U.S. health services merger and acquisition (M&A) total deal value rose 152 percent to $12.3 billion during the first quarter of 2014 compared to the same period in 2013, according to Q1 2014 US health services deals insights, a quarterly analysis of M&A trends and outlook for the health services sector issued today by PwC US.
“While deal activity held steady during the first quarter of this year compared to Q1 2013, having deal value jump 152 percent is an indication of renewed confidence in the industry as the dust settles from the implementation of the Affordable Care Act,” said Brett Hickman, partner and PwC’s U.S. healthcare deals leader. “Several indicators that we track point to robust M&A activity for the rest of the year. The impetus for greater alignment and size remains unchanged in the hospital sector – and for managed care deals, an increase is likely as these companies work to meet the required ACA milestones. Combined with positive signs we’re seeing in the other health services sectors, we’re optimistic that there will be heightened deal activity in 2014.”
In the first quarter of 2014, the total volume of deals remained consistent with the same period in 2013. From a sector perspective, hospital deal volume experienced a decrease when compared to Q1 2013, down from 21 in Q1 2013 to 12 in Q1 2014, a nearly 43 percent drop-off. However, deal value increased from $320 million in Q1 2013 to $388 million in Q1 2014. According to PwC, the softened deal activity during the first three months of 2014 does not necessarily indicate a slowdown. Hospitals continue to assess strategic alternatives, specifically addressing their market position, long-term strategy and the recent large transactions which have reinforced a “bigger is better” mentality within the hospital sector.
M&A activity in the managed care sector was up slightly in Q1 2014 as deal volume increased 150 percent relative to Q1 2013. Deal value was not disclosed for any of the deals announced in Q1 2014.
The long-term care sector has started the first quarter of 2014 where it left off in 2013, leading the sectors in both volume and value, as well as making gains over the first quarter in 2013. Long-term care deals highlighted in the quarter, in conjunction with positive operating trends, will continue to build confidence in decision makers and help support strong M&A trends in this sector.
Home health and rehabilitation have started at a slower pace, with smaller volumes and values recorded compared to the first quarter in 2013. There were just two deals in the home health and hospice sector (values were not released) and six deals in the rehabilitation sector.
Guest post by Egor Kobelev, software delivery manager — healthcare, DataArt.
There are a lot of organizational and technical challenges health information exchanges (HIEs) struggle with while trying to deploy and maintain their platforms. One of the most complex organizational and administrative challenges is to achieve sustainability. While that is often an ultimate goal for HIEs, there is a huge amount of smaller technical challenges to meet, and the way those challenges are responded to often makes a difference for future HIE sustainability.
One of those typical tasks in the industry is a patient look up and mapping. There is a well-known issue when it comes to any sort of health data integration – the lack of a global unique patient identifier. Thousands of existing healthcare providers and payers use their own internal identifiers and there is no easy way to establish a relation between these. Social Security Numbers or similar national identifiers, while useful in some of scenarios, are not suitable for the purposes of healthcare record identification, primarily because of the risks of HIPAA rules violation.
The good part of the story is the amount of talks regarding a National Patient Identifier (NPI). For instance, HIMSS is proactively driving the initiative of introducing NPI, so that eventually patient mapping, which is currently a challenge, will be routine. However, the reality is that we are pretty far away from having NPI legislated and deployed in healthcare organizations nation-wide. At the same time, as many as 8 percent to 14 percent of patient records have errors caused by mismatching patient identifiers, which in turn causes hundreds of millions of dollars in spending to repair and reconcile the records. So, while we are waiting for NPI to come, what would be a solution which is HIPAA compliant, provides high accuracy, throughput, and minimizes manual interventions at the same time?
As clearly identified in the PCAST Report on Health Information Technology (2011), and as echoed in the recent GAO report Electronic Health Record Programs — Participation Has Increased, but Action Needed to Achieve Goals Including Improved Quality of Care (2014), healthcare continues to have a data problem. The country has invested significantly to advance EHR adoption.
In simpler terms, healthcare data is messy and makes for building of accurate, actionable metadata a problem. It’s clear that the next generation of standards that are being developed by the numerous committees and acronyms and professional societies tackling measure development, harmonization and testing will now need to address the relevance of each measure.
More than a decade ago, a coalition of purchasers, payers and providers came together across Wisconsin to form the Wisconsin Collaborative for Healthcare Quality (www.wchq.org). Groundbreaking initiatives like Get with the Guidelines, Leapfrog and JCAHO revealed that “quality” and “healthcare” could be used in the same sentence (or displayed on a website). These efforts were largely inpatient-focused. Measurement in the outpatient setting, long considered the keystone of payment reform, was an unsolved riddle. WCHQ, at the urging of the IOM, IHI and others accepted the challenge of tackling performance in the ambulatory arena.
