The impact of changing payment models on private equity investments in health care was the topic explored at a February 10 event co-hosted in New York by Duane Morris and Parthenon-EY. Speakers at the program were Rachel Kaprielian, regional director, New England, U.S. Department of Health & Human Services; Lisa Clark, partner, Duane Morris; and from the private equity sector David Terry, founder and CEO, Archway Health; and David Caluori, principal, General Atlantic. The moderator was Jeff Woods, managing director and co-head of health care, Parthenon-EY.
Private equity investors see many opportunities to improve health care delivery through payment reforms being driven by the Centers for Medicare and Medicaid Services (CMS). CMS’ August 2011 launch of a bundled-payment initiative created a model for encouraging specialists to manage care and be held accountable for results. “When Medicare leads, you can bet everybody else is paying attention,” she said.
HHS is embracing value-based payments in part because of the success Accountable Care Organizations (ACOs) have had in improving the quality of care while lowering costs. Private equity firms are pursuing investments in entities that drive those changes, including ACO and bundled-payment models.
“There’s a ton of opportunity to do that better, and to make money,” Archway’s David Terry said.
The complexity of structuring risk-sharing deals was another key theme that emerged from the discussion. Providers must craft their ACO and bundled payment contracts carefully, advised Duane Morris’ Lisa Clark.
An ACO contract requires providers to calculate the risk level they are comfortable with, but it also must take into account such factors as exclusivity and market share. That complexity, Clark noted, is why contracts can take two to three months longer than projected to finalize. Payment reform is a source of anxiety and trepidation for many providers as well as their private equity investors. But for those who have guidance from financial and legal experts in value-based care, the new models represent a unique and lucrative opportunity for them to manage the health care premium dollar. Private equity investors have opportunities to invest in the companies helping providers navigate new payment models or the health care services companies poised to capitalize on those models.
In early January, 2014, the Office of Inspector General (“OIG”) for the Department of Health and Human Services (“HHS”) issued a report criticizing HHS’s Centers for Medicare and Medicaid Services (“CMS”) for failing to adopt stronger integrity practices governing electronic health records (“EHRs”). “CMS And Its Contractors Have Adopted Few Program Integrity Practices To Address Vulnerabilities In EHRs,” oig.hhs.gov/oei/reports/oei-01-11-00571.pdf. Here are some of the OIG’s challenges and concerns: “…clues within the progress notes, handwriting styles, and other attributes that help corroborate the authenticity of paper medical records are largely absent in EHRs. Further, tracing authorship and documentation in an EHR may not be as straightforward as tracing in a paper record. Health care providers can use EHR software features that may mask true authorship of the medical record and distort information in the record to inflate health care claims.” Continue reading OIG Criticizes CMS For Lack Of Adequate Fraud Detection Practices in Electronic Health Records
One of the reasons why consumers, healthcare providers, investors, the government and others have been slow to adopt mobile health applications and software (apps), are concerns about the privacy and security of data collected through the apps. For instance, Appthority, a service provider that offers an app risk management solution, recently reported that the iPharmacy Drug Guide and Pill ID app “is playing fast and loose with your personal info.” www.appthority.com/news/mobile-threat-monday-android-app-leaks-your-medical-info-online. iPharmacy is a free app that allows consumers to maintain a personal health record on their prescription drugs, look up information on a drug, provide reminders, and maintain pharmacy discount cards. Continue reading mHealth App Use: Is Data Truly Protected?
