E-DMN - July 9, 2007

July 9, 2007

Henry Ford Acquires St. Joseph's Healthcare
Ascension Adds Alabama Health System
Medicare Payment Rule Is Trouble For Docs
Health Care Trust Part Of Big Three-Union Talks
In-Store Clinic Group Talks With AMA
Iphone EMR

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Henry Ford Acquires St. Joseph's Healthcare

Following three months of due diligence and transition work, St. Joseph’s Healthcare, based in Clinton Township, has become fully owned by Henry Ford Health System, reports HFHS. And with the transfer of ownership, comes a new name: Henry Ford Macomb Hospitals.

Since 1990, Trinity Health and Henry Ford Health System each have owned 50 percent of the former St. Joseph’s Healthcare in Clinton Township. An agreement has been signed in which Trinity Health has transferred its half-interest in St. Joseph’s to Henry Ford.

Henry Ford Macomb Hospitals is a 435-bed, multi-site system with a comprehensive, acute care hospital in Clinton Township; a specialty hospital in Mt. Clemens; and health centers in Bruce Township, Chesterfield Township and Fraser.

The new name of Henry Ford Macomb Hospitals will be used with all newly acquired Macomb County facilities and programs. For example, St. Joseph’s Medical Center will become Henry Ford Macomb Hospital and St. Joseph’s Specialty Hospital will become Henry Ford Macomb Hospital – Mt. Clemens Campus.

Henry Ford currently operates four medical centers in Macomb County as well as Henry Ford Bi-County Hospital in Warren. The health care system, the largest in metro Detroit, also owns Henry Ford Hospital in Detroit, Henry Ford Wyandotte Hospital, and Kingswood Hospital in Ferndale, and is building a 300-bed hospital in West Bloomfield.

Henry Ford spokesman Dave Olejarz said the health system is not releasing price figures for the deal.

Ascension Adds Alabama Health System

Ascension Health, the St. Louis-based company that owns St. John Health in Detroit, acquired three-hospital Eastern Health System in Birmingham, Ala. Terms of the deal were not disclosed.

Eastern Health’s three hospitals—40-bed Medical Center Blount, Oneonta, Ala.; 282-bed Medical Center East, Birmingham; and 40-bed St. Clair Regional Hospital, Pell City, Ala.—merged with Ascension’s St. Vincent Health System, which includes 326-bed St. Vincent’s Hospital, Birmingham, effective July 2.

Eastern Health signed a management agreement with St. Vincent’s in December 2005 and began to consolidate some departments, operations and management, said Liz Moore, a St. Vincent’s spokeswoman, in an e-mail. Moore said Eastern Health sought the merger to bolster the struggling system’s finances and improve care by consolidating its operations with St. Vincent.

Medicare Payment Rule Is Trouble For Docs

Medicare payments to physicians in 2008 would drop nearly 10 percent under a proposed rule issued last week by the federal Centers for Medicare and Medicaid Services, which projects it will pay $58.9 billion to 900,000 physicians and other health care professionals next year.

Physician groups have pushed Congress to replace the sustainable growth rate formula, or SGR, which is tied to the health of the economy and is used to calculate physician payments under the Medicare program. It has been estimated that payments will drop by more than 40 percent by 2015 if the SGR is not replaced. Congress in the past has adopted interim measures to stop previous payment reductions.

"Last year, Congress set aside $1.35 billion that could be used to reduce the scheduled 2008 pay cut,” said Cecil Wilson, MD, an American Medical Association board member. “The AMA and 85 other physician and health professional organizations sent a letter strongly urging the Administration to use this money to help Medicare physician payments keep pace with increases in practice costs. The Medicare Payment Advisory Commission (MedPAC) made a similar recommendation. In today's rule, CMS has chosen to spend all of the money to provide just 1.5 percent to 2 percent to physicians who report on certain quality measures.

"The AMA is extremely disappointed in this short-sighted decision. Today, Medicare pays doctors the same as it did in 2001. More than 60 percent of doctors say they will be forced to limit the number of new Medicare patients they can treat when the cut goes through. Seniors' access to health care is in jeopardy."

Efforts have been brewing on Capitol Hill in the meantime to revamp the SGR. In a meeting during late June, staff for the House Ways and Means and the Energy and Commerce committees shared with physician organizations a draft proposal to halt the 10 percent cut from taking effect next year. The proposal would replace the cut with at least a 0.5 percent increase in 2008 and 2009, and would repeal and replace the SGR payment system.

The CMS’ proposed rule on the 2008 physician fee schedule is expected to be published in the Federal Register on July 12. Comments on the proposal will be accepted until Aug. 31.