At the direction of some very engaged employers, and with input from most of the state’s payers, WCHQ was charged with one very simple goal — apples to apples quality measurement, regardless of health IT infrastructure. The focus had to include both processes of care and outcomes. Oh, and if health systems didn’t have any health IT in place, data still needed to be included for these groups in the measurement effort. What transpired over an 18-month period was remarkable. With unwavering support from administrative and clinical leadership, health systems rolled up their sleeves and dug into their very messy data. Each Monday, we would devise a fiendish list of new tasks to be completed in the next four business days.
Guest post by Diane D. Homan, MD and Adam Lokeh, MD.
As the healthcare industry unwraps the next phase of population health management (PHM), providers are increasingly embracing its promise to drive success with healthcare’s triple aim of improving population health, enhancing patient experiences and reducing costs. It’s a 180-degree shift in thinking for many providers who have been conditioned to long-standing fee-for-service models, one that will require a coordinated care effort and an advanced technological infrastructure to support decision-making based on the latest industry evidence.
As regulatory initiatives, such as meaningful use and value-based purchasing converge to up the ante on improved outcomes, the proactive premise of PHM will be critical to success. A foundational component to effective implementation of a PHM model is a clinical decision support (CDS) strategy that drives standardization of care based on best practices.
For Rush-Copley Medical Center, the first step in this process was deployment of evidence-based order sets and a complete clinical content management solution— ProVation Order Sets, powered by UpToDate Decision Support. The decision to leverage evidence-based order sets at the point of care has proven advantageous on many fronts, from supporting recent responses to public health crises to raising the bar on outcomes improvement and laying a foundation of accountability across the continuum.
Reducing Variation for Improved Response
Getting clinicians on the same page and helping them to adopt industry best practices in their day-to-day workflows is certainly a key element in bending the quality curve, but ensuring that variations are minimized in a public health crisis is absolutely critical to success.
A 210-bed hospital serving the greater Fox Valley region of Illinois, including the state’s second largest city, Aurora, Rush-Copley uncovered an outbreak of tuberculosis (TB) in late 2009 following two admissions over the course of two months. In cooperation with the Kane County Health Department, an investigation traced the outbreak back to a homeless shelter, which, in turn, presented a considerable challenge to containing the outbreak as the population was highly transient.
With evidence-based order sets and an advanced clinical content management solution already deployed to address standardization of care, the clinical team was able to quickly deploy a point-of-care strategy for identifying at-risk patients, apply isolation management tactics and develop collaborative efforts throughout the community to minimize exposure. The strategy was three-fold: 1) contain the epidemic, 2) provide highest quality treatment based on industry best practices and 3) avoid duplication of services.
Guest post by Gil Lalo, director of enterprise architecture, C/D/H.
Microsoft’s Xbox 360 ranks among the best-selling game consoles in the world , and its latest iteration, Xbox One, comes with a much faster processor, tight integration with Skype, voice recognition capabilities and an amazing motion sensitive camera attachment called the Kinect.
Aside from gaming, the device has shown remarkable promise in healthcare as creativity meets practicality and talented people from various clinical disciplines develop applications that exploit some native Xbox platform features. Here are some recent examples:
Long-distance Stroke Rehabilitation
Software company Jintronix uses the Microsoft Kinect software development kit (SDK) to capture movement from the body’s 48 skeletal points on a 3-D camera. With Kinect’s capture technology, Jintronix and Microsoft’s Stroke Recovery system created cost-effective programs for clinicians and patients. Therapists can use them at the office to see more patients at a time, and patients get cheaper, efficient therapy sessions in the convenience of their own homes.
Microsoft’s Stroke Recovery with Kinect has three main programs: one evaluates manual dexterity and coordination with a timed game in which patients pick up blocks and place them in a box; another challenges them to achieve a target body position; the third is an outer-space game that assesses reflexes. All three provide immediate scores and reinforcement.
Maintaining a Sterile Environment in the Operating Room
The Sunnybrook Health Sciences Centre in Canada is one hospital already using Kinect in its operating rooms to reduce hygiene and infection issues. The contactless control of Kinect is enabling doctors and surgeons to view patient notes, scans and x-ray images without touching surfaces, such as a computer mouse or keyboard, which could be infected with bacteria. This has reduced time spent on standard operations and procedures as doctors can wash and disinfect their hands less frequently.
Guest post by Steve Jourdan, founder and CEO, BedWatch.
