Becker's Hospital Review

14 CFO / FINANCE Brigham and Women's Offers Voluntary Buyouts to 1,600 Workers By Tamara Rosin B oston-based Brigham and Women's Hospital said April 27 it is offering voluntary buyouts to 1,600 em- ployees as a means to cut costs, The Bos- ton Globe reported. Officials said the hospital, which is one of the city's largest employers, is profitable. However, it's facing pressure amid shrink- ing payments from government and com- mercial insurers and growing labor costs. Labor represents about 66 percent of the hospital's costs, according to the report. Brigham is also dealing with debt from two major infrastructure projects, including a $510 million building that opened in 2016 and a $335 million soware system that rolled out in 2015, according to the report. "You can't just keep spending more and more and more and not making any more," Brigham spokeswoman Erin McDonough told e Boston Globe. "We know we need to work differently to sustain our mission for the future. We're really looking at how you reduce costs." Although the buyouts are voluntary, hospital officials said layoffs could come later this year depending on how many employees accept the buyout offer, reports e Boston Globe. Brigham and Women's, which is owned by Boston-based Partners HealthCare, has about 18,000 employees, according to the report. To be eligible for the buyout offer, employees must be 60 or older. e deal in- cludes one year of base pay. About 5,300 employees — including phy- sicians, faculty and research staff — will be excluded from the offer, according to the report. Approximately 475 unionized workers are eligible for the buyout, but Brigham officials said it must get approval from the unions before offering members the deal. n The $12M Patient Who Drove Insurance Rates Higher in Iowa By Ayla Ellison Iowa's health insurance exchange faces a unique challenge — an individual who has $1 million per month in medical claims. David Anderson, a research associate at Duke University Margolis Center and former health insurance official, discusses Iowa's exchange market in a post on his healthcare blog called Balloon Juice. He notes that Iowa's exchange market is facing many of the same challenges as those in other states, such as tran- sitional, underwritten health plans covering most of the profitable individual market, but it is also experiencing the unique problem of providing insurance to an individual with $12 million in annual medical claims. Des Moines, Iowa-based Wellmark Blue Cross and Blue Shield sent letters to its 30,000 customers last spring, telling them it was raising their premiums by about 38 to 43 percent for 2017. According to Mr. Anderson, about 10 percent- age points of that increase stemmed from one patient with a severe genetic disorder who receives $1 million worth of care per month. This extreme outlier creates a difficult situation for insurers offering plans on the exchange in Iowa, according to Mr. Anderson. "In a competitive market where the subsidies are tied to the second least expensive Silver [plan] and there is one super-outlier who cannot be reinsured against, every carrier lives in fear of being chosen by the one outlier," he wrote. "If they set their rates low enough to be attractive to healthy people, they lose money on the catastrophic expected claims. If they set the rates high enough to cover a $12 million claim, no one buys their product." Mr. Anderson says a solution to this issue is to remove the "super-outlier" from the risk pool and use general taxes to pay for the individual's healthcare, which would lower premiums in the individual market in Iowa by $10 per member per month. Wellmark Blue Cross and Blue Shield announced this month it is exiting Iowa's ACA health insurance exchange for next year. Over the past three years, the payer has implemented double-digit premium hikes and still sustained $90 million in losses on its exchange plans in Iowa. n US Drug Spending to Hit $610B by 2021 By Mackenzie Bean U.S. prescription drug spending could peak at $610 billion by 2021, according to a new report from QuintilesIMS Holding. Here are four things to know. 1. QuintilesIMS analysts expect U.S. drug spending to jump 4 percent to 7 per- cent through 2021, hitting $580 billion to $610 billion. 2. While analysts originally predicted an average spending growth of 6 percent to 9 percent, the company lowered its forecast due to fewer new drug approv- als, increasing market competition and heightened scrutiny over prices. 3. When manufacturer discounts and rebates are considered, analysts expect spending to jump 2 percent to 5 percent through 2021, reaching $375 billion to $405 billion. 4. In 2016, prescription drug spending increased 5.8 percent from the year prior to $450 billion based on list prices. When adjusted for discounts and re- bates, spending jumped 4.8 percent to $323 billion. n

• Cover