Is Sound Physicians UnitedHealth’s Acute Care Trojan Horse?
Also: Is older really wiser? The value of physician-owned hospitals, Spotify in the incidentaloma business, rural hospital closures, and impressive geriatric ED outcomes.
Top of the Week
Thought experiment: How would your emergency medicine practice compete against UnitedHealth|Optum for contracts with health systems? In other words, if UnitedHealth|Optum wants to staff your ED, what would stop them from doing so?
If the questions seem far-fetched, think again.
Envision Health is in the Chapter 11 bankruptcy restructuring period. Envision has 120 days to provide the bankruptcy court with a suitable restructuring plan. That timeline can be extended for up to 18 months.
HCA, which owns and operates 186 hospitals, has moved to in-house the HCA-Envision Joint Venture (now called Valesco) ED staffing contracts. Envision’s other health system contracts will likely be sold, as its current owners - including investment firms Strategic Value Partners, Brigade Capital, Blackstone, and Eaton Vance - are not in the business of running healthcare delivery companies. Click here for a deep dive into the murky world of Envision’s bankruptcy restructuring.
Who will buy Envision minus HCA? The leading contender appears to be UnitedHealth|Optum. As Eileen Applebaum wrote in “Envision on the Rocks”: “What will happen to the thousands of doctors, mainly ER docs and radiologists, employed by Envision? It’s unlikely that Envision will be liquidated and all of its doctors will lose their jobs. The more likely outcome is that some company will buy Envision out of bankruptcy after the bankruptcy court relieves it of most of its debts. Health insurance companies are likely bidders; insurance giant UnitedHealth Group has been actively buying up doctors’ practices. Job cuts and reductions in pay are possible, but there won’t be mass layoffs except in the unlikely case that a buyer can’t be found. Ownership by a publicly traded health insurance company will come with less debt to pay off, and might come with less pressure to become supremely profitable in a 3 to 5-year window. But this brings its own problems. There is an inherent conflict of interest between an insurance company whose profits depend on it paying out as little as possible to providers, possibly restricting doctors’ options. Meanwhile doctors, as health care professionals, will want to provide the level of care the patient requires, even if it is expensive.”
UnitedHealth|Optum quietly entered emergency medicine in 2018. Along with Summit Partners, UnitedHealth|Optum purchased a large ownership stake in Sound Physicians for $2.2 billion. At the time, UnitedHealth’s CEO said of Optum’s strategy, “We will methodically spend a decade or more to accomplish our long-term goals of entering and building out care delivery operations in 75 targeted markets serving 60% of the U.S. population.” As Maya Angelou wrote, “When someone shows you who they are, believe them the first time.”
How big is Optum? Really big. Optum is the largest employer of physicians in the United States, employing or affiliating with over 70,000 doctors. Optum generated $54.1 billion in revenue in just the FIRST QUARTER of 2023. An abbreviated list of Optum’s acquisitions over the past six years:
DaVita Medical Group 2017 – a leading independent medical group and the nation’s largest provider of kidney services
Surgical Care Affiliates 2017 – included 205 surgical facilities, including ambulatory surgery centers and surgical hospitals, and partners with appropriately 3,000 physicians
Reliant Health 2018 – Large physician practice in Massachusetts
Sound Physicians 2018 – hospitalist and physician advisor staffing company
Equian 2019 – claims analysis/payment integrity
Vivify Health 2019 – mobile, cloud-based platform for remote patient care
Kaia Health 2019 – smartphone-based technology for chronic condition management
naviHealth 2020 – post-acute care management service for 4.5 million Medicare Advantage members and more than 140 in the CMS bundled payments for Care Improvement Advance programs
Landmark Health 2021 – Landmark Health is an in-home medical care company focused on the sickest and frailest populations. Landmark’s care teams currently provide services in 17 states.
Change Healthcare 2021 – Change Healthcare is a software and data analytics giant and will be merged with OptumInsight.
Atrius Health 2022 - Atrius Health is an independent physician-led healthcare organization with 645 physicians and primary care providers at 30 locations in Massachusetts.
Kelsey-Seybold 2022 – Kelsey-Seybold is a Houston-based multispecialty physician group with cancer and women’s health centers, two ASCs, and a sleep center. It is also an ACO focused on providing evidence-based care. Optum acquired Kelsey-Seybold for $2 billion.