It’s a broken record – we need innovation in healthcare. Being the largest economy in the world by a significant margin, with a number of resources at our disposal, one would think that our ability to deliver healthcare services would also rank at or near the top. In fact, we don’t rank well at all. A Bloomberg ranking from last year finds the U.S. healthcare market ranked 46th in the world in terms of efficiency, with the second highest healthcare costs per capita reported[1].
But, innovation equals risk, and risk is a four letter word in healthcare, for good reason. Margins are thin, enforcement and compliance efforts related to HIPAA are increasing, and, ultimately patient care hangs in the balance at a time when reimbursement models are shifting from fee-for-service to being outcome-based. It makes perfect sense that healthcare organizations take a conservative approach to their business.
However, continuing to do the same thing will not move us forward. Private industry and even the federal government[2] are taking advantage of these advancements. Technology is here, but it needs to be embraced; current technologies need to be adopted by healthcare for the benefit of everyone.
If I can perform secure online banking and investing directly from my smart phone, provided by the highly-regulated financial industry, why do I have to wait to receive healthcare services because health workers are using the technological equivalent of a Big Chief Pad and no. 2 pencil?
There is great promise in current mobile and cloud computing technologies, in that they are more accessible, easier to use, more secure, more scalable and can enable people to be more effective. The technology advancements we need are already here.
That said, use of current technology is only half of the solution. The other half is the people side of the equation. A culture of improvement must be embraced by the organization from the top down in order for significant improvements to be realized.
Attorney General Eric Holder and Department of Health and Human Services (HHS) Secretary Kathleen Sebelius announced today that a nationwide takedown by Medicare Fraud Strike Force operations in six cities has resulted in charges against 90 individuals, including 27 doctors, nurses and other medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $260 million in false billings.
Attorney General Holder and Secretary Sebelius were joined in the announcement by Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, FBI Assistant Director Joseph Campbell, U.S. Department of Health and Human Services (HHS) Inspector General Daniel R. Levinson and Deputy Administrator and Director of the Centers for Medicare & Medicaid Services (CMS) Center for Program Integrity Shantanu Agrawal.
This coordinated takedown is the seventh national Medicare fraud takedown in Strike Force history. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.
Since their inception in March 2007, Strike Force operations in nine locations have charged almost 1,900 defendants who collectively have falsely billed the Medicare program for almost $6 billion. In addition, CMS, working in conjunction with HHS-OIG, has suspended enrollments of high-risk providers in five Strike force locations and has removed over 17,000 providers from the Medicare program since 2011.
The joint Department of Justice and HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing. Almost 400 law enforcement agents from the FBI, HHS-OIG, multiple Medicaid Fraud Control Units and other federal, state and local law enforcement agencies participated in the takedown.
Healthcare reform, the newly insured and a growing interest in population health management are accelerating the market’s interest in telehealth technologies and services. Healthcare providers are developing integrated strategies for adopting these technologies with the goal of extending capabilities and patient interactions beyond traditional care settings. As more payers and employers begin to pay for telehealth services, the value of these tools is coming into focus. Market analyst IHS predicts the US telehealth market will grow from $240 million in revenue in 2013 to $1.9 billion in 2018, an annual growth rate of more than 50 percent, according to Forbes. Keys to the anticipated surge are the current physician shortage, an expanded patient base under the Patient Protection and Affordable Care Act and an effort to put consumers at the center of their own care.
Overcoming the obstacles
Historically, the healthcare industry has proceeded carefully in the world of digital advancements. High investment costs and uncertain return on investment have created a tenuous economic model. Healthcare providers also face three other key obstacles: uncertain reimbursement, varied state licensing laws and the potential for breaches in privacy and security.
Navigating reimbursement challenges
Reimbursement for telehealth services varies widely. Medicare pays for some services, especially in remote rural areas, but the program has several restrictions. It generally covers only services delivered “real time,” through videoconferencing, as opposed to “anytime,” through store-and-forward technologies.
Medicaid is the most common route states are taking to implement their telehealth programs. The National Conference of State Legislatures (NCSL) notes that to date, 43 states and the District of Columbia provide some form of Medicaid reimbursement for telehealth services.
Private payers need to comply with state regulations. Currently, 19 states and the District of Columbia require private insurance plans in the state to cover telehealth services, according to the NCSL. Arizona will join this list in January 2015. Nontraditional payers for telehealth services range from charitable organizations, long-term care and community health providers to self-insured groups and agencies serving special populations.
Policies continue to evolve. Several bills are before Congress to establish a federal standard for telehealth, while Medicare’s 2014 physician fee schedule will expand coverage incrementally for telehealth services.
