminate or weaken association rules that prevent various Blues plans from competing with one another.  In short, they can’t have it both ways – claim to be 36 independent entities, but then conspire to carve up the market and not compete with one another.

    So, our pre-election discussion around this idea of how the governmental referee interfaces with the market continues.  It beats discussing the circus called a debate, right?

    We tend to like the refs when they call a foul on the other team, don’t we?  At least I do.

    Good call here ump.

    Tim Coan
    Tim Coan

    CEO and founder

    Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
    September 24, 2020

    In the Words of Miracle Max the Wizard

    Few movies can match The Princess Bride, Rob Reiner’s 1987 jewel, for the volume of great quotes taking out of context and applied broadly to everyday conversations.

    Guy cuts you off in traffic? Simply roll down your window and calmly state, ‘Hello. My name is Inigo Montoya. You killed my father. Prepare to die.’

    Billy Crystal’s brief, but memorable, appearance as Miracle Max the Wizard will help frame up why we want to talk about a piece of legislation in California that did not make it out of the assembly and died earlier this month without a vote.

    Yes, I am writing about a state bill that never even got a vote in the state legislature.  Max will explain.

    As we discussed last week, the California Attorney General already had the power to review, alter or block the sale of non-profit health systems to for-profit owners  This bill would have extended that power to all sorts of merger and acquisitions all across the healthcare industry – for profit and not; hospitals, physician practices and most every other type of provider.  Any deal over $1 million in value would have been subject to the AG’s approval authority.

    The bill’s laudable goal was to protect consumers/patients from the ills of anti-competitive behavior – loss of access, price increases, lower quality. Specifically, ‘private equity groups’ and ‘hedge funds’ are named repeatedly as evil villains trying to make a buck off healthcare.

    Side note worth noting – ‘Private equity group was defined to mean ‘an investor or group of investors who engages in the raising or returning of capital and who invests, develops, or disposes of specified assets.’ Thus, the boy in my neighborhood who buys and sells rare basketball shoes…he’s a ‘private equity group.’

    As we noted when we began this little foray into the policies of politics, most of us accept that a robust economy requires both market forces and some level of governmental refereeing to prevent abuse.  We are now just debating where to draw the line between the two.

    There is a lot of room between ‘too much’ and ‘not enough.’  Theoretically, that is why we have elections, in part to debate where we, collectively, want these types of lines drawn.

    I would be an intellectual hypocrite if I did not acknowledge that frequently in this space I have asked why the anti-competitive regulators sleep as hospital system consolidation is allowed to progress unchecked, leaving us with dominant monopolies that harm consumers.

    But, in my humble view, California SB-977 proposed to go way, way too far.  The market side of the equation would be effectively shackled and impotent.

    It failed to even make it to the floor for a vote before the session ended, so why am I worried?

    One of Miracle Max the Wizard’s great lines was:

    ‘Turns out your friend here is only MOSTLY dead. See, mostly dead is still slightly alive.’

    You think this idea is not coming back around?

    INCONCEIVABLE!

    Tim Coan
    Tim Coan

    CEO and founder

    Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
    September 16, 2020

    Jumping Off Point

    Homophones are an oddity of language that befuddled every 2nd grader in the world.  We could go the homophone route for our discussion today and summarize the ballot choice in the minds of many with the simple: Which witch?

    ‘Almost homophones,’ words that sound mostly alike, can often be more confusing, and are way funnier.

    It’s windy today.

    No, it’s Thursday.

    So am I. Let’s have a beer.

    As a point of almost homophone clarification, I want to talk ‘policy’ more than ‘politics.’  Sound alike, huge difference.

    You remember policy, right?  That quaint little notion involving the actual decisions and actions of a government that impact its citizens?  We’d all be forgiven if it seems a little vague in the current cacophonous noise of ‘politics,’ but let’s at least pretend today that the policy differences between Team Trump and Team Biden might actually matter.  Or should, at least.

    There could be many ways to examine these, but let’s start with a case study from Kamala Harris, Mr. Biden’s first big decision as the Democratic nominee, and her days as the California Attorney General.

    Back in 2014, the Catholic Daughters of Charity Health System was trying to unload six insolvent hospitals. The highest bid of $843 million came from Prime Healthcare Services, a for-profit hospital chain that currently operates about 46 facilities around the US.

