Our Take: CommonSpirit launches PHSO to ‘help providers succeed in value-based care’
Chicago-based CommonSpirit Health, the country’s largest Catholic health system and one of the largest nonprofit health systems in the U.S., has established a population health services organization (PHSO) that will offer services to help providers and provider networks “excel in value-based care.”
The PHSO’s services — which include advanced population health analytics, network management, care coordination, data management and analytics, technology infrastructure, and reporting, among others — are intended to expand access to equitable care, improve care quality and outcomes, and lower costs, CommonSpirit said in its announcement.
The new organization will draw upon CommonSpirit’s expertise in existing value-based programs, including full risk-bearing organizations and 10 accountable care organizations. CommonSpirit noted that in the past five years of participation in the Medicare Shared Savings Program, the health system has saved Medicare more than $474 million through proactive outreach and by addressing patients’ behavioral and social needs along with their medical needs.
“The PHSO is a natural extension of our mission and longstanding commitment to providing high quality, equitable care and addressing social determinants of health,” said Wright Lassiter III, CommonSpirit Health’s CEO. “We are leveraging the national scale of CommonSpirit and our expertise in value-based care across diverse, community-based health system environments in order to elevate the standard for health care in the U.S. and help providers succeed in value-based care.”
CommonSpirit Health operates 145 hospitals and more than 2,200 sites of care in rural and urban communities in 24 states. The health system is also one of the largest providers of Medicare and Medicaid services in the country. Consequently, according to CommonSpirit, the new PHSO will serve a more diverse payer portfolio than any other management services organization nationwide.
“We serve diverse communities that include Medicaid, Medicare, and commercial insurance, which means our data are more representative of America than other models primarily focused on commercial insurance,” said Dr. Thomas McGinn, executive vice president of physician enterprise at CommonSpirit Health. “Coupled with our reach across 24 states, we can use the data and tools and access to a broad patient population to take on critical national health issues that require the size, scale, and depth that we can deliver.”
Our Take: CommonSpirit said the PHSO is designed to foster collaboration between independent and employed providers by supporting networks that include both types of physicians. The health system also noted that half of the providers engaged in value-based agreements with CommonSpirit are not employed by the health system, and it expects that segment of the network to grow.
This network growth won’t be a by-product of the PHSO. It’s one of the PHSO’s main purposes, though CommonSpirit didn’t specifically state that. By offering these services to independent physicians in the communities CommonSpirit serves, the health system can grow its provider networks organically, without having to acquire local or regional physician groups.
It’s a strategy CommonSpirit can use to address the dual challenges of physician shortages and rising labor costs while also benefiting the providers who take advantage of the PHSO’s offerings. It’s a relatively unique strategy and one that few other health systems are likely to attempt because they don’t have CommonSpirit’s resources and geographic reach.
The sprawling health system said it focused its efforts on growth and reducing its labor costs, including contract labor, among other objectives to achieve “strong financial performance” in the final quarter of its fiscal year, which ended June 30.
Nonetheless, CommonSpirit reported an annual operating loss of $1.39 billion on revenue of $34.51 billion; in FY 2022, the health system reported an operating loss of $1.29 billion and revenue of $33.91 billion. Investment income of $1.03 billion in FY 2023 helped offset the operating loss; in FY 2022, CommonSpirit lost $971 million on investments.
Salaries and benefits accounted for $18.3 billion of CommonSpirit’s operating expenses in FY 2023, a slight increase from the previous year. In the fourth quarter, the health system reduced its workforce by approximately 2,000 full-time employees in ancillary, support, and overhead functions but increased its clinical staff to keep up with higher volume levels.
“Like the rest of the health care industry, CommonSpirit continues to be affected by inflation, the continued labor shortage, and challenging dynamics with payers,” said Dan Morissette, CommonSpirit Health’s chief financial officer. “Given those headwinds, we continue to focus on initiatives and opportunities that allow us to pursue growth, reduce costs, and increase efficiency, while at the same time investing appropriately in developing the workforce of the future.”
