Becker's Hospital Review

13 CFO / FINANCE Another alternative model gaining traction, including at Oscar, is the Individual Coverage Health Reimbursement Arrangement (ICHRA), which allows employers to offer employees a defined, tax-advantaged contribution that can be used to purchase individual health plans through state exchanges. According to a 2024 report from the HRA Council, employer adoption of ICHRAs has increased by 29% since 2023, with over 200,000 employees now covered under this model. Increasing legal pressures Despite the rising cost of care, some employers may continue to play a passive role, according to Mark Cuban. In January, he wrote on X that most self-insured employers and their CEOs, "don't know and don't really want to know where their healthcare benefit dollars are going." But in July, the Cost Plus Drug co-founder issued a big warning to self-insured employers: If your company receives pharmacy rebates through employee benefits, prepare for an eventual lawsuit. "It's not a question of if, it's a question of when," he wrote on X. "e inevitable class action suit will dwarf the tobacco settlements." Mr. Cuban's tweet points to another pattern: large, self-insured employers are beginning to encounter lawsuits from their workers over alleged mismanagement of health and pharmaceutical benefits, oen citing violations of their fiduciary duties under the Employee Retirement Income Security Act (ERISA). For example, Wells Fargo is facing a lawsuit for allegedly overpaying for pharmaceutical services through its contracted pharmacy benefits manager, Express Scripts. Similar legal challenges have been brought against companies like Johnson & Johnson and the Mayo Clinic, highlighting the growing trend of employee activism and accountability regarding healthcare benefits. n Why Intermountain ditched the term 'value-based care' By Laura Dyrda S alt Lake City, Utah-based Intermountain Health was an early adopter of value-based care principles, deploying strategies to boost quality and lower costs. The health system pioneered owning a health plan and driving down pharmaceutical costs with CivicaRx. Intermountain has the reputation of leading in value-based care. But now, health system leaders are ditching the term for a new concept: proactive care. "We made the change for a couple of reasons," said Greg Poulsen, senior vice president and chief policy officer at Intermountain, on an episode of the "Becker's Healthcare Podcast." "One is we think it defines more precisely what we're about. We're trying to, whenever possible, get upstream to make sure people are as healthy as they can be and not just be there to rescue them when things go badly, but to avoid those bad things in the first place." Intermountain's leadership also found the term "value" was sometimes misinterpreted as "cheap," according to research done by the team. "While we're certainly looking for the lowest possible costs and we think that's essential in the U.S. health system, we certainly don't ever want to be in a situation where we're not providing the very best care that's available irrespective of cost," said Mr. Poulsen. "But in many cases, what we found is there are approaches that yield lower costs that actually provide better outcomes, that put people in a better health situation. That's our goal and we think the term 'proactive care' better encompasses that." n From -7.9% to 14.9%: 31 systems ranked by operating margins By Alan Condon and Madeline Ashley H ealth systems' second-quarter financial results point to the beginning of a slow and sustained recovery, but challenges including high labor costs and the ongoing disconnect between revenue generation and expense requirements persist. e jury is out on whether nonprofit hospitals are in a "new normal" of long-term lower than historical operating margins, or if 2024 will see a bigger step forward to something more akin to long-term performance, according to Fitch Ratings. Here are 31 health systems ranked by operating margins based on their most recent results: Editor's note: is is not an exhaustive list. e following financial results are for the three months ending June 30, 2024, unless otherwise stated. 1. Tenet Healthcare (Dallas) Revenue: $5.1 billion Expenses: $4.4 billion Operating income: $761 million (*Includes grant income and equity in earnings of unconsolidated affiliates) Operating margin: 14.9% 2. HCA Healthcare (Nashville, Tenn.) Revenue: $17.5 billion Expenses: $15.3 billion Operating income: $2.24 billion Operating margin: 12.8% 3. Universal Health Services (King of Prussia, Pa.) Revenue: $3.9 billion Expenses: $3.5 billion Operating income: $436.4 million Operating margin: 11.2%

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