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Healthcare M & A Heating Up? Print E-mail
Written by Jeffrey Herschler   
Wednesday, 22 December 2010 18:50
 
       Based on a story in MergerMarket.com, Healthcare M & A is due for an uptick.  In fact, according to their recent survey, 96% of respondents expect an increase or a significant increase. The authors point out that "This bullish response is not necessarily surprising, as the healthcare sector as a whole is facing an increasingly competitive climate as well as increased demand."  
  
However, according to the Walden Group, current deal activity reflects "...uncertainty over the economy, healthcare reform".  Further, "...acquirors therefore are more discriminating." To view their Q3 report, click on this link:   The Strategic Healthcare M & A Report

If you are contemplating a deal, you may want to read McDermott, Will & Emery's article entitled:

Top 5 Potential Pitfalls in Health Care M&A Transactions 

Last Updated on Tuesday, 11 January 2011 16:40
 
Research shows healthcare continues to be an economic driver in state Print E-mail
Written by Jeff Herschler   
Wednesday, 15 December 2010 19:56

A recent research report in Florida Trend demonstrates that healthcare firms continue to be prominent in the state's economy.  

Appearing on the Largest Public Companies list (Top 20) were WellCare Health Plans based in Tampa at #12 and Health Management Associates out of Naples coming in at #17.  Also making the list was PSS World Medical (#31), a Jacksonville based medical device distributor and Lincare Holdings (#39), a provider of specialized healthcare services out of Clearwater.  Rounding out the list of top public healthcare companies was Mednax, the Sunrise based super group practice at #40.

The research report also showcased healthcare firms on the list of Florida's Largest Private Companies.  Making that list were Arthrex, a Naples based designer and manufacturer of medical devices at #25, home healthcare provider Interim Healthcare of Sunrise at #29 and Signature HealthCARE (#40), the skilled nursing facilities company out of Palm Beach Gardens.

In sum the firms generated over $18 Billion in revenue and employed more than 67,000 people in 2009.  All of the public companies were profitable while the private firms did not disclose profit or loss.  These results are pretty impressive indeed considering the data comes from the depths of the Great Recession. 

To view the reports, click on the links below.

Florida's Largest Public Companies

Florida's Largest Private Companies

Last Updated on Monday, 27 December 2010 22:14
 
Who Will Control the Accountable Care Organizations? Print E-mail
Written by Bernd Wollschlaeger, MD   
Wednesday, 24 November 2010 10:45

Follow this link  to an important article "Physicians versus Hospitals as Leaders of Accountable Care Organizations" which was published recently on the New England Journal of Medicine website. I urge you to read the article and want to point out several important messages.

The next few years will be a period of what economists call  creative destruction.  Our fragmented, fee-for-service health care delivery system will be transformed into a higher-quality, higher-productivity system with strong incentives for efficient, coordinated care.  Consequently, the actions of physicians and hospitals during this period will determine the structure of the delivery system for many years.  The implications will be profound for hospitals' dominant role in the health care system and for physicians' income, autonomy, and work environments.

The Affordable Care Act (ACA) aims to improve the quality of care and reduce costs. Doing so will require focused efforts to improve care for the 10% of patients who account for 64% of all U.S. health care costs. Much of this cost derives from high rates of unnecessary hospitalizations and potentially avoidable complications.  These, in turn, are partially driven by fee-for-service incentives that fail to adequately reward coordinated care that effectively prevents illness. The ACA includes numerous provisions designed to catalyze transformation of the delivery system, moving it away from fee for service and toward coordinated care.

Incentives for the development of the information systems and infrastructure are necessary for better and more efficient management of chronic conditions.  Achievement of this level of care coordination will require the development of larger integrated delivery organizations, preferably, accountable care organizations (ACOs) that incorporate primary care practices structured as patient-centered medical homes and that can support new investments in information systems and care teams and can maintain service hours resembling those of retailers. A move toward ACOs will mean major changes in the structure of physicians' practices, since even physician-group based ACOs may include one or more hospitals.  Please note they may instead contract with hospitals for specific services chosen on the basis of their relative value.

A crucial question is who will control these ACOs. We can envision two possible futures: one of physician-controlled ACOs, with physicians affiliating and contracting with hospitals, controlling the flow of funds through the marketplace; and one of hospital-controlled ACOs that will employ physicians. Whoever controls the ACOs will capture the largest share of any savings.

For physicians to control ACOs, they would have to overcome several hurdles. The first is collaboration: ACOs will require clinical, administrative, and fiscal cooperation, and physicians have seldom demonstrated the ability to effectively organize themselves into groups, agree on clinical guidelines, and devise ways to equitably distribute money.

