QSS: Good Growth in Health Services Revenue

This morning’s Quarterly Services Survey (QSS), published by the Census Bureau, showed good revenue growth across health services, except for specialty hospitals. 

Overall, revenue grew 4.2 percent in the fourth quarter. Further, growth versus Q4 2015 was a strong 6.9 percent and YTD growth is up 5.9 percent. Only specialty (except psychiatric and substance abuse) hospitals showed a decline. Revenue at outpatient care centers has grown 10.5 percent, Q4 2016 versus Q4 2015, a remarkable growth which hopefully reflects a change in location of care to lower cost settings versus hospitals. Although, hospitals’ revenues still grew a healthy 7.5 percent.

See Table I below the fold:

Health Construction Declined in January, Robust Year on Year

The construction market was weak overall in January, especially in health facilities, where construction starts declined 1.6 percent from December. Other construction starts declined only 1.0 percent. Health facilities construction accounted for just under six percent of the value of all new nonresidential construction (Table I).

Repealing Obamacare Will Help California Jobs

(A version of this column was published by the Orange County Register.)

Obamacare was a cash cow for providers, which now argue it was a program for jobs and economic growth. They now say that repealing Obamacare will kill California jobs. That grabs any politician’s attention, but it is not true.

According to a study by the UC Berkeley Labor Center, which is promoted by the California Hospital Association:

“The majority (135,000) of these lost jobs would be in the health care industry, including at hospitals, doctor offices, labs, outpatient and ambulatory care centers, nursing homes, dentist offices, other health care settings and insurers. But jobs would also be lost in other industries. Suppliers of the health care industry, such as food service, janitorial and accounting firms, would experience reduced demand, leading to job loss. The lost jobs also include those lost due to the ‘induced effect’ of health care workers spending less at restaurants, retail stores and other local businesses.”

Such research relies on the so-called “multiplier effect,” a politically seductive but misleading type of voodoo economics.

Health Services Revenue Slides, Hospital Profits Drop in Q3

This morning’s Quarterly Services Survey (QSS), published by the Census Bureau, showed a decline in revenues for most health services. Overall, revenue shrank 1.5 percent in the third quarter. However, growth versus Q3 2015 was a strong 5.4 percent and YTD growth is up 5.7 percent.

Only outpatient care centers, home health services, other ambulatory services, and specialty hospitals reported growth. Revenue at psychiatric hospitals has grown 16.3 percent, Q3 2016 versus Q3 2015, a remarkable growth which I cannot explain. General hospitals’ revenues have finally begun to shrunk, suggesting they have maximized their Obamacare business opportunities.

See Table I below the fold.

Fifty Percent Increase in Share of Physicians Owned By Hospitals in Three Years

A new survey by the Physicians Advocacy Institute and Avalere Health, a consulting firm, shows a significant increase in the number of physicians leaving independent practice and joining hospital-based health systems:

·        From July 2012 to July 2015, the percent of hospital-employed physicians increased by almost 50 percent, with increases in each six-month period measured over these three years.

·        In 2012, one in four physicians was employed by a hospital.

·        By 2015, 38 percent of physicians were employed by hospitals.

Good or bad? Well, color me skeptical. This acquisition spree is driven by new payment models which seek to reward providers for “accountable” care (which I suppose is better than unaccountable care.) So far, the results of payment reform in Medicare have been trivial.

Health Facilities Construction Growth Up Amidst General Decline in August

Construction of health facilities significantly outpaced other construction in August. Overall, health facilities construction starts increased 1.2 percent in August, versus a drop of 0.8 percent for other construction. Further, both private and public health facilities construction grew.

Construction of private health facilities grew 0.6 percent, versus a drop of 0.4 percent for other private construction. Construction of public health facilities increased a whopping 3.6 percent, versus a drop of 2.2 percent for other public construction. Is this what they mean by “infrastructure” spending – broken bridges and roads, while more VA and county hospitals spring up?

See Table I below the fold:

Significant Divergence in Private Vs. Public Health Construction in July

The divergence between private and public health facilities construction continued in July. Overall, health facilities construction starts increased 0.3 percent in July, versus zero for other construction (Table I).

Incentives Matter: Medicare’s Hospital Readmissions Penalties Are Having An Impact

In 2012, Medicare began to penalize hospitals which had too many readmissions. For a small number of targeted conditions, the program compares actual readmissions within 30 days to what an acceptable readmission rate should be. This is an important part of the drive to “pay for value, not volume.”

For example, if a patient who had a knee replacement is readmitted within 30 days because the implant was poorly implanted, the hospital used to profit from that readmission because the extra costs would just be submitted to Medicare for reimbursement.

Health Insurers, Hospitals Cannot Figure Out How To Pay For Catastrophic Care

An advocate of consumer-driven health care, who makes the case that individuals should control most of our health spending directly, will not get very far before hearing the rebuttal: “When you have a heart attack or get hit by a bus, you won’t be in any condition to negotiate which hospital you go to.”

Fair enough, which is why we advocate insurance for catastrophic events, just like for houses or automobiles. However, in the current system, insurers and hospitals are dropping the ball on even that:

Health Construction Exceeds Other Construction in May

April’s drop in health facilities starts looks to have been idiosyncratic. Health facilities exceeded other construction in May, as in March and February. While construction overall dropped at a seasonally adjusted annual rate of 0.8 percent, health construction increased 0.2 percent (Table I).

The difference was especially apparent in private construction. Construction of private health facilities increased 0.5 percent, 0.8 percentage points more than other private construction, which declined.  Construction of public health facilities dropped 1.0 percent, but this was less than half the drop in other public construction.

