Modern Healthcare Managing Editor Neil McLaughlin discusses three of the year’s biggest stories with the beat reporters who covered them: Matthew DoBias, Washington bureau chief; and Chicago reporters Vince Galloro and Joseph Conn. Editor David Burda also reveals the results of an exclusive reader poll of the year's biggest healthcare headlines.
David Burda:Hello, everyone. This is Dave Burda, editor of Modern Healthcare. The first six months of 2010 witnessed more than its share of big healthcare stories with perhaps the biggest of all being the passage of national healthcare reform. In this video feature, Managing Editor Neil McLaughlin will discuss three of the year’s biggest stories with our beat reporters who cover them. Neil will talk with Washington Bureau Chief Matt DoBias about the Patient Protection and Affordable Care Act. He’ll discuss the impact of the for-profit chain-buying spree with Vince Galloro, and he’ll speak with Joe Conn about the information technology provisions of the American Recovery and Reinvestment Act. I’ll be back in a few minutes to reveal the results in our exclusive reader poll in which we ask healthcare executives to rank the 10 biggest stories of 2010 so far. Thank you.
Congressional passage of the Patient Protection and Affordable Care Act
Neil McLaughlin:Hello, I’m Neil McLaughlin, managing editor of Modern Healthcare. One of the most prominent stories of the year so far is healthcare reform. We’re talking here with Matt DoBias. Matt is the Washington bureau chief for Modern Healthcare. He spearheaded our nearly round-the-clock coverage of the healthcare debate over the past year. Matt, the passage of healthcare reform in March was a long, hard-fought battle. Was the outcome a plus or minus for providers?
Matthew DoBias:It was, Neil, a long and hard-fought battle, and, to a certain extent, that battle is going to continue. It’s just that the battleground has changed as the story has moved from Capitol Hill to the White House and now to the agency level where these rules are going to be implemented. Overall, I’d say that the provider community would say that it’s, at least on paper, a net win for them, for the hospitals and the physicians. They did, after all, kind of buy into the reform package at very early stages. Now all of that is subject to change as these rules and regulations get printed and as they come out of HHS and CMS.
Neil McLaughlin:And what are the next major steps in implementing that reform legislation?
Matthew DoBias:Well, we’ve seen a lot of changes already that are going to affect the health insurance sector. Just over the past six months, we’ve seen rules that will stop the practice of rescissions—that’s the practice where patients are dropped from insurance if they become sick while they have coverage. We’ve seen rules that will allow young adults to stay on their parents’ health insurance until the age of 26. So you’re beginning to see the implementation now of the larger health reform law. A lot of that has been front-loaded to affect the health insurance sector first. Moving forward, the payment rules and the payment regulations are going to go into effect. Now, I think that’s going to have the larger impact on hospitals and physicians.
Neil McLaughlin:Now, the legislation left open some key areas of payments to providers. What can we look for there in the way of payment changes, especially affecting physicians?
Matthew DoBias:That’s what they call the $300 billion question. And this is the price tag for what it would cost to wholesale change in its entirety the Medicare physician payment formula. This is what the provider community wants; however, they haven’t gotten it, and it’s been about a decade now. And each year they have to go to Capitol Hill, and they have to fight to get what amounts to a very short-term pay fix that dictates their payments under the Medicare pay schedule. This year was no different. So, the current rule—the current law that went into effect—will extend Medicare physician payments until November—through November—and then they’ll have to come back and again fight that fight to try to get a longer-term fix for what they call the sustainable growth rate.
Neil McLaughlin:Thank you, Matt DoBias.
For-profit hospital chains buying not-for-profit hospitals
Neil McLaughlin:I’m talking today with Vince Galloro, Modern Healthcare reporter who covers the for-profit healthcare industry that saw a lot of activity in the past six months of this year. Vince, the Great Recession took a toll on all businesses for a couple of years. Has anything changed in 2010 regarding the for-profit sector?
Vince Galloro:Well, Neil, as you said, during the Great Recession, the credit crunch, these companies definitely had to retrench. They needed to pay down a lot of debt that they took on when credit was very available and they spent most of their energies looking to cut costs or sell some assets or find refinancing where they could to broaden their maturities. And now in 2010, now that they’ve accomplished that, they’re looking for growth again.
Neil McLaughlin:Is any of the buying due in part to the loosening of the credit markets?
