Obamacare Is Creating More Jobs Now. Will There Be More Health Costs Later?

The health care industry remains exceptionally healthy: Hospitals, doctors, and other health care employers added 40,100 jobs in June, the latest big month for one of America’s most crucial economic sectors.

Forty-thousand-plus new jobs in one month is a lot, but it’s especially eye-catching because it’s part of a sustained trend: Health care employers have added about 135,000 jobs in the past three months, and nearly 430,000 jobs in the past 12 months.

And health care hiring — which had dramatically slowed down across 2013 and 2014 — is now surging again. Health care’s growth rate has essentially tripled what it was a year ago.

You can see the explosion of new jobs better when it’s mapped out in three month-increments.

HealthCareJobs

Again: 135,000 new health care jobs since March! That’s more than many sectors of the economy gain in an entire year. It’s more than the entire U.S. economy gained between 2001 and 2004.
And in the past 25 years, health care has never had a three-month stretch of hiring like this one.

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Centene Unfairly Punished After Buying Health Net

Investors have been waiting for a large health insurer to announce a major acquisition. For weeks, a five-way scramble has been underway as insurers have sought out deals to make them bigger and more efficient, amid significant changes brought on by the Affordable Care Act.

Aetna (ticker: AET ) has bid on Humana ( HUM ). Cigna ( CI ) has rejected offers from Anthem ( ANTM ). And even United Health has reportedly approached Aetna.

But Centene ( CNC ) snuck in and stole the limelight, announcing Thursday a $6.8 billion stock-and-cash deal for Health Net ( HNT ), a move that makes it one of the nation’s largest Medicaid-focused health insurers and grants it entry into the Medicare market.

Wall Street wasn’t impressed, however. While Health Net’s share price has surged more than 17% today to a recent $76, Centene has fallen 6.5% to $75.65, reversing the pre-market gains amid worries that Centene is sacrificing topline growth to acquire scale.

And Leerink analyst Ana Gupte sees UnitedHealth possibly sweeping in with a competitive offer for Health Net.

Regardless, today’s news has refocused Wall Street’s attention on the Medicaid market, the fastest-growing segment of the health insurance industry. And Centene’s selloff may offer a buying opportunity.

“There is still a lot of growth opportunity,” says Sarah James, an analyst with Wedbush. “Centene could have multiple upward revisions to consensus as they move toward a 2% net margin in 2017. That is significant margin growth for them. I also see a company with the potential to grow revenue 50% to 100% over 10 to 15 years.”

Barrons.com has been optimistic on Medicaid health insurers for some time, at first citing the growing demand among cash-strapped states for help managing Medicaid programs. Now, the Affordable Care Act is fueling the biggest expansion in the history of the Medicaid program.

With $22 billion in revenue and 4.4 million members in 23 states, Centene is one of three publicly traded stand-alone Medicaid-focused insurers, competing with rivals Molina (MOH ) and WellCare Group ( WCG ). Takeout speculation has swirled around this group for years.

The Health Net deal, expected to close in early 2016, creates a company with pro forma 2015 revenue of $37 billion and six million members. It is expected to generate synergies totaling $150 million within two years and add 10% to per share profit during the first year.

Current consensus forecasts compiled by sell-side analysts show Centene growing per-share profit 25% to $2.78 this year then 17.6% to $3.27 next year.

That growth and takeout speculation has fueled a more than 600% return for Centene investors over the past five years, making it the best-performing name among the health insurance stocks tracked by Thomson Reuters. It is also the most expensive, trading at almost 28 times forward earnings.

But none of the Medicaid-focused insurers are cheap. All three trade above 20 times forward earnings — the cost of rapid growth and lingering takeout hopes.

Budget cuts could devastate already tight profit margins, as could a big jump in medical costs. There is fierce competition for Medicaid contracts, and more federal regulations ahead.

Wedbush’s James argues that Centene is now well positioned to go after $40 billion to $47 billion in Medicaid contracts going out to bid in the next one to three years.

In short, Centene still makes sense.

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Health IT Underused in Care Coordination

The capabilities of health information technology tools aren’t always aligned with physician priorities, research finds. And the care coordination activities that matter most to clinicians aren’t ones that are best supported by health IT.

Using health IT to support care coordination is inconsistent in primary care practices, especially when it comes to the care coordination activities that matter most to clinicians, according to new research in theAnnals of Family Medicine.