    Prime was the only bidder that was willing to take on the $300 million of debt held by Daughters, so had the support of creditors.  Affiliated doctors and nurses supported the deal as well.  The communities served by those facilities just wanted to see them continue to operate.

    But, as with many states, California law requires the AG to approve deals that sell non-profit organizations to for-profit entities.

    Ms. Harris found at least one group opposed to the deal – the Service Employees International Union-United Healthcare Workers West (SEIU-UHW) – which represented 2,000 workers at the six facilities.  Prime would not agree to sign a neutrality pledge allowing SEIU-UHW to organize other Prime hospitals in California. Ms. Harris imposed several onerous conditions on the deal and Prime walked away.

    A year later, she approved a deal from hedge fund BlueMountain Capital for $260 million, which included assuming only $160 million of the debt.

    Yes, kids, $260 million is a lot less than $843 million.

    There were charges that SEIU-UHC pledged $25 million in political contributions to Ms. Harris.  You decide.

    For me, this is less about unions, hedge funds, for-profit hospital chains, or even political corruption, all ideas that conjure up negative feelings, depending on your world view.

    However, as a generally pro-market guy who believes there is a role for the government as referee and protector of public good, this example serves up a big question: where do we want this line drawn?

    And California, feeling its ‘bluest of the blue’ status threatened by many states, now wants to push that line even further.  Another illustrative case for us to ponder.

    Next time.

    Tim Coan
    Tim Coan

    CEO and founder

    Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
    September 9, 2020

    COVID Cognitive Worries

    There is so much about the long-term health issues from COVID that we do not know.  The Big Ten Conference canceled fall sports because of the possibility that the coronavirus could cause myocarditis, an inflammation of the heart, though they are reconsidering because canceling football does cause alumni donor angina, a proven health problem.

    Today I am more focused on the prospect of cognitive damage from the virus.  Some report having ‘brain fog,’ which, of course, is impossible to diagnose in Washington DC because how would you ever distinguish the experimental subjects from the control group?

    I am personally worried that I have been infected and could have some far-reaching issues.  I say that because I think it time to write a few posts on politics.

    What? What rational person would make such a decision, especially this election cycle?

    Like a big nasty rattlesnake laying in the middle of a mountain trail, give that subject a wide berth and don’t think about touching it.

    This blog is up to me.  Healthcare is a big world. I could write about anything I chose, but I am willfully wading into this morass.

    See why my family is worried?

    But, as regular readers know, we do not always choose the smart and safe path here.  Fortunately, processing subscription refunds is easy if you are disgruntled.

    Looking back at 2016, we talked politics quite a bit in the run-up to the election.  Healthcare was, as always, an important topic.  The name mentioned most was not even on the ballot, but the guy about to retire, because his name was on the central legislation being debated.

    One side was going to tear it all down and transport the pieces to Texas to be used on a big wall with his name on it.  The other (what was her name again? how quickly we move on) would not only continue the legacy of her rival turned boss, but, a hundred years before had architected her husband’s healthcare overhaul before that effort got aborted by the mid-term elections.  Surely, she had some big ideas about healthcare reform, v 2.0.

    Looking back, there is a lesson for looking forward, one that we noted then though not clearly enough.  We all get caught up in the big stories, the massive pieces of legislation that may or may not come off the Hill and roll down Pennsylvania Avenue for a signature.

    Various administrative actions, especially when taken together, are more important, though not sexy enough to make the evening news.  They are important because of how they signal, nudge, restrict and cajole the most significant, most critical force of all in healthcare – the market.

    So that is where we will start this dangerous foray.  And to make things interesting, we’ll poke the snake right in the eye straight out of the gate. We’ll start with the intersection of Kamala Harris and hedge funds.

    Should be fun.

    Tim Coan
    Tim Coan

    CEO and founder

    Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
    September 2, 2020

    The Majestic View from 4F

    Yesterday morning, my mask and I flew from Denver to Los Angeles.  Normally, I am an aisle seat flyer, but knowing the flight was mostly empty and having enjoyed the beautiful Colorado sunrise on the drive to the airport, I grabbed a window seat to enjoy the climb out over the Rockies.

    As always, the Colorado mountains were beautiful, the highest peaks showing just a hint of the season’s first dusting of snow.  Yes, I know, we are obnoxious in pointing out the joys of getting to live where we do.  To quote the peanut butter cups, ‘Not sorry.’

