Blue Shield of California and CalPERS are partnering with virtual care company Included Health to improve access to care for members, creating more opportunities to lower costs through better care management.
A unique collaboration in California is using virtual care to bring down healthcare costs for millions of Californians.
Blue Shield of California and CalPERS (California Public Employees’ Retirement System), a federal agency that manages pensions and health benefits for more than 1.5 million people, are teaming up with virtual care company Included Health to develop the virtual care strategy.
Included Health, which sells navigation and virtual care services mostly to self-insured employers and health plans, was chosen by CalPERS to be its population health management vendor. The partnership will provide ‘care case and disease management’ for complex care members and those who are going through a transformative moment in their lives.
Blue Shield of California’s big objective within this three-way partnership is to provide a cohesive underlying network that will support CalPERS objectives and put cost controls in place for its members
“We have over 80% of our primary care providers on pay-for-value arrangements,” said Tim Lieb, senior vice president of growth at Blue Shield of California.
Equity Through Virtuality
Dr. Ami Parekh, chief health officer of Included Health, says technology can not only aid in lowering healthcare disparities, but also create an engaging experience for members, all while lowering costs. Through an app on their smartphone, they can do anything from speaking with their clinician to checking their deductible.
“I wanted to see how technology could transform the patient experience,” said Parekh.“While we have used a lot of technology in healthcare, I don't think we’ve really pushed the limits on how transformative it can be from a member experience perspective, as well as from the outcomes it can deliver.”
“So one of the things we find with our clients and I think this will be true of CalPERS, is many patients just aren't engaging at all in primary care.” she said. “And what [this] allows, it just gets more people engaged in care.”
Parekh and Lieb agree that virtual care is often thought about too narrowly, but with the right implementation, it allows members to access care on their own time, and for many Californians who live in healthcare deserts, that’s a big deal.
The partnership won’t eliminate brick and mortar options, enabling members to choose which option suits them to connect with their care providers. Members who are more engaged in their primary care, they note, often need less urgent or emergency care, which in turn can lower care costs.
“And so, you can still go in person, but if we really are seeing greater use of primary care, we're seeing less emergency care,” says Lieb. “It's not a takeaway for any member, this is additive and that's the real positive. The virtual suddenly opens up that conduit to actually get care, whether that's during a lunch break or around the off hours.”
Lower Costs Through Higher Quality
The partnership with CalPERS aims to lower costs through higher quality care, both say. This includes how providers make treatment decisions.
“If you're seeing a high-quality orthopedic surgeon, they're not going to recommend surgery unless you really, really need it. That improves the quality and outcomes and decreases the total cost of care,” Parekh said.
Parekh said this is the huge driver to affordability with better outcomes and experiences, and CalPERS aims to build a model to help California with the sustainability of the investment in healthcare.
“The total cost of care and improved outcomes is actually the navigation piece and the population health management work, and we're going to supplement that with virtual to really get the best outcomes we can,” says Parekh.
“The more we can improve the quality, the more we can improve the outcomes.
That's what drives overall lower spend,” said Lieb.
Tenet's $259 million Q2 income flew in from a few key factors like increased ambulatory services.
As health systems close their second quarter of 2024 Tenet Healthcare watched its net income rise 111%, taking it from $123 million to $259 million. The Dallas-based health system’s financial gains follow a strong first quarter performance, where net income soared to $2.2 billion, according to financial reports.
So what drove Tenet’s financial success?
Tenet Health's positive financial outlook in 2023 set the health system up well in 2024. Tenet’s roadmap from its first to second quarter shifted from the selling of several hospitals towards purchasing facilities in better alignment with the health system’s long-term strategy towards profitability. After exiting a successful first quarter, Tenet saw mounting gains coming from the sale of three hospitals in South Carolina and six more in California.
Tenet’s earnings report also highlighted effective operational management, as well as volume growth in the ambulatory care and hospital segments. Notably, ambulatory services drove a large part of Tenet’s revenue in the second quarter, reeling in 21.1% more net operating revenue compared to the previous year.