For the twelve months from May 2015, there is a significant difference in trend between private and public construction. Private construction increased 4.7 percent, and private health facilities starts increased at almost exactly the same rate. However, while public construction declined 2.6 percent, public construction of health facilities dropped only 1.4 percent.

Overall, health construction increased 3.3 percent, versus only 2.8 percent for non-health construction. Notwithstanding other factors, this indicates health costs will continue to increase faster than other sectors of the economy because (as the old saying goes) “a bed built is a bed filled.”

Health Construction Boomlet Collapses in April

The boomlet in health construction from February and March lost its wind in April. While construction overall dropped at a seasonally adjusted annual rate of 1.8 percent, health construction dropped by 3.0 percent (Table I).

Health Jobs Grow Three Times Faster Than Other Jobs

Health services jobs grew over three times faster than non-health, nonfarm civilian jobs in April. Health services jobs comprised 44,200 (28 percent) of 160,000 jobs added. The rate of growth from March was 0.29 percent for health services jobs versus only 0.09 percent for other jobs.

Also concerning is the revisions of the job figures from February and March (Table III). The estimates of overall employment growth in those months have been revised down significantly from the previous two reports. However, all the downward revision has been outside health services. Indeed, the originally reported health services job growth for February has been revised up, while the previously estimated growth in other jobs has been revised down by 22,000.

Read more at NCPA's Health Policy Blog.

Health Construction Boomlet Continues

The boomlet in health construction, first noted in last month’s Census Bureau release, continued in March. Health facilities construction starts grew 1.6 percent, while other construction grew only 0.3 percent.

Read more at NCPA's Health Policy Blog.

Are Prescription Prices Becoming As Meaningless As Hospital Charges?

Professor Jack Hoadley of Georgetown University recently gave an excellent presentation discussing prices of prescription drugs. Two slides stand out. First, a slide showing how much prescription spending is controlled by insurers and governments versus patients directly. The second slide shows rebates given by drug makers to insurers in Medicare Part D, the prescription benefit that was launched in 2006.

Read more at NCPA's Health Policy Blog.

Health Jobs Grow Over Two Thirds Faster Than Other Jobs

Health jobs grew more than two thirds faster than non-health jobs in March. Health jobs comprised 37,000 (17 percent) of nonfarm civilian jobs added (215,000). The rate of growth from February was 0.24 percent for health jobs versus only 0.14 percent for non-health jobs.

Over the last twelve months, it looks like the workforce for elderly people is moving out of nursing homes and into home health and elderly community care.

Read the entire entry at NCPA's Health Policy Blog.

Boomlet in Health Construction in February

Construction of new health facilities enjoyed a boomlet in February, growing 2.0 percent, while other construction shrank 0.6 percent.

Read the entire entry at NCPA's Health Policy Blog.

Two Thirds of Patients' Hospital Debts Unpaid

Holly Fletcher of The Tennessean describes an insane system of billing which has been focused on getting dollars out of the byzantine bureaucracies we call health insurers. When it comes to getting money from patients directly, hospitals are hopeless, with two thirds of their accounts receivable remaining unpaid.

One might think this was a problem that is not too difficult to solve: Just call the supermarket or department store and ask them to recommend a point-of-sale technology vendor.

Read the entire entry at NCPA's Health Policy Blog.

QSS: Revenue Growth Strong in Health Services, Hospital Profitability Recovered

The Quarterly Services Survey (QSS) from the Census Bureau showed 2015 was a good year for revenue growth in health services. Overall, fourth quarter revenue grew 1.8 percent on the quarter, 3.7 percent from Q4 2014, and 5.5 percent year on year.

Revenue growth in psychiatric and substance abuse hospitals really blew the doors off in Q4, increasing 8.2 percent. However, this looks idiosyncratic. Q4 2014 to Q4 2015 growth was only 1.6 percent, and year on year growth was 4.0 percent.

Read more at NCPA's Health Policy Blog.

Health Construction Still Very Weak in January

Construction of new health facilities remained very weak in January, shrinking 0.1 percent since December, while other construction grew at 1.6 percent (Table I).

The rate of decline in public health facilities continued to be dramatic at 5.0 percent, versus booming 4.8 percent growth in other public construction starts. Private health facilities construction grew 1.3 percent in slow private construction market, which grew just 0.5 percent.

Over the last twelve months, health facilities construction starts have lagged other construction significantly. This suggests health systems are pessimistic about their ability to extract further revenue from the system.

Read the entire entry at NCPA's Health Policy Blog.

Increasing Medicaid Dependency Does Not Reduce "Uncompensated" Care

Robert Laszewski is a leading health insurance expert whom I often cite. However, in a recent article praising Ohio governor John Kasich he has made a serious error. Governor Kasich is one of only three Republican governors who took federal Obamacare money to expand Medicaid dependency. According to Mr. Laszewski:

On Medicaid, the Kasich administration helped 650,000 people whose uncovered health-care costs were being shifted onto and burdening employers and individuals struggling to pay their already-high health insurance costs. The administration enrolled them into a new Ohio Medicaid system that made 38 different reforms over five years. In 2015 alone, it saved Ohio taxpayers $1.9 billion compared with the original state-budget target. It held the program’s per capita cost growth below 3 percent while cutting the state’s uninsured rate in half.

The idea that people who cannot pay their hospitals bills are the major problem in driving American health costs is evidence-free.

Read more at NCPA's Health Policy Blog.