April 2024 – The Journal of Healthcare Contracting
Outpatient revenue has increased more than 40% compared to 2020
Recently, hospitals and health systems have experienced difficult years in terms of finance since the beginning of the COVID-19 pandemic. However, 2023 presented a more promising trend for hospitals and health systems. According to the latest data from Kaufman Hall, outpatient revenue has grown significantly, increasing by more than 40% compared to 2020.
The median calendar year-to-date operating margin index for hospitals was 2.3% in December, according to Kaufman Hall. Provider productivity has increased, while expenses continue to outpace revenue growth. Improved margins may indicate that hospitals and health systems are taking proper steps to adapt to the new environment, according to Kaufman Hall.
Participation grows in CMS’ Accountable Care Organization initiatives
The Centers for Medicare & Medicaid Services (CMS) announced increased participation in its 2024 accountable care organization (ACO) initiatives. Increased participation will drive better quality care for individuals enrolled in Medicare. Nineteen newly formed accountable care organizations (ACOs) are participating in a new, permanent payment program that begins this year, and will enable ACOs to receive advanced interest payments to care for underserved populations.
Advance interest payments through the program will enable healthcare providers in underserved areas to provide patients with whole-person care, and build healthcare clinic staffing, infrastructure, and develop care delivery, providing proper patient healthcare, according to CMS.
CMS’ priorities are to expand access to affordable care and health coverage for users of Medicare across the nation. Accountable care organizations (ACOs) are groups of doctors, hospitals, and healthcare professionals that work together to better coordinate patient care and improve health outcomes. Accountable Care Initiatives will support ACOs, providing tools and financial support to healthcare organizations so they can deliver better care to patients through programs like the Medicare Shared Savings Program and Innovation Center accountable care initiatives.
Fifty new ACOs joined the program in 2024, and 71 renewed their participation, bringing the new total to 480 ACOs in the Shared Savings Program. Overall, in 2024 there are about 13.7 million people with Traditional Medicare aligned with an ACO, according to CMS. ACOs now serve half of the people with Traditional Medicare, which is a 3% increase from 2023.
In 2024, ACO initiatives including The Shared Savings Program, the permanent ACO program, and the ACO REACH model have continued to grow, enabling higher quality care for people with Traditional Medicare, and improving care for rural and underserved populations.
The Shared Savings Program has 480 ACOs, and the ACO REACH Model has 122 ACOs, serving 13.4 million people combined, according to CMS. Increasing the number and reach of ACOs in underserved communities will help in closing racial and disparities that have been identified among people with Traditional Medicare in accountable care relationships. Participation in ACO models in 2024 will overall assist patients with accessing quality healthcare that addresses their health needs.
Tenet to sell two hospitals
Tenet Healthcare Corporation has entered into a definitive agreement with Adventist Health for the sale of two Tenet hospitals and related operations in San Luis Obispo County. Tenet also announced its Conifer Health Solutions subsidiary will enter into an agreement to provide revenue cycle services for Adventist Health.
The transaction will include Sierra Vista Regional Medical Center and Twin Cities Community Hospital, as well as affiliated physician practices and other related operations. The agreement is for approximately $550 million (after-tax proceeds of approximately $450 million).
The transaction is expected to be completed in the spring of 2024, subject to customary regulatory approvals, clearances, and closing conditions.
Nuvance Health to join Northwell Health
Nuvance Health and Northwell Health, two nonprofit, mission-driven healthcare organizations announced they have entered into a strategic agreement to form a new integrated regional health system serving communities across two states. The proposed agreement will allow the organizations to come together formally upon receipt of necessary regulatory approval.
“This partnership opens a new and exciting chapter for Northwell and Nuvance and provides an incredible opportunity to enhance both health systems and take patient care and services to an even higher level,” said Michael Dowling, president and CEO of Northwell Health. “We have similar missions in providing high-quality care for patients in the communities we serve. We look forward to building on the care that Nuvance Health’s 14,000 staff members and providers deliver each and every day.”
Northwell and Nuvance Health will combine the strengths of both organizations and advance the level of care for patients in New York and Connecticut. The new regional system will bring greater access to primary, specialty and hospital care through a diverse network of combined 14,500 providers and over 1,000 sites of care, including 28 hospitals.
“By joining forces with Northwell Health, we are taking a giant leap forward in our shared mission to enhance the quality, accessibility and equity of the healthcare we provide to our communities,” said John M. Murphy, MD, president and CEO of Nuvance Health. “This agreement enables us to make significant improvements to health outcomes for community hospitals and to deliver unparalleled care and drive positive change in the healthcare landscape.”
Northwell will make significant investments in Nuvance Health, helping it continue to evolve as a high-quality and comprehensive healthcare system serving communities throughout New York and Connecticut.
SMI announces new Chair-Elect and Board Members
SMI®, a non-profit, community of healthcare supply chain organizations, has appointed 3 new Board members for 2024: Susan Louis, Vice President of Healthcare & Strategic Accounts from Staples; Eric Tritch, Vice President of Supply Chain & Support Services from UChicago Medicine; and Kelly Quick, Vice President of Contract Solutions from Stryker.
Lisa Hohman, CEO of Concordance Healthcare Solutions, is the Chair-Elect following Donna Drummond, SVP, Chief Expense Officer, Chief Sustainability Officer, from Northwell Health who has served as Board Chair since 2023. Hohman will begin her term as Board Chair in 2025.
The SMI Board of Directors includes 12 members, 6 provider partners and 6 industry partners to ensure a balanced representation of its membership which consists of leaders from large integrated delivery networks (IDNs) as well as suppliers, manufacturers, distributors, and service organizations. Hohman, Louis, Tritch, and Quick all serve on SMI Thought Leadership Councils, which operate as catalysts for collaborative action and focus on strategic imperatives including clinical integration, key strategic collaboration, intelligent supply chain, and diversity & inclusion. SMI Thought Leadership Councils give members the opportunity to work side-by-side with industry peers to connect on key topics over time that are shaping the future healthcare supply chain.
AdventHealth expands supply chain resiliency
The healthcare industry is still dealing with and navigating the impacts of global supply chain disruptions. To ensure the continuity of the supply chain, AdventHealth is partnering with Medline to create a comprehensive solution that will ensure supply chain resiliency. Through a multi-faceted partnership, AdventHealth and Medline will allow AdventHealth to own its inventory and distribution strategy and create a structure to accommodate future growth.
As part of the partnership, AdventHealth will continue to utilize Medline as its prime vendor distributor for all medical and surgical supplies throughout its network of more than 50 hospitals and additional care sites in nine states.
The partnership also assumes the co-development of a 300,000-square-foot AdventHealth Consolidated Service Center (CSC) that is now up and running in Central Florida, after a ribbon cutting ceremony on February 23. The CSC contains supplies for AdventHealth’s hospitals and care sites throughout Florida to ensure product availability for patient care.