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“When considering cost containment, are researchers and policymakers considering hospital system membership separate from market concentration? They probably should.”

That tweet, posted by the University of Southern California’s Schaeffer Center for Health Policy & Economics, references a study it just published on hospital system participation and health care spending. The study offers an important counter-perspective to the conventional wisdom that hospital “systemness” increases costs.

Recent public discourse about hospital integration often assumes that it contributes to overall health care spending, but the USC researchers discovered some trends to the contrary that must be considered:

Hospital system membership and market concentration are two different issues. The researchers found that hospital systems are not strongly correlated with market concentration and tend to have a broad reach beyond geographic markets. 
States with the highest proportion of system hospitals tend to have lower per capita hospital costs. California ranks as the ninth lowest state in per capita hospital costs (75% of hospitals beds in the state are part of hospital systems).

What we also know about hospitals that join forces within systems is that they improve their ability to leverage resources, innovation, and technology. This creates efficiencies for coping with burdensome regulations and enables a shift of resources to quality initiatives. In many areas — like rural and underserved communities — system integration preserves access to care by keeping open hospitals that might otherwise shutter.

Patient care in the 21st century has meant more hospitals reinventing themselves to meet their patients’ and communities’ needs by integrating and, in so doing, creating more options for people to get the right care at the right time and in the right setting.

This new data suggesting hospital systems yield lower health care spending means that policy makers will need to reconsider some common assumptions if they want to preserve high-quality care while keeping costs in check.

In 2020, as California lawmakers focus more keenly than ever on the issue of health care affordability, integration will be part of the discussion — and studies like these, which demonstrate the need for more research, will be critical to shifting the tone in the Capitol.

— Carmela

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About a year ago, the Behavioral Health Action Coalition held a historic forum focused on mental health and substance use disorders in California, featuring then-Lt. Gov. Gavin Newsom. This week, in a much-deserved recognition, the coalition named Gov. Newsom a Behavioral Health Champion.

CHA co-founded Behavioral Health Action in 2018 with the National Alliance for Mental Illness, California, to lead a partnership of more than 50 organizations from health care, education, labor, law enforcement, local government, and business — all focused on eliminating stigma and engaging lawmakers to develop solutions to the behavioral health challenges faced by millions of Californians (check out all of our efforts here and here).

The coalition’s one-on-one conversation with Newsom shortly before his election to the governor’s office was a catalyst for something new in California: As lieutenant governor, he was the highest-ranking statewide official to meet with such a wide array of behavioral health professionals.

That forum was the beginning not just of a high-level public discussion about the needs of people who face behavioral health challenges — but also the beginning of meaningful statewide change. As he said then about the need for California to set an example for the nation, “[there is] no state more capable than this state to truly lead in this space.”

Once in office, Gov. Newsom quickly announced a first-ever special advisor on mental health care, Tom Insel, MD, who continues to advance the conversation on improving lives and innovating behavioral health care. And, the governor has — most importantly  — championed mental health funding on a statewide level.

This year’s state budget recognizes the need for mental health workforce development with $150 million, including $20 million for hospitals to use in emergency departments. It also includes $100 million for whole person care pilot programs, and $70 million for Medi-Cal integration programs.

We were grateful a year ago when he sat down to talk with us and pledged his commitment, and we are grateful now for the important steps he has already taken to help make California a global model for behavioral health.

To borrow from Gov. Newsom: “This is an issue that demands to be treated on par with physical health… and with a sense of urgency.”

Half of us will care for someone living with a mental health issue at some point in our lives. If we are to make good on our commitment to improve lives and relieve suffering, we need to continue to support leaders like Gov. Newsom who champion a better system to care for those with behavioral health needs.

— Carmela

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It’s easy to be distracted by the news coming out of Washington, D.C., these days, much of which has little to do with sound policies that advance hospitals’ efforts to care for their patients. But on the issue of Medicaid disproportionate share hospital (DSH) payments, we cannot afford to lose focus in our fight against devastating funding cuts to hospitals that serve the uninsured and underinsured.

