Featured Guest: Scott Nelson (Host)

Mid-year assessment of risk areas and topics from 2024 Risk Outlook.

Transcript

Welcome to The Risky Health Care Business Podcast, where we help you prepare for the future by sharing stories, insights, and skills from expert voices in and around the United States health care world with a mission to inform, educate, and help health care organizations and individuals, ranging from one doctor practices to large integrated systems and organizations throughout the dental, medical, and veterinary health care industry with risk, while hopefully having some fun along the way. I'm your host, Scott Nelson, a guy that grew up in Ohio and has been working all over the United States during my 20 plus year and counting career in the health care industry, with a commitment to accelerating health care performance through creativity, not just productivity. Let's dive in.

As we have reached the halfway point of 2024, it's important to take a look back and do a midpoint review on the key risks in healthcare we identified at the beginning of the year in our 2024 risk outlook. Regular assessments are essential to ensure that expectations align with reality and to determine if strategic adjustments are needed. We initially pinpointed five significant risk areas: Medicare Advantage, Legislative and Regulatory, Finance, Technology, and Burnout. How have these risks evolved over the past six months? Were they greater than anticipated, less impactful, or did other risk areas and challenges emerge?
In January, we foresaw several potential risks that could shape the healthcare landscape in 2024. Now, six months in, we must evaluate these areas to understand their actual impact. For example, has the integration of new technologies been smoother or more challenging than expected? Have regulatory changes created unforeseen complications? These insights are vital for adapting strategies and ensuring resilience in the face of evolving risks.

The purpose of this discussion is to review and reflect on forecasts, projections, and expectations through the actual January through June experiences, enabling healthcare communities to learn and adapt. By examining how these risks have manifested, we can better prepare for the remainder of the year and beyond. 

In January, we discussed the issue of Medicare Advantage plans denying coverage, forcing healthcare providers to absorb associated costs. This situation has placed a significant burden on the health care industry, as practitioners are compelled to navigate the complexities of denied claims while ensuring uninterrupted patient care. The financial strain and operational disruptions are daily challenges.
During the first half of the year, the Federal government issued a final rule aimed at streamlining prior authorization standards across most insurance programs overseen by the Centers for Medicare & Medicaid Services (CMS). This new regulation mandates uniform prior authorization procedures, which aim to shorten decision timeframes and tighten decision-making standards. These changes are intended to reduce administrative burdens and improve the efficiency of patient care delivery.

While these advancements are a step in the right direction, there are limitations and constraints with the new regulation. The implications of these regulatory changes necessitate a nuanced understanding. Health care professionals must recognize that while CMS’s efforts to standardize prior authorization can enhance operational efficiency, a significant portion of the patient population remains outside its purview. The uniform standards, though beneficial, do not extend to large private employer plans that fall under the Employee Retirement Income Security Act (ERISA) requirements, which are administered by the Department of Labor. Consequently, these rules do not alter the current requirements for the majority of Americans covered by large insured and self-insured employer plans, even small employer plans.
The transition to these new standards will undoubtedly come with challenges and learning curves but improvements can be viewed on the horizon.

Regulatory risk has consistently been a top area of concern for healthcare professionals and organizations. As we entered January, the discussion centered around several critical issues, including low Medicare reimbursement rates, the 340B drug pricing program, and the new minimum staffing standards for long-term care facilities. Additionally, guidelines from the Federal Trade Commission (FTC) and the Department of Justice (DOJ) regarding healthcare mergers and acquisitions further complicated the regulatory environment.

Throughout the first half of 2024, these factors have continued to significantly influence the health care industry. The impact of low Medicare reimbursement rates remains a pressing issue, straining financial resources and affecting the sustainability of healthcare practices. The 340B program, designed to help healthcare providers serving vulnerable populations, continues to present challenges due to its complex requirements and potential changes. Ensuring compliance with minimum staffing standards can also been demanding, necessitating strategic adjustments in workforce management to meet regulatory expectations while maintaining high-quality patient care.

In addition to these ongoing concerns, two potentially important governmental issues have emerged during the first half of 2024, adding to the regulatory complexity and influence. First, the FTC's stance on noncompete agreements has introduced new dynamics in employment practices within healthcare. The FTC’s proposed rule to ban noncompetes could reshape the employment landscape, affecting recruitment, retention, and competitive practices. This issue and decision was discussed during episode 19 with Kim Ruppel. Kim is a partner at Dickinson Wright in Michigan and Chair of Dickinson Wright’s Healthcare Litigation and Telehealth Task Forces.  Kim is a commercial litigator who represents healthcare providers, insurers, and benefit plans in healthcare contract litigations, including non-compete agreements.

Secondly, the Supreme Court of the United States made a pivotal decision regarding the Chevron doctrine, which could create an uncertain and unstable regulatory environment for patients, providers, and health systems. The Chevron doctrine, which has long guided courts in deferring to agency interpretations of ambiguous statutes, is now under scrutiny. Changes to this doctrine could significantly alter the way regulations are interpreted and enforced, introducing new levels of uncertainty and necessitating heightened vigilance and adaptability from healthcare organizations.

The landscape of healthcare regulatory risk from January through June has been marked by ongoing challenges and new developments which continue to shape the healthcare environment. 
As we entered 2024, healthcare was already on high alert due to the record number of bankruptcy filings in 2023, the highest in recent history. This troubling trend set the stage for an even more challenging year ahead, with expectations of increased financial distress across the industry.

