As the holiday season continues to heat up, many hospital and medical group practice administrators may have missed an important change in the creation of the health insurance exchange under the Affordable Care Act.  The issue concerns how the “essential health benefits” under the health insurance policies to be offered under the health insurance exchanges would be determined.  Initially, this was to be determined by Health and Human Services.  However, in a recently issued regulation, HHS determined that each state could determine what constitutes “essential health benefits” for the health insurance policies offered to individuals and to small groups.  Many providers have not followed this debate because very few states have decided to participate in the health insurance exchanges.  However, for those states that are participating, hospitals and physicians need to get into this debate.

Beware of Greeks bearing gifts.   Not an original thought and yet it so aptly applies to the proposed regulations CMS has issued recently concerning the Medicare Shared Savings Demonstration Program.

Why?  Any program which included the words "shared savings" should immediately be viewed as a euphemism for lower payments for providers.  This approach is a throw back to the 70's and 80's where HMO's told primary care doctors that they would share the savings from speciality risk pools.  If primary doctors did not refer to specialists, they would share the remainder in the risk pool.  Actually, I know of no primary care doctors  who benefitted from these shared savings.

The Conference got off to exciting start with the opening cocktail party in the exhibit hall and the "by invitation only" dinners in evening.  Many of the people I met night were eager to talk about where they were looking to invest or where their clients were looking to invest.  No surprise that when most people found out that my area of expertise was health care and specifically, health care reform, the conversation quickly changed from the usual pleasantries to specific questions like is the bill going to be overturned?  How will these changes impacting existing investments---will reimbursement be reduced? What will happen with electronic medical records and the health care IT space?  It was pretty clear that most of the investors that I spoke with were interested in investing in the health care industry, but  had not been regular investors in the industry.  Health care is now becoming the hot sector for investment again.

One of the companies that I met last night was HealthFusion, whose CEO is Dr. Sol Lizerbram, is a veteran physician entrepreneur who after 13 years of hard work has developed a state of the art electronic medical record.  This company gets the health care IT space from the doctor's perspective, has received a number of awards including a JD Power and Associates award for user satisfaction and is priced for the small primary care physician market ---one to ten physicians. Dr. Lizerbram in expanding his marketing staff trying to quickly to ramp his sales. 

My view about most EMR systems for physicians is that they are either done off of legacy systems, are too expensive and complex to use.  This product was truly designed with doctors in mind.

Recent discussions with some private equity players have targeted non-profit hospitals assuming that the recent transactions in Rhode Island are indications of things to come. Many hospital systems are currently starved for long term capital and see private as a new viable source to monetize the value of their real estate.