Washington State Hospital Admits to Buying MD's to Drive up SOS reimbursement

[drusso]

https://www.courtlistener.com/recap/gov.uscourts.wawd.249658.1.0.pdf

"Defendants recognized that TDC’s sale of ancillary surgical (“ASC”), imaging,
and laboratory services to CHI Franciscan would enable the latter to effectively shut down the facilities providing those services and shift their outpatient procedures to CHI Franciscan’s inpatient hospital in Kitsap County, benefiting from higher, hospital-based rates. CHI Franciscan’s Chief Financial Officer, Mike Fitzgerald, revealed this goal to a colleague in an internal e-mail: “I am all for taking advantage of hospital based pricing, if we think it is doable in the market and the market can support it. It would be great to drop a couple of million more to our bottom line, if we think we can do it.” TDC sold these services even as it acknowledged that Kitsap Peninsula residents would receive inferior, costlier care. TDC’s former physician president succinctly summarized these effects to its current medical director: “I can’t wait to hear how CHI messages the addition of TDC to FMG. ‘You can now get your outpatient care in a complex, relatively unsafe, and vastly more expensive location. You are welcome, Kitsap County…[’]”

Be careful who you choose to be your employer.

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[SeniorWrangler]

That's the business of medicine!

 

[drusso]

That's the business of medicine!

Resist.

 

[yankeeh8r]

Resist‽ please. Did you take a hard look at the redacted parts of the brief? The docs were getting screwed by the insurance companies. Once they affiliated with the hospital they saw their payment rates go up, "...including overall increases for some payers of over XXXXXXXXX percent."

Yes...that is 10 digits BEFORE percent. Remember that 100% is double the prior payments the physicians were receiving. The state is bringing this lawsuit on behalf of the insurances. Because the Anthem, Cigna, Humans, et al liked being able to pay XXX% (so at least half as much) LESS for a lap Chole and XX% LESS (we can safely assume at least 10% then) for a hysterectomy, etc.

I'm not sure I'd cheer so hard for the state, who is really representing the interests of insurance companies more than itself. What you have here is really a battle of two Goliaths, there really is no David in this scenario.

If anything, the docs managed to pull a Solomon in this whole thing. They sold off assets that were not without some long term risk/liability (losing or poor paying ASC contracts, employee/nurses salaries, maintenance costs/contracts on imaging equipment, etc) and likely sold those assets at a premium, thus making them some money. Meanwhile they reduced overhead costs by being able to resource billing and contracts to the hospital, thus reducing their employee related liabilities, all while still maintaining their practice (at least in TDC's case). In return they got markedly improved payments for their services thru obtaining a better collective bargaining position. That means better long term revenue numbers. It was a smart move by the docs. Hopefully for them the deal will be upheld by the court.

 

[hyperalgesia]

https://www.courtlistener.com/recap/gov.uscourts.wawd.249658.1.0.pdf

"Defendants recognized that TDC’s sale of ancillary surgical (“ASC”), imaging,
and laboratory services to CHI Franciscan would enable the latter to effectively shut down the facilities providing those services and shift their outpatient procedures to CHI Franciscan’s inpatient hospital in Kitsap County, benefiting from higher, hospital-based rates. CHI Franciscan’s Chief Financial Officer, Mike Fitzgerald, revealed this goal to a colleague in an internal e-mail: “I am all for taking advantage of hospital based pricing, if we think it is doable in the market and the market can support it. It would be great to drop a couple of million more to our bottom line, if we think we can do it.” TDC sold these services even as it acknowledged that Kitsap Peninsula residents would receive inferior, costlier care. TDC’s former physician president succinctly summarized these effects to its current medical director: “I can’t wait to hear how CHI messages the addition of TDC to FMG. ‘You can now get your outpatient care in a complex, relatively unsafe, and vastly more expensive location. You are welcome, Kitsap County…[’]”

Be careful who you choose to be your employer.

Liberal states like Washington love complicated and anti-market regulations like CON and SOS differential because then they can go after people who navigate them and pretend to be heroes. Washington State should be suing Medicare for having an SOS differential in the first place because it decreases competition and access to quality and affordable care.

 

[Ducttape]

I assume by you stating "Medicare having an SOS differential" you are talking about facility fees?