The first half of 2024 has indeed borne out these concerns, with several significant bankruptcies and closures shaking health care. Steward Health filed for bankruptcy and is currently in the process of selling its assets, reflecting the severe financial pressures it faces. Similarly, Cano Health and Envision Healthcare also experienced financial difficulties and filed for bankruptcy.

These bankruptcies are not isolated incidents but part of a broader trend affecting various healthcare services. CVS, a major player in the retail healthcare space, has closed MinuteClinics, a move that affects many communities relying on these accessible care options. Walgreens has reduced its stake in VillageMD, signaling a strategic withdrawal from certain healthcare investments amidst financial uncertainties. Additionally, Walmart Health closed all 51 of its health centers and virtual care services, marking a significant retreat from its healthcare ambitions. These closures underscore the challenging financial environment.

These developments, along with an inflationary economic environment, highlight the heightened financial risks facing healthcare providers in 2024 an continue to exert pressure on the financial viability of healthcare organizations and require careful navigation and strategic planning. 

In January, we delved into the alarming increase in cyberattacks targeting healthcare, as well as the influence and impact of artificial intelligence. The growing sophistication of cyber threats and the rapid integration of AI technologies present both opportunities and significant risks for healthcare. These discussions highlighted the urgent need for robust cybersecurity measures and thoughtful implementation of AI to protect patient data and enhance care delivery.  In Episode 20 Esmond Kane, Chief Information Security Officer of Steward Health Care, talked about technology and information security risk in health care.

Earlier in 2024, a major cyberattack against Change Healthcare underscored the severity of these risks. This attack crippled many aspects of healthcare systems, demonstrating the far-reaching consequences of cybersecurity breaches. The fallout from this event is still being felt, affecting healthcare providers, patients, and the broader healthcare infrastructure. The disruption of services, compromise of sensitive data, and financial losses have sent shockwaves throughout the industry, emphasizing the critical need for enhanced cybersecurity protocols.

The Change Healthcare attack serves as a stark reminder of the vulnerabilities inherent in our healthcare systems – no matter the size and sophistication. It has spurred a renewed focus on cybersecurity, prompting organizations to reevaluate their defenses and invest in more advanced protective measures. The attack also highlighted the importance of resilience and preparedness, as the ability to quickly respond and recover from such incidents is crucial to maintaining continuity of care and trust in the system.

Simultaneously, the influence of AI in healthcare continues to grow, offering transformative potential but also introducing new risks. AI technologies possibly can improve diagnostic accuracy, personalize treatment plans, and streamline administrative tasks. However, it also raises concerns about data security, ethical considerations, and the potential for unintended consequences. 

At the beginning of the year, we talked about the growing issue of burnout among providers, including doctors, nurses, and other healthcare professionals. Their negative experiences, driven by issues such as workloads and emotional strain, have become an alarming trend that continues to impact the industry.
As we moved through the first half of 2024, it’s clear that burnout remains a significant risk. Healthcare professionals are still grappling with intense pressure, leading to exhaustion and decreased job satisfaction. This persistent stress is not only affecting individual well-being but also compromising the quality of patient care and other ripple effects that lead to errors, reduced patient satisfaction, and poor health outcomes.

Tackling burnout effectively requires a comprehensive approach. We discussed this in Episode 18 with Kandi Wiens, a burnout educator and researcher at the University of Pennsylvania.  Healthcare organizations must prioritize the mental health and well-being of their staff by initiatives such as fostering positive work environments and ensuring adequate staffing levels to reduce workloads. 

Workplace violence was not an area or item identified in the 2024 risk outlook but the pressing issue of workplace violence in healthcare is a serious and unfortunately growing problem affecting healthcare professionals and organizations alike. The safety and well-being of healthcare providers are paramount, yet incidents of violence have been increasing, creating an environment of fear and stress that impacts both staff and patient care.  

As we finish the first half of 2024, the frequency and severity of workplace violence incidents remain a significant concern. Healthcare workers, including physicians, nurses, and support staff, are facing verbal and physical assaults from patients, visitors, and even colleagues. This not only jeopardizes their safety but also contributes to job dissatisfaction, burnout, and a decline in the quality of care provided to patients.

Addressing workplace violence requires a comprehensive and proactive approach, and we discussed this with Karen Daw, an Occupational Health and Safety Expert, in Episode 21. Healthcare organizations must implement robust safety protocols and provide regular training to staff on how to de-escalate potentially violent situations. Ensuring that all incidents are reported and thoroughly investigated is crucial for understanding the root causes and preventing future occurrences. 

As we begin the second half of 2024, it’s essential to reevaluate the major risks in healthcare that were anticipated at the start of the year. Have these risks materialized as expected, or have new, unexpected challenges surfaced?  Understanding these shifts is crucial for healthcare. Keep in mind a quote attributed to author and philosopher George Santayana: “Those who do not learn from history are doomed to repeat it.” By critically and honestly reviewing real events and experiences, we can draw valuable lessons and make necessary adjustments to our strategies. This proactive approach will help us stay resilient and ensure we continue delivering high-quality care amidst constant and evolving risks.

Thank you for listening to The Risky Health Care Business Podcast. You can listen to all episodes from the resource center page of the SpringParker website, springparker.com, or click the Listen link in the show notes to listen and subscribe for free on your platform of choice. And remember, accelerating health care performance is achieved through creativity, not just productivity.