“The activities that the clinicians were most interested in were not ones that were necessarily most supported by health IT,” says lead author Suzanne Morton, MPH, MBA, senior healthcare analyst for the National Committee for Quality Assurance.

In addition, the research found that the care-coordination activities that practices had most commonly implemented were not the ones with the greatest degree of health IT support.

The researchers surveyed primary care practices (both physician-owned and hospital/health system–affiliated) that achieved patient-centered medical home recognition and participated in the Meaningful Use program, as well as community health clinics with patient-centered medical home recognition.

They asked questions about six proposed care coordination objectives for stage 3 Meaningful Use:

• Having a clinical summary for patients that’s pertinent to the office visit, not just an abstract from the medical record
• Using computerized provider order entry for referrals/transition of care orders
• Providing a summary of care record for each site transition or referral when transition or referral occurs with available information
• Ensuring that the provider receiving a referral acknowledges receipt of external information and provides referral results to the requesting provider
• Getting electronic notification of a significant healthcare event in a timely manner to key members of the patient’s care team, including arrival at an emergency department, admission to a hospital, discharge from an emergency department or hospital, or death
• Generating lists of patients for multiple specific conditions and present near real-time patient-oriented dashboards

“We found moderate use of health IT for care coordination objectives… we were a little surprised that it was not higher than when it was,” Morton says. “We also found that it varied depending on the type of activity that was being asked about.”

And high health IT use and the perceived importance of certain activities didn’t match up.

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Utah Medical Privacy Bill Receives Pushback from DEA

A medical privacy bill went into effect in Utah earlier this year, requiring police agencies to get a warrant from a judge before searching the state’s controlled-substance database. However, the US Drug Enforcement Administration may sue Utah over the restricted access.

DEA investigator Robert Churchwell sent a subpoena for information to state database administrator Marvin Sims, according to The Salt Lake Tribune. The subpoena demanded that Sims provide contact information and a full prescription history for the target of a DEA investigation.

Assistant Attorney General David Wolf refused the request, saying that Sims would have been committing a felony.

As reported earlier this year by HealthITSecurity.com, S.B. 119 requires law enforcement to use a search warrant to gain database information related to a controlled substance investigation. The legislation also requires that officers specify the individual who they are searching.

“Any person who knowingly and intentionally releases any information in the database or any information obtained from other state or federal prescription monitoring programs by means of the database in violation of the limitations under Part 3, Access, is guilty of a third degree felony,” the bill states. “ Any person who negligently or recklessly releases any information in the database or any information obtained from other state or federal prescription monitoring programs by means of the database in violation of the limitations under Title 58, Chapter 37f, Part 3, Access, is guilty of a class C misdemeanor.”

Wolf added that without a valid search warrant, Sims did not have to comply with the request.

Utah Senator Todd Weiler sponsored the bill back in February, and said that the recent pushback is very disappointing. Specifically, Weiler said it is upsetting that the federal government believes that it is exempt from the 4th Amendment, which prohibits unreasonable searches.

The bill also allows those whose information is in the database to obtain a list of individuals who have had access to their data, except when the information is subject to an investigation. Individuals who are in the database can also ask that the division give them their records in the controlled substance system.

”I think it’s disgusting that this is what it’s come to, that the federal government thinks they have a right to see whatever they want and the 4th Amendment means nothing,” Weiler told the news source.

The controlled substance database was created 19 years ago, and when individuals have their name and prescription entered into the database when they receive a prescription for a controlled substance, such as oxycontin or morphine. Weiler said in February that while the main purpose of the database was for doctors and pharmacists to ensure patients aren’t “prescription shopping,” lawmakers knew at the time that the database could potentially be abused without further legislation.

Assistant Supervising Agent in Charge of the Salt Lake City office of the DEA Nicki Hollmann told the Tribune that having to get a subpoena would “significantly hamper” the agency’s mission. Specifically, Utah is ranked fifth in the nation for drug overdoses, which is something that the DEA hopes to address.

Weiler counters that argument though, saying that a state judge can electronically issue a subpoena within just a few hours.

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How Health IT Adoption, Data Sharing Affect Clinic Workflow

Health IT adoption has spread throughout the medical industry ever since the HITECH Act was passed in 2009 and meaningful use requirements were established under the Medicare and Medicaid EHR Incentive Programs. Whether in the hospital, clinics, nursing homes, rehabilitation centers, or other medical facilities, health IT adoption has made significant progress in advancing the quality of healthcare services.

