Final week, the CFO of the nation’s largest personal psychiatric hospital operator acknowledged that the corporate chooses which sufferers to deal with based mostly on whose insurance coverage provide the best funds. Steve Filton, CFO of Common Well being Providers (UHS), made these feedback throughout the King of Prussia, Pennsylvania-based firm’s second quarter earnings name.
“We’ve been going to our lowest payers and both demanding will increase from them or canceling these contracts that we view to be insufficient and easily admitting sufferers whose insurance coverage can pay us extra, once more, in an setting the place we will solely deal with a restricted variety of sufferers. We will be extra selective about who we deal with and the equity of what we expect we’re being paid,” he mentioned throughout the name.
Filton’s candid feedback have sparked some media consideration — however healthcare finance consultants say this sort of pondering is nothing new to the trade.
Michael Abrams, managing accomplice of healthcare consulting agency Numerof & Associates, was unsurprised by the remarks. He mentioned that a long time of consolidation from well being methods like UHS have “created an oligopoly of healthcare companies that aspire to inform insurers what they may or is not going to do and the way a lot they may pay.”
With an annual income that reached $13.4 billion final 12 months, UHS “clearly believes it has achieved this standing,” Abrams added.
Through the name, Filton acknowledged that UHS’ income for acute care providers rose by practically 10% year-over-year within the second quarter and that income from behavioral well being providers elevated by practically 8%. He additionally mentioned that UHS’ whole income rose by practically 7% to $3.5 billion within the second quarter, up from $3.3 billion throughout final 12 months’s second quarter.
Abrams argued that for-profit well being methods have cherry-picked sufferers so as to enhance earnings for fairly a while.
“Cherry-picking will not be new — hospitals have been complaining for years when unbiased physicians referred their more healthy sufferers to the outpatient amenities wherein they’d monetary pursuits, and cherry-picking happens extensively, even in areas like Medicare attribution. One of many principal implicit targets of hospital consolidation was to provide the surviving entities the market energy to push again on payers,” he declared.
In Abram’s view, Filton’s feedback counsel that this sort of affected person choice “is turning into an on a regular basis actuality, which is why it must be curbed.”
Seth Joseph, managing director of Summit Well being Advisors, agreed with Abrams about affected person cherry-picking being a comparatively frequent apply.
“Whereas his remark might not have been expressed in essentially the most suave approach, the state of affairs Mr. Filton is referencing happens much more regularly than we’d assume,” he mentioned.
UHS mentioned that Filton’s remarks have been taken out of context, stating that he was responding to a query posed by one of many analysts on the earnings name concerning UHS’ pondering on business and Medicaid reimbursement charge will increase.
“Steve’s feedback about selectivity needed to do with insurance coverage that we contract with versus particular sufferers. Steve’s feedback weren’t an announcement that UHS would choose sufferers based mostly upon means to pay nor cherry-pick sufferers,” the well being system instructed MedCity Information in an announcement.
UHS additionally mentioned that it, together with different well being methods, is taking “a extra aggressive stance” with payers.
“Towards that finish, we’re being extra ‘selective’ with respect to which insurance coverage we are going to contract with to make sure that we’re paid pretty and adequately for the care we offer. For much too lengthy, the insurance coverage firms and payers have a historical past of underpaying for providers supplied,” the well being system declared.
Joseph, of Summit Well being Advisors, identified that different well being methods have used an identical strategy when negotiating with well being plans. For instance, Bon Secours just lately ended its Medicare contract with Anthem.
“The truth is that well being methods have been going through headwinds for a number of years with points like supplier churn, burnout, escalating clinician bills on account of journey nurses, decrease affected person volumes and extra. Nevertheless, inpatient quantity has began to return — UHS income development is up 6% year-over 12 months after 9% development final 12 months — so it appears UHS views this as a possibility to leverage timing, its market place and returning affected person quantity in an try to be made entire,” he mentioned.
There shall be “a number of eyes watching” to see which payers UHS pursues for larger reimbursement, and whether or not that can have any long-term results, Joseph added.
Picture: StockFinland, Getty Photographs