 

[hyperalgesia]

I assume by you stating "Medicare having an SOS differential" you are talking about facility fees?

I'm referring to Medicare paying one business/facility more for a service than another one providing the same service.

Medicare should be interested in the service itself and getting it done economically. Other considerations, like how a community provides for its indigent population, should not be factored in when Medicare covers a beneficiary entitlement.

 

[drusso]

In this case, community doctors are suing the hospital because of hospital was directing commercial payer patients to its employed MD's and directing government payer patients to independent MD's.

https://www.courtlistener.com/recap/gov.uscourts.laed.220864/gov.uscourts.laed.220864.1.0.pdf

 

[Disciple]

In this case, community doctors are suing the hospital because of hospital was directing commercial payer patients to its employed MD's and directing government payer patients to independent MD's.

https://www.courtlistener.com/recap/gov.uscourts.laed.220864/gov.uscourts.laed.220864.1.0.pdf

You mean they’re getting money from SOS differential and then turning away Medicaid patients?!. Say it ain’t so!

 

[Ducttape]

You mean they’re getting money from SOS differential and then turning away Medicaid patients?!. Say it ain’t so!

isn't it the other way around? they are not wanting SOS differential from Medicaid, they want money from primary insurance coverage.

 

[Disciple]

isn't it the other way around? they are not wanting SOS differential from Medicaid, they want money from primary insurance coverage.

The justification given for the SOS differential is that hospitals should receive higher rates (vs. ASCs) to subsidize the care they provide to the uninsured and Medicaid. SOS differential is for all payers, not just Medicaid.

Many would argue that justification is disingenuous, as exemplified above.

Same goes for non-profit status.

 

[drusso]

Health systems driving prices higher with physician group purchases

"The reasoning behind such vertical integration is primarily twofold, Scheffler said. Health systems want to bolster their referral networks and send more patients to hospitals. They also benefit from charging facility fees, a higher rate that's meant to account for a hospital's overhead, he said. Hospital executives argue that more control will produce more coordinated care, while economists contend that larger health systems raise prices as they gain more leverage with insurers. Critics also claim that price hikes dwarf any purported efficiencies of scale."

@Ducttape : The farce continues...

 

[Ducttape]

Farce? Or...

It’s medicine practiced as a business. Hospitals as individual entities are in business to make money, just like private doctor offices.

It’s free market economy concept at work.

If the govt provides a benefit, someone will exploit it... and hospitals have to, to stay in business.

 

[hyperalgesia]

Farce? Or...

It’s medicine practiced as a business. Hospitals as individual entities are in business to make money, just like private doctor offices.

It’s free market economy concept at work.

If the govt provides a benefit, someone will exploit it... and hospitals have to, to stay in business.

I agree with everything here except this environment is only a free market among corporations. With hospital systems competing against each other, since individual practices have been handicapped by laws.

I also don't "blame" the hospitals. Any more than I blame sharks in the ocean. The SOS is a political/legal problem.

 

[drusso]

Farce? Or...

It’s medicine practiced as a business. Hospitals as individual entities are in business to make money, just like private doctor offices.

It’s free market economy concept at work.

If the govt provides a benefit, someone will exploit it... and hospitals have to, to stay in business.

Except hospitals, unlike private practitioners, are often filing as "non-profit" charities with the IRS and not paying applicable state, local, and Federal taxes on their operating revenues. That's the evil/greedy/disgusting part. Not only are they raping the system the on SOS & facility fees, they are starving the local tax base too. Schools, libraries, and public safety agencies go without just so a fat-cat hospital CEO can buy a second vacation home.

Ambition must be countered with ambition.

 

[Ducttape]

but that is not a direct issue with relationship to private practice vs. hospital system. I know in your eyes everything conflates to hospitals suppressing private practices, but there is no direct relationship.

one could argue that hospitals shouldn't exist because they take up land that could be used for individual doctor offices... but that argument is tenuous at best, ridiculous at worst.




question - why not open a non-for-profit pain clinic?

 

[VA Hopeful Dr]

question - why not open a non-for-profit pain clinic?

Because its essentially impossible?

 

[Ducttape]

can you give me reasons why?

we have many not for profit community health centers. planned parenthood being the biggest example. there are not for profit addiction centers.

why not a not for profit pain management center, sans opioids?