The Agency for Healthcare Research and Quality (AHRQ) published a report showing how health IT adoption has revolutionized ambulatory care settings. Whether it is workflow or efficiency of care, HIT makes a significant impact among ambulatory care practices.

Via the use of patient portals, patients are able to access their health records digitally as well as provide information directly to a clinic. Patient portals may be used to access records, send secure messages, upload medical information, schedule appointment, request pill refills, and even pay bills online.

Meaningful use requirements have requested that healthcare providers develop a method for patients to access, view, and share their health information and most facilities have developed portals for this capability.

A research team looked at how certain capabilities of health IT adoption has allowed patients to exchange and share electronic data among different clinics. Additionally, the researchers analyzed how patient data sharing impacted the clinic workflow. Through interviews and observations, the team discovered how providers and clinics redesign workflow depending on patient-reported information.

Greater patient engagement is necessary for this type of data sharing via patient portals and secure messaging platforms. There are three questions that the researchers answered, which include:

1. How does health IT adoption aiding patient-reported information impact the workflow of clinicians, healthcare staff, and patients?
2. In what ways do sociotechnical context affect workflow associated with patient-reported information?
3. What methods do clinics use to redesign workflows when it comes to patient-reported data?

The results from the study show that five out of six clinics use secure messaging with communication and information flow acting as a stimulant among clinicians. Secure messaging is one essential tool that improves communication between patients and providers, the researchers explain.

“The majority of clinicians think that secure messaging does have a positive effect on patient satisfaction and that it could improve the quality of care and patient safety. The most frequently reported barriers to the use of secure messaging for clinicians are communication and information flow, inappropriate use of the health IT application by patients, and poor usability of the application itself,” the report stated.

“The barriers that staff most frequently reported are communication and information flow, amount of work, and ambiguity. Like clinicians, staff perceive barriers related to communication and information flow: they are afraid that they could miss important information when communicating via secure messages.”

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Security threats, hackers and shadow IT still plague health IT

Security has long been a primary challenge in the health IT market, and two new reports help illustrate the vulnerabilities surrounding some of the most sensitive consumer data.

The health IT group HIMSS on Tuesday released its 2015 cybersecurity survey, finding that 87 percent of healthcare officials and information security workers polled identify cybersecurity as an increasing business priority within their organizations, but still report an alarming rate of intrusions.

Two-thirds of the nearly 300 respondents report that their organization had recently experience a “significant” cyber event, and many express little confidence in their ability to defend against zero-day attacks.

In a statement, HIMSS Vice President Lisa Gallagher calls the recent breaches in the healthcare sector a “wake-up call” that should remind the industry that the information held in medical systems is a high-value target, and that many firms need to take security more seriously.

“Healthcare organizations need to rapidly adjust their strategies to defend against cyberattacks,” Gallagher says. “This means implementing threat data, incorporating new tools and sophisticated analysis into their security process.”

Shadow IT is a big threat in healthcare

In a separate study, the security-software vendor Skyhigh Networks offers a sobering assessment of the extent of unauthorized applications and services running within healthcare organizations. As a result of that so-called shadow IT, the average healthcare firm is running 928 cloud services, more than 10 times the number that IT departments know to be in use, according to Skyhigh’s analysis.

In most cases, employees have no malicious intent when they use unauthorized tools to collaborate, develop software or share content, but in doing so they nonetheless introduce new security vulnerabilities — only 7 percent of the cloud services Skyhigh detected meet its standards for acceptable enterprise security and compliance.

As a starting point, Hopfer suggests that CIOs take an inventory of the cloud services running within their organizations to assess their security posture. The exercise of evaluating what types of applications employees are running can shed light on the tools they need to support the business objectives of the enterprise.
Safe cloud adoption in healthcare is crucial

“You don’t know what you don’t know, so the first thing CIOs can do to help their employees adopt the cloud safely is to discover all the services in use across the organization,” Rick Hopfer, CIO at Molina Healthcare, writes in an email. “Employees rarely have the information to determine whether a particular cloud application complies with organization’s security and compliance policies.”

The average healthcare employee uses 26 different cloud services, Skyhigh found. And those applications often have very different levels of security protections, highlighting the importance of the IT department working with the business units to ensure that cloud services are deployed safely and managed by the CIO’s team.

“We educate employees on which services are high-risk and provide them with cloud services that have best-in-class security capabilities and a great user experience,” Hopfer says.