CareMount Medical 2022 – three midsized physician-led independent medical groups in southeastern New York State, New Jersey, and Western Connecticut.
LHC Group 2022 – LHC Group is one of the nation’s largest home health and hospice companies providing 12 million in-home interventions to 500,000 patients annually. LHC has 557 home health locations, 170 hospice locations, and joint venture partnerships with 435 hospitals and health systems in 37 states. Through LHC Optum is also acquiring Imperium Health. Imperium currently manages 16 ACOs and partners with a large ACO group.
Refresh Mental Health 2022 – Refresh operates a network of 300 outpatient mental health, substance abuse, and eating disorder clinics across 37 states.
Returning to the original question, if Sound|Optum|UnitedHealth, buys the non-HCA Envision contracts, defending against its further expansion in emergency medicine would likely be difficult.
UnitedHealth’s provider group expansion strategy has been described as a “boa constrictor” in court filings. Since UnitedHealth is the country’s largest insurer, it can attack Optum’s competitor physician practices from several sides at once:
Starve the competitor physician group by decreasing contracted payments.
Financially incentivize patients to go to other hospitals through the insurer’s narrow networks.
Decrease reimbursement to hospitals contracting with a Sound|Optum competitor practice.
Promise hospitals increased reimbursement in return for replacing the current medical practice with Sound|Optum.
As of now, Sound is the eighth-largest employer of emergency physicians. How big will Sound Physicians get if UnitedHealth|Optum chooses to flex its muscle in acute care medicine? And will your practice be swallowed by its growth?
EM Practice
Per this Annals study, patient mortality increased with emergency physician age. “Medicare patients aged 65 to 89 years treated by emergency physicians aged under 40 years had lower 7-day mortality rates than those treated by physicians aged 50 to 59 years and 60 years or older within the same hospital.”
Exploration of the value of PAs practicing in the emergency department.
Profile of a new EM residency: the positive sides of opening a training program.
Physician trainees, NPs, and PAs are competing for procedures at academic medical centers.
House of Medicine
The ACA banned physician-owned hospitals. A movement is afoot to reverse that law. Per Plummer, Cram, & Bai: “Using newly available price transparency data, our study in JAMA Network Open revealed that both commercial negotiated prices and cash prices in physician-owned hospitals were about one-third lower than their competitors across eight common services. Ample evidence also suggests that physician-owned hospitals enhance physician engagement, provide higher-quality care, and have improved patient satisfaction, lower costs, and better infection rates compared with their competitors.”
Healthcare spending in the US is projected to increase by 5.4% per year over the next decade.
Incidentalomas are about to become more common. The CEO of Spotify founded a new full-body-scanner company called Neko Health.
Op-ed about Medicaid redeterminations in Indiana: “In May, 82% of those who lost coverage did so for procedural reasons, like incomplete or missing forms. Only 6% of people lost coverage in May because they were no longer eligible.”
A majority of physician practice purchases over the last five years were by private equity companies.
Hospitals & Health Systems
Accredited Geriatric EDs had better outcomes for elderly patients compared with non-geriatric EDs.
With the expiration of federal COVID funds and increasing interest rates, the number of rural hospital closures is increasing.
CMS proposes paying hospitals $9 billion as a 340B remedy. However, that payment will be budget-neutral, so Medicare will reduce $9b of payments elsewhere.
Nursing & Allied Health
Hospitals are decreasing their reliance on travel nurses, as the COVID-related nursing shortages resolve.
Wall Street Journal: “Some Hospitals That Spent Big on Nurses During Pandemic Are Now Short on Cash”
Details of New York’s new nurse-to-patient ratio law.
The Dispo
Some Twitter medical wit.
United is by far the worst insurer to deal with in my state (MS). And I’ve read they made the double the profit of the next most profitable insurer in the US. As mentioned in the article, they show us who they are on a daily basis. As the owner of a five-center urgent care network, I am seriously considering dropping out contract with them. I wish more physicians would. It is going to take millions of patients hearing that their insurer is no longer accepted due to inadequate provider reimbursement to effect any chsnge. Unfortunately I doubt this will happen.