This issue tops our current federal advocacy priorities because it is time sensitive: the DSH cuts were scheduled to take effect on Oct. 1 but were briefly delayed by the current temporary spending bill. When that measure expires on Nov. 21, unless the cuts are eliminated or further delayed, they will take effect immediately.

Now is the time for a full-court press urging Congress to continue this vital source of funding for safety-net hospitals.

Medicaid DSH cuts were adopted as part of the Affordable Care Act, on the assumption that the number of uninsured Americans would decrease more than it has. In California, 2.9 million people remain without health insurance. Those patients are disproportionately served by our safety-net hospitals, which rely heavily on DSH payments to offset the cost of the uncompensated care they provide.

As planned, the cuts will be unsustainable for California’s safety-net hospitals, reducing DSH allotments in the state by $500 million in 2020 and by about $950 million a year from 2021 through 2025.

So far, members of Congress have been willing to delay these drastic reductions while millions remain without coverage, but the time has come to once again impress upon Congress the essential nature of DSH payments to safety-net hospitals and their patients. To that end, CHA is leading an effort to press the California congressional delegation to sign a letter that urges House Speaker Nancy Pelosi and Minority Leader Kevin McCarthy to support eliminating the cuts for another two years. 

Next week, we’ll be sending an Advocacy Alert to member hospitals, asking you to contact your representative about signing the letter. This is an issue that all hospitals should care about — because cuts of this magnitude will jeopardize access to care for millions.

For lawmakers to support a policy that diminishes access to care for California’s most vulnerable patients is unacceptable. It is incumbent upon all of us to let them know that.

— Carmela

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When Congress created the 340B Drug Pricing Program over 25 years ago to help safety-net hospitals pay for prescription drugs, it set up a unique government program that costs taxpayers nothing but makes vital medications available to millions of uninsured and low-income patients. 

By requiring participating Medicaid drug manufacturers to sell their outpatient drugs at discounted prices to providers in underserved communities, the 340B program has also created the ability to expand community health investments, which hospitals are able to make, in part, thanks to the savings they realize from discounted drug prices. These investments include programs like preventive health screenings and mobile clinics.

340B drug discounts are crucial to patients and hospitals in vulnerable communities. That’s why, when the program itself became vulnerable to state and federal proposals this year, CHA intensified efforts in both Sacramento and Washington, D.C., to protect 340B hospitals.

At the federal level, a proposal to reduce Medicare reimbursement rates for some 340B-covered drugs has been challenged by a lawsuit and, while a court has stalled the rate reduction, it hasn’t yet been ruled out. Meanwhile, CHA is urging the Centers for Medicare & Medicaid Services to move forward with full retroactive adjustments that are not budget neutral for 340B hospitals.

In California, Gov. Newsom issued an executive order early this year creating a single drug purchasing system and transitioning the Medi-Cal pharmacy benefit out of managed care and into fee-for-service. This will impact some 20 hospitals in the 340B program — specifically, those that dispense 340B-purchased drugs to Medi-Cal managed care beneficiaries through their retail pharmacy will now be paid the actual acquisition cost of the drug plus a dispensing fee, which might be lower than what they are paid under managed care. We’re convening the affected hospitals to more fully understand the implications of the proposed changes.

As we keep a watchful eye on the outcome of proposals and changes for 340B hospitals, it is imperative that we ensure lawmakers understand the remarkable care that 340B hospitals provide with programs like expanded mental health services, urban and rural primary care clinics, transportation to medical appointments, and so much more — created specifically to meet their patients’ most pressing needs.