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Population Health Management Starts with Flagging High Costs

In order to begin an effective population health management initiative, providers must first identify and stratify patients by the costs they incur, says a new white paper by the Health Care Transformation Task Force.  By proactively flagging patients in the highest brackets of spending and service utilization, providers can target their population health and chronic disease management programs more effectively.

“Identifying the high cost population is important for practical reasons. Health care costs are highly concentrated in a very small patient subpopulation,” says the paper, compiled by the High Cost Patient Work Group.

“For example, the top 5 percent of patients, ranked by individual health care dollars spent, are responsible for almost half of the nation’s total personal health care dollars spent. Finding and managing care for this group of patients can be an efficient and effective way to increase quality and reduce total costs for the entire population.”

The Health Care Transformation Task Force, a coalition of providers and industry groups attempting to rapidly accelerate the adoption of value-based reimbursement and accountable care, suggests that healthcare organizations divide their patients into two major subgroups based on their spending, disease patterns, and likely outcomes.

Patients with advanced or terminal illnesses

While data from the National Institute for Health Care (NIHC) indicates that the top five percent of patients incur more than 49 percent of spending each year, not all patients are chronic users of services.  Many of these patients are in the final stages of expensive illnesses and will not reappear in the spending bracket the following year.

Nearly a third of patients ranked as top decile spenders died within two years, Medicare data shows.  Population health management strategies for these patients typically center on end-of-life care planning, including hospice use and the collection of advanced directive information.

Increased hospice use can save significant revenue for healthcare organizations, the white paper says.  “Aetna reports average savings of nearly $13,000 per enrollee associated with an 82 percent hospice election rate, 82 percent reduction in acute hospital days and 86 percent reduction in ICU days,” the report states. “Similarly, Sutter Health’s Advanced Illness Management (AIM) program found savings of more than $4000 per enrollee per month associated with significant reductions in hospital utilization.”

“Focusing on this patient population has the potential to greatly reduce costs, while also providing care that is appropriate and valued by individuals with advanced illness and their families.”

While clinical analytics based on claims data can help to identify patients who fall into this category, current analytics technology is not always sensitive or comprehensive enough to rely upon fully, the Task Force says.  Claims data does not always contain the necessary elements to distinguish between persistent high-users and end-of-life users, and EHR data is not consistently collected and applied to big data analytics projects in order to make large-scale population health analytics effective just yet.

Persistent super-users and high spenders

The second group of patients, those with complex chronic disease management needs that are projected to last for a longer term of care, have been the subject of most population health management projects thus far.  Hypertension, diabetes, and high cholesterol are extraordinarily common diagnoses for patients who comprise the top five percent of spenders: more than 65 percent of elderly patients and 35 percent of younger patients who rank in the top tier of spending have been diagnosed with hypertension, the report states.

“In these patients it is useful to distinguish common diagnoses from diagnoses that drive spending,” the paper points out. “For example, hypertension and hyperlipidemia are widely prevalent conditions, but do not necessarily directly result in high costs, as renal failure, congestive heart failure (CHF), and COPD do. On the other hand, complex patients with low patient activation—as measured by the Patient Activation Measure (PAM)—are at particular risk due to the inability to perform adequate self-care to manage their condition.”

Big data analytics can be an important tool for making these distinctions.  Prospective risk analytics that integrate claims and EHR data into risk scores can help providers target their services appropriately.  However, the time delays involved in using claims data as a primary source for actionable analytics can leave some patients at risk of falling through gaps in care coordination.

As providers work to move from descriptive to predictive analytics, the increased use of real-time EHR and patient-generated health data will help ensure that chronic disease management for high-spending patients can be enacted more immediately.

Nonetheless, claims data is an important jumping off point for providers who hope to improve their population health management techniques by starting with spending data.  This information is critical for achieving the cost savings and quality outcomes that support emerging value-based reimbursement strategies.

“Changing overall clinical, utilization, and cost outcomes for the entire population may best be accomplished by intervening with the small number of patients with highest need and highest cost,” the paper concludes. “Care management programs can be developed and brought to scale fairly easily to manage this cohort.  Strategies to improve care for patients with advanced illness or persistently high costs are challenging to implement, but several viable innovative models exist.”

Future efforts by the Health Care Transformation Task Force and the High Cost Patient Work Group will detail successful use cases for cost-based population health management programs that achieve sustainability and widespread acceptance in the provider community.

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