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Source: STAT News
Author: Bob Herman
Date: July 29, 2024
Many of us know UnitedHealth is a massive health insurer, pharmacy benefit manager, and payments processor. But as my colleagues Tara Bannow, Casey Ross, Lizzy Lawrence, and I have discovered in a new series, UnitedHealth’s unrivaled leverage over physicians has changed the practice of medicine and allowed UnitedHealth to milk more profit out of the system.
Over the past six months, we have talked with scores of people inside and outside UnitedHealth to understand what is happening, and the picture is bleak. UnitedHealth has more physicians under its umbrella than anyone else. And when UnitedHealth enters the picture, the company changes how medical groups operate to benefit itself. Physicians often have to see more patients. And crucially, they are told to jot down as many diagnosis codes for patients as possible — sometimes even when doctors think those codes are not applicable.
UnitedHealth’s widespread coding operation hasn’t just frustrated doctors. It has soiled relationships between physicians and patients. It has sucked billions of taxpayers dollars out of Medicare. And it has allowed the company to siphon an ever-increasing amount of money back to itself, by serving as both the buyer and seller of medical services, we report.
UnitedHealth declined to make executives available for interviews and did not answer a detailed list of questions. In a statement to STAT, spokesperson Eric Hausman said the company’s “providers and partners make independent clinical decisions, and we expect them to diagnose and document patient information completely and accurately in compliance with [federal] guidelines.”
Read the first story in this series, called Health Care’s Colossus. There is a lot more to come. And we also want to hear from readers like you about your experience with UnitedHealth — as a patient, as an Optum physician, as any other worker from within. Share your stories here.
Hospitals are bursting, and Wall Street wants more
2024 has been the year of improving hospital volumes, and those gangbuster numbers continued yet again in the second quarter for HCA, Tenet, and UHS, Tara reports.
The trend is exactly what hospitals want to see. It’s also never enough. Tara listened to Tenet’s earnings call and found this telling moment: After praising Tenet for its strong margins, Baird analyst Michael Ha pointed out that one of its competitor’s hospitals were more than 70% full, whereas Tenet’s were just 50%. He wanted to know if Tenet could catch up. “What’s necessary to happen to accomplish it?” Ha asked.
This is the reality on the ground. As much as the health care industry drones on about “value-based care,” hospitals, including nonprofits, are still oriented around getting butts in beds. It’s what investors and bondholders expect.
HCA CEO Sam Hazen said his company is seeing demand for everything and among people with all types of insurance — except Medicaid, which is down because of redeterminations. “We are in really uncharted territory for growth in demand in a normal environment,” Hazen said on HCA’s call. Saum Sutaria, Tenet’s CEO, views the aging Baby Boomer cohort as a “fundamental tailwind for the hospital sector, in my belief, at least into the early part of the next decade.”
The state of the noncompete ban
The Federal Trade Commission’s noncompete ban may not be long for this world. Given the current trajectory of the lawsuits challenging the ban, labor attorneys are confident the question of whether it should survive will end up at the Supreme Court, Tara reports. If you’ve been following along, you know the court’s current lineup is not a fan of giving federal agencies power.
There have been a flurry of lawsuits since the FTC voted in April to prohibit employers from making most workers sign agreements that prevent them from working for competitors. Last week, a federal judge in Pennsylvania declined a company’s request to stop the rule from taking effect, currently set to happen Sept. 4. Last month, a judge in Texas issued the opposite ruling in a similar case, saying the ban should not take effect.
Mark Goldstein, a partner in Reed Smith’s labor and employment group, told Tara that when this kind of split happens, it’s common for the question to hit the Supreme Court, especially when the question is this significant. He thinks the court will find the FTC overstepped its authority in issuing the rule. Consider the court’s current makeup and its recent monumental decision to overturn the Chevron doctrine, significantly weakening federal agencies’ longtime authority to regulate their industries. “This court has demonstrated that it does not intend to defer to federal agencies, so ultimately I think if the case gets up to the Supreme Court, the court will overturn the rule,” Goldstein said.
One of the toughest things about writing stories like the UnitedHealth one: It’s filled with dense health care topics that take some explaining. Hierarchical Condition Category codes, risk scores, Medicare Advantage — those terms can be a complete turnoff. But have no fear: My colleague Hyacinth Empinado is here to help.
Hyacinth created a masterful video that breaks down how all of this works. In my head, I now think of HCC codes as Mega Bloks. If you are new to health care, or a veteran who just wants a refresher, take a few minutes, and watch the video. UnitedHealth’s financial motivations to control physicians will become even clearer after watching it.
A hospital content studio, wait wut
Northwell Health, one of the largest nonprofit, tax-exempt hospital systems in New York, has launched its own entertainment studio.
I spoke with Ramon Soto, who is Northwell’s chief marketing officer and the president of its new studio. I asked him how Northwell justified launching a studio to make documentaries and marketing videos when Northwell specifically (and the hospital industry more broadly) have cited “immense financial struggles.” Does that create a weird discrepancy?
“You’re using really interesting words to ask the question: ‘justify’ and ‘weird.’ I’m not exactly sure where that energy is coming from,” Soto said. He went on to say the studio will make unscripted and scripted films, and is essentially trading intellectual property for distribution of its productions. Soto declined to say how much Northwell is investing in the studio.
Northwell sported an 8% total margin and a 1.6% operating margin on $4.5 billion of revenue in the first three months of this year.
Industry odds and ends
- Top Senate leaders voted to compel Steward Health Care CEO Ralph de la Torre to testify on his hospital system’s collapse, Aaron Pressman of the Boston Globe reports.
- Hospitals across the country are facing a severe shortage of supplies of blood culture bottles, my colleague Helen Branswell reports.
- Six years after buying the Presence hospital system around Chicago, Ascension is selling itto the for-profit Prime Healthcare. Yet another example to add to this great story from Tara, showing how Ascension continues to undo the wild expansion that occurred under the “two Tonys.”
- The stock price of DexCom, the maker of continuous glucose monitors, crashed by more than 40% overnight last week, my colleague Elaine Chen reports. Nearly $20 billion of market value, wiped out — not sure the last time I’ve seen this for a company of DexCom’s size. Wall Street is concerned the rise of the new weight loss drugs will lower the demand for DexCom’s devices, since fewer people may develop diabetes.
- Senate Democrats have introduced a bill that would reverse the Supreme Court’s recent ruling that killed the ability for federal agencies to interpret ambiguous laws, Nate Raymond of Reuters reports.
- Speaking of that Supreme Court decision, more hospitals are suing HHSin yet another lawsuit over Medicare payments — citing how the government no longer has Chevron deference.
- CMS released the winners and losers under the Affordable Care Act’s risk adjustment program (which is waaaaay differentfrom risk adjustment in Medicare Advantage). Have fun.