In the meantime, if your hospital participates in the 340B program and hasn’t yet signed on to the American Hospital Association’s 340B Good Stewardship Principles, we encourage you to do so. AHA has posted the names of hospitals that have committed so far, but it’s not too late to make the pledge. It’s an important step that more than 85% of California’s 340B-covered hospitals have already taken — a way of demonstrating their value to their communities and amplifying the importance of this essential program.

— Carmela

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This week, California communities experienced the largest intentional blackout yet in the latest power company strategy for mitigating fire risk during extremely dry and windy conditions.

Intended to keep power lines from sparking potentially devastating fires, utility companies intentionally cut electrical power for nearly 1 million people — and their hospitals ­— across the state over the past few days (even more experienced the uncertainty of pending planned outages). 

The question that should be at the top of every Californian’s mind is, “When does a public safety power shutoff jeopardize public safety?”

Hospitals, of course, are better prepared for these events than most other businesses and residents. You’ve got expertise, your staff is well trained, and you have backup generators — as a matter of course, your disaster preparedness plans and requirements kick in and you’re poised to continue caring for patients.

But we know that managing and sustaining the complex and life-saving work that happens in a hospital during a power outage is challenging and not without risk. Surgeries must be preemptively rescheduled, nurse shortages grow as workers are faced with addressing the needs of their own children and families, and all are on high alert to ensure the power backup plan holds. In the community, people in need of nursing homes and dialysis centers are at risk, diabetics with home refrigerators full of insulin are at risk, and people in need of home medical supports are at risk. Add the uncertainty about when power will be restored to public safety concerns, because longer term outages are fraught with greater risk. 

Wildfires can be destructive, with devastating impact for the individuals and communities involved. The risk of fire is greater than it has ever been, but so too is the growing risk to health and safety caused by widespread power outages. If this is the power companies’ public safety strategy for California, it is unacceptable. The way the shutoffs have been rolled out and managed must change. Preventing the need for shutoffs in the first place is the goal. 

Together, CHA and the Regional Associations will press the power companies, state government, and regulators for better. We’ve been working with Pacific Gas & Electric, Southern California Edison, San Diego Gas & Electric, and local government officials to ensure they grasp the obstacles you must overcome during power shutoffs, in order to continue providing seamless care. And we’ll press for additional solutions.

We want to hear about and collect your experiences. If your hospital has been affected by one of the public safety power shutoff events, please share your story with us via email.

In the meantime, thank you for standing strong for your communities. For hundreds of thousands of Californians this week, their homes and businesses were dark, but the lights were on — as always — at their local hospital.

— Carmela

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With the legislative year coming to an end in Sacramento last week, and important signing decisions yet to be made by the Governor, our advocacy in Washington, D.C., is heating up.

Congress returned Sept. 9 facing a full legislative agenda. Because neither party wants another government shutdown, the House of Representatives passed a measure to keep funding flowing through Nov. 21. The Senate is expected to consider that legislation in the next few days.  

There’s also a full slate of health care issues up for debate in the coming months, so it was important that we took the opportunity last week, alongside nearly two dozen of California’s hospital CEOs, and with our partners at the American Hospital Association, to spend time with members of the California congressional delegation to discuss the issues most important to your hospitals and your patients. 

As we made the rounds on Capitol Hill, some common themes emerged: 

• Surprise billing: This issue is top of mind for Congress. Over the summer, one House committee reported legislation, the No Surprises Act; two others are expected to craft additional bills, and we could see a House floor vote sometime this fall. This week, the issue took on a new depth when the House announced an investigation into private equity firms that own physician-staffing companies, and whether they use out-of-network billing as an intentional strategy. In the meantime, we’ll keep reinforcing our message that hospitals support taking patients out of the middle when it comes to out-of-network bills, but we stand firmly against rate setting as part of the solution.