On top of this, Tenet attributed its 2023 success to a favorable payor mix, and improved contract labor costs.
Fast forward to 2024 and all these factors are still playing a role, especially volume growth. Tenet was the only major for-profit health system to raise its full-year projection following first-quarter earnings.
"Our results through the second quarter, which have significantly exceeded our expectations, have been driven by volume and revenue growth as well as sustained fundamentally strong operating performance," said Saum Sutaria, M.D., Chairman and Chief Executive Officer of Tenet in the company’s earnings report.
"Our portfolio transformation and enhanced cash flow profile provide us with compelling opportunities for growth as we execute on our strategy and continue to broaden our service offerings for patient-centered care."
Tenet’s net operating revenue for the first three months of its second quarter was $5.1 billion, up from $5.08 billion at the same time last year.
Tenet Health’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for its second quarter was $945 million, which is up just over 12% compared to 2023. The company’s adjusted EBITDA outlook for 2024 is expected to be somewhere between $3.8 billion to $4 billion, which is up $300 million from the year before.
According to the report, Tenet's salaries, wages and benefits were $2.2 billion in the second quarter of 2024, a 5.1% decrease from $2.3 billion over the same period in 2023.
Tenet’s earnings stayed steady even though supply expenses increased, although not by much. Tenet’s supply expenses were $908 million, up 1.9% from $891 million in the second quarter of 2023.
Lastly, Tenet’s second quarter operating income was $761 million, a bump of 26% from $604 million compared to the same time last year.
Since the Change cyberattack UnitedHealth has seen major financial woes.
After UnitedHealth totaled its losses from the Change cyberattack earlier this year, the healthcare giant is projecting to lose more than expected. But UnitedHealth's profits are still up after adjusting its net earnings outlook. After ransom payments and loans, here's where UnitedHealth's financial outlook stands now.
Also be sure to check out the accompanying article here.
Up to 30% of health systems' costs are tied up in departments that have little to nothing to do with patient care. And that’s where savings can be found.
Hospitals and health systems are fighting battle after battle as more factors come into play to disrupt finances. Inflation, high labor costs and regulatory concerns are weighing on CFOs to make the right financial decisions at the right time.
Recent studies show that a hospital's nonclinical spending can climb as high as 30% of overall spending.
So how can CFOs think outside the box to reduce this cost?
John Dockins, executive director of sourcing and vendor management at Cleveland Clinic, shared how his organization tackles nonclinical expenses with a strong team. Cleveland Clinic (CCF) operates an indirect sourcing team to examine everything from IT to laundry, as well as utilities committees to decide on products and services and a vendor management office.
“Understanding spend on service-based agreements is typically more challenging than SKU-based products,” said Dockins. “It requires a strong data foundation where the contract, PO and invoice can be matched together at the service line.”
Matt Gattuso, managing partner at Logicsource, a procurement services and technology provider focused exclusively on indirect, or not-for-resale, expenditures, also gave some insight into what he is seeing throughout the industry in terms of spending, and offered some advice on what options health systems should examine to reduce costs where they can.
When looking at the big picture, he said, each business is simply trying to make use of the same products for the least cost. But healthcare isn’t doing a good job.
“It's the same Microsoft product just being used in a different environment,” Gattuso said. “It shouldn't be a significantly different cost in the healthcare environment, but we're seeing that there are significant differences in those exact same type of products when they're used in different environments.”
Dockins spoke about the importance of examining large spend first.
“If a health system is just starting the indirect journey, I would start in a category where there is large spend, multiple vendors, organizational expertise and buy-in,” he said. That could be waste management, uniforms, janitorial services, or a section within IT like telecom or PCs
Dockins continued: “This requires balancing the push to not treat indirect spend any differently than clinical supplies, while at the same time understanding the difference of maturity between the two.”
Down to the Nitty Gritty
With added inflationary pressures, how far can the CFO zoom in on their budget? Gattuso’s advice is to “control the controllable,” and look at the expenses that often fly under the radar, like landscaping and signage.