    I kind of knew it going in, but this seat selection strategy was bad on my productivity.  A few minutes turned into a long time of ignoring the laptop.  Oh, I was ‘working,’ thinking big shot CEO thoughts as I gazed at creation below me.

    Then the Grand Canyon appeared, and it got me thinking: When did the Grand Canyon become ‘grand?’  For that matter, when did it become a canyon?

    Really, I think these things.  I blame the accidental inhalation of too much hand sanitizer.

    Go back far enough in time, and it was a lot of really flat dirt with a little stream of water trickling through.  That water eventually became the Colorado River and the river began to carry soil toward the ocean.

    One day, someone, or maybe it was a coyote, looked up and noticed it was now a few feet up from the river to the plateau.  Years later, someone got out a tape measure and, sure enough, it was deep enough to join the canyon club.  Then there was a pageant and it won the title of ‘grandest canyon of them all.’

    Both ‘grand’ and ‘canyon’ were obvious from seat 4F yesterday.  The changes may have been slow, but now the result is dramatic.

    Enough poetry…let’s talk payers.

    Had to be abrupt on the pivot.  Get to the point…

    Three things from just recently:

    One, there has been a spate of announcements of JV deals between payers and large health systems to form new, more integrated health plans.  You can read that as a better platform for value-based care, or you can read it as the next generation of narrow networks, or you can read it as both.

    Two, more and more payers are offering no-cost telemedicine visits to their members.

    Three, my health plan (one of the biggies) sent me a postcard yesterday encouraging me to save money by electing to do almost any future surgery in an ASC instead of the hospital. This was not about anything I am specifically doing, just a general member education mailer.

    You don’t have to step back as far as necessary to see how the Grand Canyon formed, but step back a little and take a look.  The land is being carved up in dramatic ways and one of these days – soon maybe – we’ll notice and decide it is now different enough from what it was that it needs a new name.

    Tim Coan
    Tim Coan

    CEO and founder

    Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.
    August 20, 2020

    We Interrupt for a Longer Vista

    As we have discussed here a time or two of late, one of the casualties of 2020 is the loss of the normal sense of time.

    What day of the week is it?  [One or two days past when your blog is due.]

    How long have we been in this thing? [Don’t change the subject. Where is your blog post?]

    Is it time for dinner?  [No blog, no dinner.]

    Fine, voice in my head, fine.  I am writing now, I promise.

    Today we diverge from all things 2020 and look at a longer-term issue.

    A recent study published in the Annals of Internal Medicine examined 142 million primary care visits from a large national commercial payer.  The data was from 2008-2016 and was for adults ages 18-64 years.  No kiddos, no Medicare.

    It found some big trends that are troubling for primary care providers.

    Visits to PCPs declined by 24% over the period, from 170 per year per 100 members down to 134.  In 2008, 38% of folks had no PCP visit in a given year.  That rose to 46% in 2016.

    The drivers were what you might imagine…lower acuity visits were way down (almost half); visits by young people were off 28%; visits by those without a chronic condition dropped 26%; visits in low income areas were down 31%.

    Young, relatively healthy, relatively poor folks aren’t going to see their doctor as much.  By a wide margin.

    But maybe it was just the ‘their doctor’ part that is troubling because at the same time visits to alternative primary care venues like urgent care clinics increased by almost 50%.

    In the ‘just in time’ world of the ubiquitous Amazon truck, in the ‘I want it fast’ world of 15 second TikTok videos, primary care seems to be viewed the same way by the next generation.

    Throw in the news that at least one health plan is now including free, unlimited telehealth visits for their members and you see a big, long-term trend that does not bode well for primary care providers.

    That the study found visits to specialists to be stable during the same time frame is noteworthy.  It was not physicians in general that saw a net outflow, just primary care providers.

    This all raises two slightly rude, slightly inappropriate questions from me…

    This was the timeframe when tons of PCPs left private practice to become health system employed providers.  Is that a factor in this trend at all?  Just asking.

    Also, this was the time of great reform, of accountable care, of the elevation of primary care on many fronts.  So, after all this push, why does the consumer seem to be voting the opposite direction with their behavior?  Again, just asking.

    Now can I go get a snack?

    Tim Coan
    Tim Coan

    CEO and founder

    Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.