The J.P. Morgan Healthcare Conference kicked off in San Francisco on Monday. Our reporters Shelby Livingston and Tara Bannow are there to offer daily observations and news.
Tenet continues road to revitalization with more job cuts
Tenet Healthcare Corp. will shed an additional 700 jobs on top of the 1,300 announced in the fall as part of the Dallas-based system's broader effort to find $250 million in savings, the company announced Monday at the J.P. Morgan Healthcare Conference in San Francisco.
Ron Rittenmeyer, Tenet's executive chairman and CEO, said in an interview with Modern Healthcare that the cuts will take place both within the system's headquarters and in the field. None of them will be positions involved in direct patient care.
"Every job is important and you don't want to lose any, but the reality is companies need to adjust to what the market is demanding," he said.
Some of the job losses are the result of eliminating duplication across the system and consolidating duties across regions, Rittenmeyer said. He declined to say how close the job cuts will move Tenet toward its $250 million goal.
"It's a fair amount of money," he said.
Tenet announced last month it plans to sell its revenue-cycle management company, Conifer, and the system has already seen interest from "a large number of different firms across a wide spectrum," Rittenmeyer said. He expects to make a final decision by late summer. Tenet is not making the decision lightly, he said, as the company plans to continue using Conifer for its own revenue-cycle management.
"It's very important to us because it does collect our cash," Rittenmeyer said. "It does a lot of other businesses for us in our hospitals."
Conifer is growing, having increased its revenue 2.6% to $1.2 billion from $1.17 billion in the first nine months of 2017.
Bad debt continues to grow with the rise of high-deductible plans, which cause nearly half of Americans to delay payments, research shows. Tenet's own provision for doubtful accounts was $355 million in the third quarter, representing 7.2% of the company's revenue before bad debt, up from 7% in the third quarter last year.
Tenet is in the midst of selling eight hospitals in the U.S., including the announcement of a St. Louis-area hospital last week, and Aspen Healthcare in the U.K. as part of a divestiture program that the company said Monday is expected to yield more than $1 billion in proceeds.
Molina talks company turnaround, future in the exchanges
Eight months after firing CEO Dr. J. Mario Molina for poor financial performance, Long Beach, Calif.-based insurer Molina Healthcare is well on its way to bringing the company back to profitability, the company's new CEO Joseph Zubretsky said Monday at the J.P. Morgan Healthcare conference.
Molina, which boasts 4.5 million members, struggled to handle the exponential membership and revenue growth it experienced after the Affordable Care Act was implemented. It posted a $97 million loss in the third quarter of 2017, on the heels of a $230 million loss in the second quarter.
But Zubretsky said he expects the company to hit target margins of 1.5% to 2% in the next one to three years by squeezing costs out of the company where it can, shoring up its provider networks and shedding noncore businesses.
"There's a lot to work with here," Zubretsky assured investors. "The franchise that's been built over the past decade is incredibly well-scaled and well-diversified."
Molina has already laid off 1,750 employees, or 12% of its staff. The layoffs, coupled with other cost-cutting measures, have led to $235 million in run-rate savings for 2017. It completely exited the primary-care business by selling off its community clinics, which Zubretsky said were poorly run. The sale will provide a "meaningful boost" to the insurer's 2018 profit, he said.
Molina is rethinking whether it wants to continue selling products in Puerto Rico and New York. "There are a couple of spots where anyone will tell you the market will question whether you can ever earn a fair profit," Zubretsky explained.
The company already exited some exchange markets this year, and raised rates by an average of 55% in others. Exchange membership will fall from nearly 900,000 to about 400,000 this year, and Molina will re-evaluate its footprint again in the spring.
Centene is still winning the ACA exchange game
The St. Louis-based insurer now covers about 1.43 million people through the Obamacare exchanges, a business that has and continues to do "incredibly well" for the insurer, even though "the administration did everything they could to kill it," CEO Michael Neidorff said during the conference.
Growth has been dramatic: Before open enrollment for 2018 coverage, Centene covered a little more than 1 million members. It's one of the few companies to turn a profit on the exchanges, thanks largely to its experience managing Medicaid members and its low-premium, narrow-network plans. Its narrow networks recently got Centene in trouble in Washington, however. The company was fined $1.5 million and briefly banned from selling individual insurance plans in the state because its coverage network didn't have enough doctors.
The insurer is also investing in Medicare and working to expand its international business. Neidorff addressed the GOP's tax overhaul, saying the proceeds it will receive from tax cuts should help lower prices.
Not-for-profit systems focus on continuum of care
Altamonte Springs, Fla.-based Adventist Health System touted its focus of meeting patients where they're at along the continuum of care—especially outside hospitals. The 45-hospital system welcomed a new cabinet in spring 2017 that CEO Terry Shaw said has championed its mission of getting closer to the patients and meeting them where they're at rather than just at incidents of care.
"If we are truly to never discharge a patient, then we must develop programs, services and platforms and a culture that connects with and serves the consumer's needs regardless of their location or condition," he told investors.
At Adventist, 92% of care takes place outside of hospitals, Shaw said. And the system has been trying to improve its ability to navigate patients to the next phase of their care, he said.
Adventist has grown from a $2 billion enterprise in 2000 to a $10 billion enterprise last year, Shaw noted. In the first 11 months of 2017, the system maintained a 7% operating margin with net income just shy of $1 billion, Paul Rathbun, Adventist's chief financial officer, told investors. The system has also placed a lot of emphasis in recent years on improving its revenue cycle, managing supply costs and reducing debt interest.
Similarly, Peter Markell, the CFO of Partners HealthCare System, said in an interview with Modern Healthcare that his system's goal is to address all of an individual's needs when they're in the system. Partners is a Boston-based integrated system with 800,000 members in risk-based contracts.
To do that, Partners is exploring what type of ambulatory models will work best and where they should be located. Markell declined to provide specifics.
Much like Adventist, Markell painted an optimistic picture of Partners' financial standing. Net assets were up by $1.7 billion in fiscal 2017, which he said is unusual, but happened through a combination of strong investment performance, operating gain and lowered pension liability.
Kathy Lancaster, the CFO of Oakland, Calif-based Kaiser Permanente, told Modern Healthcare in an interview that focusing on the continuum of care is in her system's DNA. While inpatient care drives revenue at other health systems, it's not necessarily always the right place for a patient to be. Kaiser is a 39-hospital system, but draws most of its revenue from its health plans.
Lancaster said she recognizes that other systems are going in that direction and thinks it will ultimately work to lower the cost of healthcare for everyone.
"We're right there with that," she said. "We think that's great, and we'll want to make sure that we're keeping up with everybody else."
