Becker's Hospital Review

55 CFO / FINANCE Academic medical centers generally behind counterparts in cost, quality By Kelly Gooch A cademic medical centers do not necessarily achieve better cost and quality metrics com- pared to non-academic medical centers, sug- gested a Navigant study. For the study, researchers examined Medicare cost and quality data from 175 U.S. academic medical centers and 212 U.S. nonacademic medical centers. ese are hospitals with more than $500 million in annual net patient revenue and 10,000 annual discharges. e study excluded facilities that didn't report financial data in 2016 and CMS value-based program scores for fiscal year 2018. Here are three findings: 1. In 2017, the Medicare median wage and case mix index-adjusted cost per case was 5.8 percent higher at academic medical centers compared to non-academic medical centers. Navigant said this represents an esti- mated $3.1 million in average added annual operating expenses for traditional fee-for-service Medicare ben- eficiaries for each academic medical center. 2. e study also identified a 22 percent cost per case disparity between high (25th percentile) and low (75th percentile) performing academic medical centers, compared to 19.8 percent for nonacademic medical centers. Researchers said this cost per case disparity represents $12 million in added annual operating ex- pense for each academic medical center and $9.2 mil- lion per nonacademic medical center. 3. From 2016 to 2018, academic medical centers re- ceived more Medicare value-based program penalties than nonacademic medical centers, with 40 percent of academic medical centers receiving seven or more of nine possible penalties, compared to 23 percent of nonacademic medical centers. Navigant recommended academic medical centers take various steps to minimize future negative im- plications — from trends such as "growing revenue at risk through alternative payment models" — and improve quality and cost. ese included comparing performance against peers with benchmarking data, as well as addressing clinical variation by leveraging evidence-based protocols. n Mission Health pledges $90M to rural communities if HCA deal closes By Ayla Ellison A sheville, N.C.-based Mission Health will distribute a combined $90 million to hospital foundations in six rural communities if its proposed sale to Nashville, Tenn.-based HCA Healthcare closes. If the deal with HCA goes through, Mission will donate $15 million to each of its five existing hospital foundations, plus one that will be created for Angel Medical Center in Asheville. Mission would distribute the funds, which would come from sale pro- ceeds, over a three-year period. The first $5 million would be distrib- uted upon the HCA deal closing. The funds are intended to be used to help improve the health and well-being of local communities. Mission said the disbursement of funds in years two and three will be contingent upon each founda- tion's previous year's progress and commitment to improving local social determinants of health. "Throughout the due diligence process, Mission Health's board has discussed various ways to provide additional support for the communi- ties served by our member entities," Mission Health Board Chair John Ball, MD, said in a press release. "In addition to significant protections against program or facility closures for our rural communities, we are pleased to provide each member entity with proceeds from the sale of Mission Health to benefit their communities directly and locally." n Private equity firms pouring millions into physician offices: 3 things to know By Morgan Haefner S everal private equity firms are investing in primary care clinic operators, driven in part by greater employer pressure to lower medical costs, according to Bloomberg. Here are three things to know: 1. Private investor New Enterprise Associates led a $165 million fund- ing round for Paladina Health, a Denver-based primary care compa- ny. Paladina runs 53 primary care clinics in 10 states for employers. Earlier this year, NEA acquired Paladina for about $100 million from DaVita. Paladina plans to use the funds to expand its clinics, acquire other firms and look into caring for Medicare populations. 2. Private equity firm Carlyle Group is investing up to $350 million in One Medical, a national primary care clinic operator with offices in San Francisco and New York City. One Medical is working to sign up employer clients at its clinics, according to Bloomberg. 3. Boston-based primary care operator Iora Health, which serves Medicare beneficiaries, raised $100 million from investors this year. Companies like Iora are seeing higher funding rounds as investors fo- cus on preventive care as a possible way to limit the cost of providing employees healthcare, the report stated. n

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