 

[VA Hopeful Dr]

can you give me reasons why?

we have many not for profit community health centers. planned parenthood being the biggest example. there are not for profit addiction centers.

why not a not for profit pain management center, sans opioids?

So here's the IRS form to apply for non-profit status: https://www.irs.gov/pub/irs-pdf/i1023ez.pdf

The rules seem to prohibit medical clinics unless set up in a very specific way - for instance, there is a reason that community health centers all have a board of directors. Its a requirement.

Let me ask you this: if its possible to set up a medical office as a nonprofit why aren't more people doing it?

 

[SSdoc33]

Except hospitals, unlike private practitioners, are often filing as "non-profit" charities with the IRS and not paying applicable state, local, and Federal taxes on their operating revenues. That's the evil/greedy/disgusting part. Not only are they raping the system the on SOS & facility fees, they are starving the local tax base too. Schools, libraries, and public safety agencies go without just so a fat-cat hospital CEO can buy a second vacation home.

Ambition must be countered with ambition.

i would love to see the "beth israel's" and "st. lukes" and "our lady of the worthless miracle" etc get out of the hospital business. many of these hospitals use some nominal associated with religion to get their non-profit status. total BS.

 

[VA Hopeful Dr]

i would love to see the "beth israel's" and "st. lukes" and "our lady of the worthless miracle" etc get out of the hospital business. many of these hospitals use some nominal associated with religion to get their non-profit status. total BS.

Except even non religious hospitals are usually nonprofit. If they weren't religious, they'd still be nonprofit.

 

[Ducttape]

So here's the IRS form to apply for non-profit status: https://www.irs.gov/pub/irs-pdf/i1023ez.pdf

The rules seem to prohibit medical clinics unless set up in a very specific way - for instance, there is a reason that community health centers all have a board of directors. Its a requirement.

Let me ask you this: if its possible to set up a medical office as a nonprofit why aren't more people doing it?

because most independent private practice doctors want to make oodles of greenbacks?

is there listed some specific rule why a doctors office cannot be a nonprofit? just because it is hard to do doesn't mean it is impossible.

point is, if one wants to complain about the unfairness of hospitals being nonprofit, one should make sure that private practices and clinics cannot also be nonprofit under any circumstance, imo.

 

[SSdoc33]

Except even non religious hospitals are usually nonprofit. If they weren't religious, they'd still be nonprofit.

Did You Know: For-Profit Versus Nonprofit Hospitals

the rules for obtaining and maintaining nonprofit status are ambiguous at best. "reinvestment" in the hosptital is what you are supposed to do with the surplus. so, yet another tower/ward/cancer center. i agree that hospitals should be help to a higher standard in regards to charitabe work, community reinvestemnt, etc

 

[VA Hopeful Dr]

Did You Know: For-Profit Versus Nonprofit Hospitals

the rules for obtaining and maintaining nonprofit status are ambiguous at best. "reinvestment" in the hosptital is what you are supposed to do with the surplus. so, yet another tower/ward/cancer center. i agree that hospitals should be help to a higher standard in regards to charitabe work, community reinvestemnt, etc

Or bonuses to select employees....

 

[VA Hopeful Dr]

because most independent private practice doctors want to make oodles of greenbacks?

is there listed some specific rule why a doctors office cannot be a nonprofit? just because it is hard to do doesn't mean it is impossible.

point is, if one wants to complain about the unfairness of hospitals being nonprofit, one should make sure that private practices and clinics cannot also be nonprofit under any circumstance, imo.

Did you read the document?

 

[Ducttape]

Did you read the document?

yep. the whole kit and caboodle. nowhere did I see "Medical clinics cannot apply for tax exempt status".

in the form, in fact, the caveat is that you cannot apply with form 1023-EZ if you answer "yes" to any questions, you have to use form 1023.

 

[VA Hopeful Dr]

yep. the whole kit and caboodle. nowhere did I see "Medical clinics cannot apply for tax exempt status".

in the form, in fact, the caveat is that you cannot apply with form 1023-EZ if you answer "yes" to any questions, you have to use form 1023.

Which is why I said "essentially". Its theoretically possible but very difficult and usually involves a structure that isn't conducive to running a single clinic.

For this to work you have to be doing charitable work, have a board of trustees, community outreach, and a whole host of other things that are just insane for a single clinic to do.