Health Care Trust Part Of Big Three-Union Talks

The Detroit News on July 6 examined potential solutions to fund retiree health care that likely will be discussed during upcoming contract negotiations between the United Auto Workers and the Big Three auto manufacturers (Hoffman, Detroit News, 7/6). In recent months, General Motors, Ford Motor and Chrysler have considered an agreement reached late last year between Goodyear Tire & Rubber and the United Steelworkers of America. Under the agreement, Goodyear transferred retiree health care obligations to an independent trust fund. In exchange, Goodyear established a $1 billion fund to pay health care costs and agreed to invest at least $550 million in manufacturing facilities represented by the union.

The Goodyear fund, known generally as a voluntary employee beneficiary association, is expected to be a "central issue at the bargaining table" during contract negotiations later this month, according to the News. A VEBA would "dramatically narrow the competitive gap dragging down Detroit automakers" -- which will spend more than $10 billion on health care this year -- and give UAW "enough starting capital to guarantee retiree health benefits well into the future, assuming the funds are managed wisely," according to the News.

If UAW adopts a VEBA to provide health benefits, the union would become one of the largest health care payers in the US and the manager of one of the country's largest private investment funds, which some say "could give the UAW far more clout in the national health care debate," the News reports. However, UAW, Ford and GM might not be able to enact a VEBA until 2011 because of court settlements from previous contract negotiations that bar the companies from altering retiree health care benefits until that date.

Estimates
Himanshu Patel of JPMorgan estimates that GM and Ford might come to an agreement with UAW to fund 50 cents to 70 cents per dollar for retiree health benefits. Assuming a funding level of 60 cents on the dollar, Ford would improve earnings by 17 cents per share in 2008 and increase cash flow by $600 million, according to Patel's estimates. Earnings would continue to improve by 25 cents per share in 2010, and cash flow would increase by close to $1 billion. GM would increase their cash flow by $600 million in 2008 with no increase in stock value.

In 2010, GM would increase cash flow by $1.6 billion and its earnings would improve by 73 cents per share. Patel estimates that GM would need to set aside $29 billion and Ford would need $12.5 billion to fund a VEBA.

Patel and other analysts say that "neither automaker should have too much difficulty raising the cash" by using money already set aside for health care, asset sales or existing financing, according to the News. Patel said, "We think the UAW leadership will see the benefits of becoming an asset manager" (Detroit News, 7/6).

In-Store Clinic Group Talks With AMA

The Convenient Care Association, the industry trade group that represents retail clinics, recently met to discuss a response to American Medical Association concerns that the clinics represent a conflict of interest, the Houston Chronicle reports (Harris, Houston Chronicle, 7/6).

AMA at its annual meeting in June adopted a resolution to ask state and federal agencies to launch investigations into whether retail health clinics place the health of patients at risk. AMA also will seek an investigation into whether retail clinics encourage patients to fill their prescription on site, a practice that might involve a conflict of interest. In addition, AMA will seek a ban on a practice in which health insurers offer to waive or reduce copayments for members who seek care at retail clinics (Kaiser Daily Health Policy Report, 6/26).

A statement on the CCA Web site (http://www.convenientcareassociation.org/) states that the group wants to work with AMA to address the concerns. CCA Treasurer Web Golinkin, president and CEO of clinic chain RediClinic, said in-store clinics do not represent a conflict of interest because they have no connection to the pharmacies. He said that the pharmacies "have no financial interest in the clinics, and there is no financial incentive for them."

AMA Trustee Peter Carmel, chair of the New Jersey Medical School Department of Neurosurgery, said insurance companies are lowering premiums for members who use in-store clinics, and the same discounts should be offered to patients seeking care at private practices. Carmel said, "In effect, the insurance companies are steering patients toward the clinics." Golinkin said he was not aware of this practice but noted that as health costs rise, insurers likely will encourage patients to seek the most cost-effective care.

Carmel said, "The AMA strongly believes in consumer-driven health care. It is likely that if we're going to lower health care costs, we're going to need entrepreneurial answers," but "[i]n finding new solutions, we can't lose sight of patient safety and quality" (Houston Chronicle, 7/6).

Iphone EMR

According to the website www.medgadget.com “the first, and only, electronic medical record (EMR) compatible with the infamous iPhone,” is on display. It is reported to facilitate “everything from office notes to prescriptions, x-rays to echos” on a multi-touch screen. The website reports that patients will soon be able to access their medical records as they download music. Medgadget currently has a four-minute video demonstration of the Iphone working with the Life Record system. A company called Life Record (www.liferecord.com) provides a web-based electronic medical record interface that works with the Iphone.

This publication brought to you by Natinsky Publishing Network.

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