Vince Galloro:Perhaps. There is some loosening of that. We’ve seen acquisition financing for Vanguard Health Systems in its acquisition of Detroit Medical Center, which is about a $1.25 billion acquisition. Universal Health Services has also been able to get financing for its acquisition of Psychiatric Solutions, about a $3.1 billion deal.
Neil McLaughlin:And on the equity side, hospital giant HCA announced it was going to do an initial public offering. What’s the thinking behind that?
Vince Galloro:HCA is looking to raise, perhaps, as much as $4.6 billion with its initial public offering, announced in May. There’s a couple of different things they hope to accomplish there: One is definitely to return some value to the private equity firms that helped buy them out in 2006. They’ll be selling some shares, perhaps as much as $2 billion of that $4.6 billion, and then the company will raise about $2.5 billion at the most, and they’ll use that to pay down some of the debt that the company took on in that leveraged buyout in 2006.
Neil McLaughlin:And a couple of recurring problems have been bad debt and uncompensated care. Are they still plaguing the industry?
Vince Galloro:Certainly, it’s there. It hasn’t gone away. It’s something that really started to crop up in earnest in 2003, and a lot of hospitals have come up with strategies to deal with those, to mitigate the problem. And in 2009, we saw that while it did increase, it did not overwhelm them as many feared.
Neil McLaughlin:Thank you, Vince Galloro.
Impact of the health IT provisions of the economic stimulus law
Neil McLaughlin:In addition to healthcare reform and for-profit hospital news, one of the biggest stories of the year was healthcare information technology. We’re here with Joe Conn who covers healthcare IT for Modern Healthcare. Joe, what’s been the biggest factor affecting healthcare technology this year so far?
Joseph Conn:Well, this year, the biggest influence of healthcare information technology is what happened last year with the passage of the American Recovery and Reinvestment Act of 2009. It contained enormous amounts of funding for HIT subsidies and also a significant amount of money for the Office of the National Coordinator to spend to promote health information technology and health information exchange.
Neil McLaughlin:So what is the government health IT office funded so far?
Joseph Conn:They’ve had, as I mentioned, an enormous increase in their budget—$2 billion from the ARRA. They have funded a Beacon Communities program to have a bunch of shining cities on the Hill for health information technology use. They’ve stood up with funding of over $600 million of a series of regional extension programs that will blanket the country and provide assistance to providers to install healthcare IT systems. There’s just an enormous amount of programs that they’ve sought to fund and to help get started.
Neil McLaughlin:And how is the push for what the government calls ‘meaningful use’ affecting the industry?
Joseph Conn:This is probably the most important influence on the industry now in preparation for the beginning of the first payment year, which will start Oct. 1 of this year, for the Medicare portion of the ARRA subsidy program—stimulus law program. Meaningful use is basically a phrase that describes the hoops that providers are going to have to jump through to qualify for the federal subsidies.
Neil McLaughlin:Thank you, Joe Conn. And now we’ll go back to Dave Burda. He’ll tell us what readers selected as the top stories of 2010 so far. Thank you.
Reader poll:Top 10 stories of the first six months of 2010
David Burda:Thank you, Neil, Matt, Vince and Joe. Hello again, this is Dave Burda, editor of Modern Healthcare. As I mentioned earlier, we polled our readers on what they thought were the biggest stories in 2010 so far. More than 700 healthcare executives took the poll, which ran throughout the month of June on our website. Here in rank order from 10 to one are the biggest stories through the first six months of this year:
No. 10: Financial Accounting Standard Board’s plan to standardize charity care reporting.
No. 9: Radiation overdoses in diagnostic medical testing.
No. 8: HCA announcing plans to go public.
No. 7: Providers forming accountable care organizations.
No. 6: The battle over the choice of Donald Berwick to head CMS.
No. 5: For-profit hospital chains acquiring not-for-profits.
No. 4: Health insurers drawing criticism over premium hikes and rescissions.
No. 3: Information technology implementation under the economic stimulus law.
No. 2: Congress’ ongoing struggles to fix the Medicare physician payment system.
No. 1: Passage of the Patient Protection and Affordable Care Act.
Now, if I were eligible to vote, I would have voted for national healthcare reform, too. We affectionately know it as the ‘Healthcare Reporter Full Employment Act.’ Thank you for watching. We’ll be back again at the end of the year for a look back on all the big stories for 2010. Until then, I’m Dave Burda with Modern Healthcare.