If hospitals are to control ACOs, they, too, will need to overcome barriers. First, they will need to trade near-term revenue for long-term savings. Hospitals are typically at the center of current health care markets, and by focusing on procedures and severely ill patients, most have been fairly profitable. Building an ACO will require hospitals to shift to a more outpatient-focused, coordinated care model and forgo some profits from procedures and admissions.

Holding off on creating ACOs is likely to be a bad long-term strategy for physicians.  Therefore, the actor who moves first effectively is likely to assume the momentum and dominate the local market. A wait-and-see approach could succeed if the first mover executes poorly, failing to coordinate care and manage risk. But rather than controlling destiny, cautious actors will be hanging their fate on the mistakes of others.

Last Updated on Monday, 27 December 2010 22:16
 
ACOs: A system that can deliver on the goals of healthcare reform Print E-mail
Written by Todd Demel   
Friday, 19 November 2010 15:43

The Concept

The recently enacted Affordable Care Act establishes a Medicare shared savings program for Accountable Care Organizations (ACOs) to take effect no later than January 2012. The law makes contracts with ACOs a permanent option under Medicare, the specifics of which will be left to the discretion of the secretary of the Department of Health and Human Services (HHS). 

ACOs are changing the way physicians and hospitals are providing care. Through an ACO's delivery system, provider groups accept responsibility and become accountable for the cost and quality of care delivered to a defined population of patients. ACOs can increase patient satisfaction and potentially lower costs by improving the coordination and efficiency of care. Currently being promoted by our Administration as a system that can deliver on the goals of healthcare reform, ACOs emphasize health and wellness in contrast to our current system that is primarily structured to treat illness. Through payment systems developed by the Centers for Medicare & Medicaid Services (CMS), primary care physicians, specialists, and hospitals assume varying degrees of financial risk and will be rewarded for achieving quality and spending goals. Although much of the discussion about ACOs has been in the context of Medicare, there is growing interest in extending the concept to patients covered by Medicaid as well as private insurance. 

Variation

Findings suggest that there exists wide variation in the cost of care across the country, and that the regions that spend more per patient do not necessarily obtain better outcomes. This would seem to put into question whether there is a correlation between the cost, and quality of care. While it acknowledges the valuable role that primary care clinicians play in patient health and well-being, The Dartmouth Institute Atlas Study suggests that such care can be negatively impacted by episodic delivery that is not coordinated with specialists and hospitals. So, merely increasing access to care may not in itself be enough to improve health outcomes. Rather, care is most effective when it is part of a high-functioning system where physicians communicate with each other and ongoing feedback encourages continual improvement (for a copy of The Dartmouth Atlas report, please send a request to tdemel@mfhealthcare.com).

Working Together

ACOs must have a formal legal structure. However, it is envisioned that ACOs will take the form of "virtual" organizations consisting of physicians and other professionals in groups or networks of practices, hospital-physician partnerships, and multispecialty groups. Such organizations may be either associated or directly affiliated with local hospitals through their inpatient work, or through the care patterns of the patients they serve.  The group practices that are coordinated around local hospitals come to serve as an "extended hospital medical staff" thus improving quality and lowering cost by fostering greater accountability. Within this scenario, physicians become more involved with the managing of care across the continuum of different institutional settings. Part of this process involves the prospective planning of budgets with respect to resources and needs, and the ACO must be of sufficient scale that it supports comprehensive and reliable performance measures.  

Benefits

If successful, ACO members will share in the savings that are achieved through cooperation, the coordination of care, the sharing of resources, and improved bargaining power.  ACOs provide the opportunity to establish value-based rather than volume-based incentives thus leading to improved beneficiary outcomes. The hope is that, ultimately, the ACO model will help to combat overutilization and overbuilding of healthcare facilities and technology. The keys to the success of this model lie in transparency of execution and a spirit of inquiry.

Looking Ahead

Among the goals of healthcare reform is encouraging integrated care within the US healthcare system so that increased levels of coordination can be achieved. In an integrated system, primary care physicians, specialists, and hospitals work together to manage the overall care of their patients thus encouraging and enabling the sharing of patient information and adherence to uniform practice guidelines. Payors can hold such organized systems accountable by assessing the quality of care provided as well as whether or not there has been any unnecessary use of resources. And financial rewards for good performance based on comprehensive quality and spending measurement will serve to further encourage ongoing efforts and a steady revolution towards fully coordinated systems. It is hoped that ACOs will avoid some of the problems associated with past efforts involving capitation and managed care. However, given the details and design that still need to be established, the ACO model can be expected to evolve gradually, over time.