Mobile health (“mHealth”) medical app developers, including health information technology (“HIT”) and telemedicine app developers, tend to focus on FDA requirements. Indeed since many of these apps may be categorized as medical devices, and the FDA approval process is lengthy, developers are wise to focus on whether an app is regulated by the FDA. But a successful developer should also build privacy protections (e.g., privacy policies) and security protections (e.g., disaster recovery) into its product from the earliest stages. The Federal Trade Commission (“FTC”) calls this “Privacy By Design.” “Security By Design” is the corollary. Continue reading Attention mHealth, HIT and Telemedicine App Developers: Privacy and Security By Design Is Critical
The meaningful use (MU) regulations provide incentive monies for hospitals and physicians that establish electronic health records systems (EHRs) and satisfy other criteria, such as providing new forms of ‘patient engagement’ like technologically-enabled patient-provider communications. The advantages of a wireless record-sharing are enormous – quicker diagnoses, better quality tracking, and seamless payment systems. But there are lots of steps and decisions required in setting up EHRs and developing broader data exchange systems like health information organizations/exchanges (HIOs or HIEs). Last week, the Department of Health and Human Services’ Office of the National Coordinator denied certification for two small EHRs and promised ongoing rigorous enforcement of EHRs. Continue reading Electronic Health Records and Health Information Exchanges/Organizations: The Changing Landscape
On January 17, 2013 the federal Department of Health & Human Services (“HHS”) announced a final omnibus rule that details amendments to the privacy, security, data breach and enforcement rules under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). The 2013 HIPAA Amendments (which, with commentary from HHS, weighs in at 563 pages) are closely based on statutory changes under the HITECH Act of 2009, and were previewed in proposed and interim rules issued by HHS several years ago. Continue reading HHS (Finally) Announces The HIPAA/HITECH Amendments
Mobile health (“mHealth”, “telehealth” or any other terms for health care delivered wirelessly) is revolutionizing the health care industry. That message resounded at last week’s mHealth Summit, which gathered roughly 4,000 investors and angel-funders, telecom and software companies, and entrepreneurs and developers to share ideas and display new mHealth products. Hot mHealth areas include data analytics, texting and medical records. Home health and medical homes also stand to benefit with the introduction of products designed to submit protected health information (“PHI”) and other data between patient and provider. Continue reading mHealth/Telehealth Investors and Entrepreneurs: The Generational Divide
Last month, top health care investors and entrepreneurs came together with hospital, payor and government leaders at a conference sponsored by the University of Pennsylvania’s Wharton Healthcare Management Alumni Association to discuss the restructuring of the health care system. Jonathan Blum, CMS Deputy Administrator and Director of the Center of Medicare participated on a panel about about macro health care system changes and one of the key take aways was not surprisingly, that change in the health care system is all about the data. Continue reading Medicare and Health Care Reform: Why Isn’t Real Time Data a Priority?
Health care payors (plans, insurers) are emerging quickly as one of the dominant players in the mobile health (mHealth) marketplace. Apps to exchange information with patients regarding appointment reminders, to coordinated care among various providers for diabetes and other conditions, and to provide patients with personal health records (PHRs) are becoming all the rage. Payors command a unique place in the healthcare industry; not only do they receive and distribute the healthcare dollars but they maintain deep files of information on the consumers whose care they pay for. With their reserves of funds, payors are also uniquely positioned to invest in the use of mobile health in the delivery of health care. They can develop and distribute apps from basic-to-sophisticated, from those that merely provide good diet tips to beneficiaries, to those that collect and transmit critical health data to physicians and other providers. They can also incentivize beneficiaries to adopt mHealth solutions by, for instance, offering to reduce premiums in exchange for compliant behavior. Further, the employers who pay for health coverage may incentivize, or penalize, employees that do not utilize mHealth tools offered by payors.
Continue reading Health Plans Jump Into The Mobile Health (mHealth) Market – How Much Will Providers Have To Pay?
The Minnesota Attorney General is on a mission to eliminate over-aggressive debt collection behavior in the hospital industry. Her target is Accretive Health, Inc., a national company that provides support services to hospitals in Minnesota and other states on debt collection and revenue cycle management using sophisticated data analysis tools. Already other states have announced investigations, and federal investigations are likely to follow. The AG has also raised issues regarding the health system that used Accretive, Fairview Health Services, a nine-hospital system in Minnesota. Any hospital that outsources collections, revenue cycle management and related financial activities, or even performs them in-house, should closely review its compliance with best practices, including the AHA’s Statement on Hospital Billing and Collection Practices, agreed to in writing by many hospitals some years ago.
Continue reading The Accretive Matter Is a Wake-Up Call for Hospitals: Examine Your Debt Collection and Revenue Cycle Practices ASAP