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Separately, Meditech announced a partnership with tech firm Suki to integrate similar generative AI and voice technologies into Meditech’s Expanse EHR. The Suki Assistant platform combines ambient note generation with dictation and commands to facilitate clinical documentation. Earlier this month, Meditech launched its Expanse Virtual Assistant, developed in collaboration with Nuance Communications. The platform, built upon the Nuance Dragon Medical solution, uses conversational AI to assist clinicians in navigating EHRs and quickly accessing the information they need.
Big Pharma has a big PR problem, according to the latest annual Gallup poll of U.S. business and industry sectors. Just 18% of the respondents said they had a positive view of the pharmaceutical industry — the lowest positive ratings Gallup has recorded in annual trends for the industry since 2001, dropping 7 percentage points since last year. The poll indicated that 60% of Americans have a negative view of the industry, while 21% have a neutral stance. Gallup attributed the decline to a 13-point drop in the positive score among respondents identifying as Republicans; the score dropped from 26% last year to just 13% for this group in the most recent poll. Gallup said Republicans’ positive view of the pharmaceutical industry averaged 37% from 2001 to 2019.
Hospitals’ online prices seldom match prices provided by phone for shoppable procedures, based on study findings published online by JAMA Internal Medicine. Researchers conducted a secret shopper survey of 60 U.S. hospitals, including 20 top-ranked hospitals, 20 nearby safety-net hospitals, and 20 other hospitals in the vicinity. They compared cash prices the hospitals posted online with estimates given to callers for two common procedures: vaginal childbirth and brain MRI. In all, 22 of the hospitals provided both online and phone prices for vaginal childbirth and 47 provided both types of prices for brain MRIs. Of these hospitals, 14% had a complete match between their online and phone prices for vaginal childbirth and 19% had a complete match between their online and phone prices for brain MRIs. In many instances, the difference in prices at the same hospital was 50% or more and in some cases exceeded 100%.
A group of pharmacy benefit management companies has formed a coalition called Transparency-Rx to advance PBM reform by “taking on corporate monopolies” and addressing issues that protect “a broken system which hides profits and inflates prescription costs.” The group espouses many of the reforms Congress is considering, including a ban on spread pricing, nationwide reporting and disclosure requirements for PBMs, rebate reforms, and data-sharing practices with patients, health plans, pharmacists, and physicians. The coalition also supports a 100% pass-through model for PBMs and “delinking” provisions that will require PBMs to be paid by flat, disclosed fees. The six founding members represent 14.5 million lives throughout the U.S.
The Biden administration wants to remove medical debt from consumers’ credit reports. The Consumer Financial Protection Bureau announced that it has initiated a rule-making process to accomplish this goal, which would prohibit creditors from using information about medical collections when they assess borrowers’ credit applications for car loans and home mortgages and prevent debt collectors from leveraging the credit reporting system “to pressure consumers into paying questionable debts,” according to the CFPB. The bureau said its proposal would not keep creditors from obtaining medical bill information for other purposes, such as verifying the need for medical forbearances and evaluating loan applications to pay for medical services.
American Physician Partners (APP) and affiliates filed for Chapter 11 bankruptcy protection. The Brentwood, Tenn.-based hospital staffing firm posted a statement on its website saying the filing would ”facilitate an orderly and efficient wind down of its business affairs following the transition of its clinical operations” at the end of July. Despite consistent increases in annual revenue, the company — which was founded in 2015 — had annual net losses ranging from $101 million to $148 million from 2019 through last year. The company’s chief restructuring officer attributed APP’s ongoing financial struggles to several factors, including ripple effects throughout the health care industry from the pandemic, rising labor costs, inflationary pressures, and the “problematic” regulatory implementation of the No Surprises Act.
Medicare’s Historic Prescription Drug Price Negotiations. JAMA, 9.20.23
Federal Health Policy Requires Child Health Investment Focus. Health Affairs, 9.22.23
Improving US orthopedic care via patient-centric pathways. McKinsey & Company, 9.14.23