About the Author:  Mr. Demel is the Senior Executive of Physician Management Services at MF Healthcare Solutions.  For more information, please visit: www.mfhealthcare.com or contact Todd Demel at (954) 475-3199.
Last Updated on Wednesday, 24 November 2010 10:45
 
Interview Exclusive - Albert Santalo, CEO, CareCloud Print E-mail
Written by Jeffrey Herschler   
Thursday, 11 November 2010 11:06

An experienced entrepreneur, Mr. Santalo founded CareCloud in 2009 with the vision of becoming a healthcare information technology leader focused on eliminating the waste and inefficiency in the healthcare industry today. Previously, Mr. Santalo was Founder and Chairman of Avisena, a software-enabled revenue cycle management company in the healthcare industry where he worked from 2001 to 2008. He is the lead inventor and has a U.S. patent for Avisena's Accounts Receivable Management Methodology. He holds an MBA from FIU.  CareCloud was founded with the explicit goal of uniting a disjointed healthcare industry by giving providers good cause to snap out of their software-imposed quarantine. The firm is striving to replace legacy practice management applications with online solutions that are lightweight, intuitive, and most importantly, connected.  Launched with $2.8 million, the firm just completed its second round of fundraising and has collected an additional $5 million (click here to see the full story published in SFBJ).  I had an opportunity to interview Mr. Santalo (AS) on October 20 and had a chance to learn more about the company as well as his views on health policy and the economy. Below is an excerpt from that conversation.     

Thanks for visitng FloridaHealthIndustry.com!

Jeff Herschler (JH)

JH        Congratulations on the $5 million.  How will you spend it?

AS        Product development, programming, increased sales capacity, corporate infrastructure and staffing will be the main focus.  We are hiring.  We have 52 or 53 employees currently and will add 23 more this quarter.  Our firm intends to hire 50 more in the first half of 2011 and an additional 75 in the second half of the year.

JH        Impressive.  Now let's back up a step.  Can you explain to our readers what CareCloud does?

AS        We are a medical practice automation platform based in the cloud. Additionally we offer revenue cycle management services. Unlike legacy software solutions there is no upfront cost and you pay as you go. The CareCloud community is a social network connecting patients, physicians, practices and payers.  The solution is safe, secure and HIPAA compliant.

JH        You mentioned a social network.  Is CareCloud a FaceBook for healthcare stakeholders?

AS        In many respects, yes.  We utilize Facebook-like methods to engage doctors and patients in a secure, social network-like technology environment.

JH        The business plan's foundation is on cloud computing.  Isn't it possible that cloud computing is just another technology fad?

AS        No way. The benefits of cloud computing, otherwise known as Internet-based computing, are too great to think it will ever go away - it's not just another Internet bubble; it's the future of IT.  Physicians realize that to optimize their practice, they must embrace technology.  We offer that technology but you don't need to be a techie to use it.  It's also very accessible because it's a pay-as-you-go model.

JH        The medical home and the accountable care organization were two pillars of healthcare reform.  Can your technology help transform these ideas into reality?

AS        Without a doubt.  These two related concepts put the burden on primary care to keep patients healthy.  The systems in place now are practice centric.  CareCloud's solution is patient centric and cross-practice centric.

JH        The Republicans have added Healthcare Reform Repeal to their platform.  What are their chances of success?

AS        Pretty decent. We'll see what happens now that the Republicans have taken control of the House.

(see related article from CNN.com Repeal 'Obamacare': GOP will try at least posted 11.03.10) 

JH        You launched in the depths of the Great Recession.  What's your view on the economy now?

AS        I think high unemployment is going to be with us for a number of years.  Millions of jobs were lost and now Americans have to retrain for new jobs.  Corporate balance sheets are healthy and the economy is back on a growth track.  Entrepreneurial activity creates jobs but entrepreneurs are also looking to reduce cost by automating and off shoring jobs. 

JH        These are pretty typical elements of the business cycle.  Why do you think unemployment is going to be so hard to solve this time around.

AS        Technology and innovation developments are evolving at a rapidly accelerated rate. This exponential change means some workers are going to be left behind if they do not retool.

JH        To what extent is the government responsible for transforming healthcare delivery?

AS        We need a national infrastructure for financial, administrative and clinical transactions.  The government needs to create the environment for capitalists to build that system. 

JH        Why hasn't the free market been able to do it without government help?

AS        Providers are fragmented and haven't been able to act in a unified manner.  Payers benefit from complexity and disorganization.  They are models of efficiency when collecting premiums but become mired in bureaucracy when it comes time to reimburse.  The whole health system is weighed down by antiquated technology.  We deal with one insurer that accepts submissions using a modem. The mentality is that healthcare is a zero sum game but really it needs to be about the patient.

JH        The prophets of doom would have us believe the nation is headed for ruin.  The reasons for our ultimate bankruptcy are healthcare inflation, unfunded government liabilities and an aging population.  How does healthcare IT prevent the Armageddon prediction?

AS        25 to 50 cents of every healthcare dollar is spent unnecessarily. The culprits are administrative waste, fraud & abuse and redundant care.  Well designed healthcare technology, properly implemented, can solve all three problems.

 

Last Updated on Friday, 19 November 2010 15:46
 
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