• Eliminating payment cuts to Medicaid disproportionate share hospitals (DSH): Set to take effect Oct. 1, cuts to Medicaid DSH hospitals will be unsustainable for many hospitals and could sever the safety net for your most vulnerable patients. We’re fighting hard on this one, urging that the cuts be eliminated or – at a minimum – delayed. The good news is that we have strong support in Congress, and a delay in the cuts for the first quarter of the 2020 fiscal year is part of the current House bill to temporarily fund the government. It’s good to be part of “must-pass” legislation, and we’ll keep pressing to get this done.

• Drug pricing: Reducing consumer drug prices remains a high priority for both Congress and the president. As we monitor those evolving efforts, we’re engaged in discussions with California congressional leaders to fully understand the various forms any pending legislation might take, as well as any impact on patients and hospitals.

As we continue to fight for policies that help you care for your patients and communities, last week’s meetings in the nation’s capital make clear that our greatest strength is in our unity, and when you lend your personal voice to the conversation, our message resonates. Thanks to all of our AHA regional policy board representatives who traveled to set the stage for our senators and representatives as they prepare to make decisions that will affect all of your hospitals.

— Carmela

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In just a few hours, the state Legislature will officially wrap up its 2019 session. This was a particularly challenging year for our work to protect your ability to care for patients, as a new Democratic supermajority opened the door for several brazen policy proposals detrimental to hospitals. And the session saw a record number of bills (more than 3,000) introduced, so the pace was fast and furious. Factor in the uncertainty about how a new governor would respond to this environment, and you’ve got a volatile legislative mix for the past nine months.

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Over the Labor Day weekend, The New York Times published a column critical of hospital spending. It called, ahead of the Democratic Primary debates, for elected officials and candidates to “address the elephant in the room and tell us how they plan to rein in hospital excesses.”

The data the author uses to form her call to action were carefully selected to support her position, and as is too often the case, fail to account for the myriad cost drivers beyond the control of hospital leaders, such as the high price of labor.

The American Hospital Association has already submitted a response to The New York Times, and has debunked some of the incorrect points in its blog.

We can argue data validity all day, and that work has its place. What’s more important, however, than simply correcting the record for this column – and hundreds of others like it in the past year – is that we take heed of a growing shift in how real people experience their hospital. Despite its many problems, the NYT column sadly does capture the sentiment of millions of Americans.

In June, NPR published “When Hospitals Sue for Unpaid Bills, It Can Be ‘Ruinous’ for Patients.” The piece offered multiple tales of the impact on patients and their families of garnished wages resulting from medical debt lawsuits.

Their stories are heartbreaking.

In the NPR story, the reporter interviewed Martin Makary, a surgeon and researcher at Johns Hopkins Medicine.

“Hospitals were built — mostly by churches — to be a safe haven for people regardless of one’s race, creed or ability to pay,” Markey said. “…They’re supposed to be community institutions.”

Markey is partially right when he says hospitals are supposed to be community institutions. There’s nothing “supposed” about it. You are community institutions.

You are there, 24/7, through all manner of emergencies, disasters, and more. You are economic pillars in your cities and counties. You wake up each day thinking about how to serve people better.

Even the NYT piece concedes: “…when their operations generate huge surpluses…they plow the money back into the system…build another cancer clinic…buy the newest scanner (whether it’s needed or not).”

It’s that last sentence that is troubling. Are we really at the point where we should think that building a cancer clinic or buying a scanner is a bad thing? These are investments that save and change lives. They are made solely with that purpose in mind.

It’s saddening that for some, the impact of not doing these things isn’t considered.

Which brings us back to the experience people have with their hospital and how they feel about that experience. There’s a joke about the airline industry here that is relevant. It goes something like this:

“There you are, 30,000 feet in the air, flying in an aluminum cylinder across the country to see your loved ones in just a few short hours, and all you do is complain that the movie selection is weak and the peanut bag is small. Where’s the appreciation for the miracle of flight itself?”

In 2019, this is our call to action as hospital leaders: to not only perform the daily medical miracles, but also to meet people where they are – so their hospital experience is one that matches your values of service, healing, and hope.

— Carmela