Our Take: Atrium, Wake Forest to create academic health system
Apr 15, 2019
Charlotte, N.C.-based Atrium Health signed a memorandum of understanding with Winston Salem, N.C.-based Wake Forest University and Wake Forest Baptist Health to create a “transformative academic health care system.” The organizations said they have entered into a period of exclusive negotiations to agree on terms, and intend to arrive at a final agreement later this year.
As part of the deal, the partners plan to build a second campus in Charlotte.
“Phenomenal things can happen when like-minded partners, committed to the same transformative vision, come together in new ways to better serve our patients and communities,” said Eugene Woods, CEO of Atrium Health.
Our Take: Not so fast; we’ve seen this dance before. In March 2018, Atrium called off a similar arrangement with UNC Health Care that it had been negotiating for months.
Insiders say the two systems couldn’t come to terms about shared leadership — that Atrium was dictating negotiations like the bully on the block and UNC wasn’t having it.
Others say it was the heat Atrium was getting from state officials over concerns that the deal would result in higher prices for health care services.
Remember the history here? Just weeks before telling UNC to pound sand, Carolinas HealthCare System abruptly announced that it was changing its name to Atrium Health. Then, the next day, Atrium said it had signed a letter of intent to acquire Macon, Ga.-based Navicent Health.
We all correctly believed that the name change and Navicent acquisition was about expanding Atrium’s reach, not limiting itself to the Carolinas for expansion.
Turns out, there was a missing component to Woods’ vision: having the legitimacy, prestige and other important benefits of an academic medical center.
The question is, how will regulators react? Will they raise as many concerns as they did with the UNC merger? Stay tuned.
Atrium has 40 hospitals and more than 2,700 physicians in several large physician groups. From a technology standpoint, it’s one of the most advanced systems in the nation. (Really. Harvard Business School even did a teaching case about Atrium’s technology rollout.) Wake Forest Baptist — another tech-savvy institution — would add another seven hospitals and 1,800 physicians.
Both systems are vertically integrated with owned retail clinics, surgery centers, skilled nursing facilities, medical imaging, dialysis, home health and hospice care. Combined, the two systems would have nearly $10 billion in annual net patient revenue.
What else you need to know
The Department of Justice (DOJ) charged 24 durable medical equipment (DME) and telemedicine executives with fraud, alleging their participation in a scheme to defraud Medicare of $1.2 billion in false payments — one of the largest health care fraud schemes ever involving DME and telemedicine companies. According to federal prosecutors, telemarketers targeted elderly and disabled people, calling and offering free or low-cost back, shoulder, wrist and knee braces that were medically unnecessary. The DOJ said patients were referred to telemedicine companies, where physicians would prescribe DME “without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen.” Proceeds of the scheme were allegedly laundered through international shell corporations and used to buy luxury real estate, exotic automobiles and yachts. Hundreds of thousands of elderly and disabled patients were affected by the scheme.*
Pharmacy benefit manager (PBM) executives were grilled by the Senate Finance Committee Tuesday, answering questions about their role in escalating drug prices and whether they would support a law banning spread pricing. Attendees included William Fleming, president of health care services at Humana; Dr. Steve Miller, chief clinical officer at Cigna; Derica Rice, executive vice president at CVS Health; John Prince, CEO of OptumRx; and Mike Kolar, interim president and CEO of Prime Therapeutics. As expected, PBM executives pointed the blame squarely at drug manufacturers, whom they labeled “anti-competitive” juggernauts that drive prices higher to maximize profits. Sen. Ron Wyden, D-Ore., lambasted the panel for its use of spread pricing, where health plan customers are charged a higher price for prescriptions than pharmacies are reimbursed. “In my view, it’s as clear a middleman rip-off as you’re going to find,” Wyden said.
Sanofi announced that it is expanding its Insulins Valyou Savings program under a $99 monthly subscription program. Patients with a valid prescription will have access to all Sanofi insulins, for up to 10 boxes of pens and/or 10 mL vials per month, regardless of income level. The program is unavailable to Medicare, Medicaid or patients on another government health care program, although Sanofi says it supports changes in the rules to allow access for everyone. Of note, the announcement was made just hours before Sanofi executive Kathleen Tregoning, along with representatives from Eli Lilly and Novo Nordisk, appeared before the House Committee on Energy and Commerce hearing on insulin pricing.
Medtronic and Blue Cross Blue Shield of Minnesota signed a value-based agreement for the device-maker’s Guardian Connect Continuous Glucose Monitoring (CGM) system, a wearable monitoring device that connects with a mobile app. According to the agreement, the percentage of time spent in a healthy glucose range is the key metric used to set the amount of value-based payments that Medronic will receive. BCBS Minnesota said the system will be available through the pharmacy benefit, which may lower costs and improve convenience for patients.
Mount Sinai’s Ichan School of Medicine will cap medical student debt at $75,000 for students who demonstrate financial need, Crain’s New York Business reported. The decision follows NYU School of Medicine’s announcement last year to offer free tuition for medical students. Unlike the NYU program, Mount Sinai’s capped assistance program applies to living expenses as well as tuition. According to the Association of American Medical Colleges, the median debt for medical school graduates was nearly $200,000 in 2018. The average four-year cost for public school students is $243,902; for private school students, the cost is $322,767.
The Houston metro area is getting more primary care, as Walgreens and VillageMD have partnered to open five new state-of-the-art adult primary care clinics, with the first to open by the end of 2019. The clinics will be branded Village Medical at Walgreens and will offer “comprehensive primary care services, integrated tightly with pharmacists, nurses and social workers.” Chicago-based VillageMD has 2,500 physicians across eight markets. Likewise, Blue Cross and Blue Shield of Texas, in collaboration with Colombia-based Sanitas, will open 10 advanced primary care medical centers in Houston and Dallas. The companies said starting in 2020, the centers will offer primary care, urgent care, lab and diagnostic imaging services, care coordination and wellness and disease management programs.
What we’re reading
An Initial Assessment Of Initiatives To Improve Care For High-Need, High-Cost Individuals In Accountable Care Organizations. Health Affairs 4.11.19
Leadership Survey: Organizational Culture Is the Key to Better Health Care. NEJM Catalyst, 4.4.19
Make Your Meetings a Safe Space for Honest Conversation. Harvard Business Review 4.11.19
* Editor’s note: We included this brief because it’s big news that received widespread media attention. But in researching the story, we found that the headlines by others were often misleading, laying the blame on telemedicine. Examples: “What a $1.2B fraud scheme means for telemedicine” (Becker’s Hospital Review); “Why a $1 billion Medicare fraud case could impede telemedicine growth” (Business Insider); and “DOJ Breaks Up $1.2 Billion Medicare Telemedicine Fraud Ring” (Medscape).
Props to the one that got it right: “Feds break up $1.2B Medicare orthopedic brace scam” (Modern Healthcare). And a nod to the one that got it wrong: “U.S. charges 24 in telemedicine healthcare fraud” but later changed the headline to: “U.S. charges 24 in $1.2 billion Medicare orthotic brace fraud” (Reuters).
We must emphasize that the telemedicine companies involved in the case appear to be nothing but fronts — not the kind of telehealth organization we have written about here. No well-known or established telehealth company was involved.
This is the type of news that can sully the reputation of an industry, which we’ve seen from high-profile home health Medicare fraud cases. Likewise, this is a case of a few bad actors that aren’t representative of the whole.
It also provides us with another lesson: If you get your news by browsing the headlines — even if from reputable sources — you may not be getting your facts straight.