Dockins also encouraged CFOs to dig deeper into operations to control expenses.
“Look inside the four walls of the organization and determine if you are leveraging the data and talent correctly,” he said.
The potential savings in nonclinical spend could help CFOs unlock a variety of wins, like funding for high-value clinical innovation, supporting talent retention, preventing burnout, and driving better patient care and outcomes.
“Draw on the experiences gained in clinical services and apply them to indirect spend,” said Dockins.
Where can health systems look to level out rising costs?
A new report from PwC Health Research Institute is renewing a call to action to address affordability in healthcare. According to the report commercial healthcare costs are expected to grow 8% in 2025, and 7.5% for the individual market. The survey looked at actuaries at over 20 employer-sponsored and Affordable Care Act and exchange health plans.
The Outlook
The results are concerning for healthcare, insurers, and consumers.
Insurers, in particular, will likely have to raise premiums, which will be a big hit to consumers already facing rising care costs. A rise in premiums could have aftereffects like an increase in the uninsured population and an increase in medical debt, spelling financial strain for health systems.
Although some health systems have seen improved margins in recent quarters, others are still wading through a sea of increased operational expenses attributed to workforce and current medical supply inflation.
There are some notable trends that could hold off the healthcare cost uptick, such as the increased use of biosimilars, as well as more whole-person care cost management by insurers. But these trends won't be enough to offset expenses, according to the report.
Health systems are also faced with increased regulation surrounding government fee schedules for Medicare and Medicaid, which will lead them to recoup those costs through commercial health plan contracts. Out of the health plans surveyed, over half cited private equity, hospital and physician consolidation among the top three cost inflators. This will feed into contract negotiations and health systems will need to be prepared.
What It Means for CFOs
A tough healthcare climate calls for tougher strategies. CFOs will have to double-down on efforts to contain costs and think outside the box to implement new strategies. CFOs will need to implement hard-ball payer strategies to level the playing field and ensure satisfactory contract negotiations.
CFOs can also look to more strictly manage non-clinical expenses and examine where smaller costs are adding up.
Another possibility is to examine opportunities for non-traditional forms of revenue like filming. Some health systems have added thousands of dollars of revenue a day in fees by allowing film companies to use their facility.
CFOs should also be fully aligned with their revenue cycle team to ensure total financial transparency and goal alignment. Staying aligned with CIOs can also have an impact for CFOs so they can ensure their organization isn't leaking money in the wrong places.
CFOs can dramatically cut costs by decreasing burnout. But where do they start?
Burnout among physicians and nurses has increased dramatically since the COVID-19 pandemic. According to the American Medical Association, physician burnout rose from 38.2% in 2020, to an all-time high of 62.8% in 2021.
Burnout not only affects physicians and their patients, but entire health systems, particularly finances. Nearly one-half of physicians exiting the workforce cite burnout as a major reason.
One study concluded that physician turnover due to burnout costs health systems an extra $260 million each year. Part of this is due to increased use of specialty, urgent and emergency care.
As hospitals and health systems battle rising costs of care, and CFOs look consider ways to contain costs, decreasing burnout could have a big impact. CFOs should examine how burnout is affecting their organization and what’s it costing them. CFOs can then collaborate with CMOs to create an action plan to support physicians to better care outcomes and reduce costs.
“When we start talking about it, we open up the ways to address it,” Dr. Steve Hippler, retired Chief Clinical Officer of OSF HealthCare said during the recent Healthcare Finance Management Association (HFMA) conference in Las Vegas.
Defining Burnout
Burnout goes deeper than just being tired from a long day on the job; it can include emotional exhaustion, depersonalization and decrease in personal accomplishment. While it's not usually external, external factors like workload, overstimulation, and micromanagement all contribute to burnout. Executives at HFMA spoke not just about the amount of work that leads to burnout, but the emotional impact that it creates.
The discussion at HFMA highlighted studies that show interventions have not caused significant improvements for burnout. Mindfulness, art therapy and other methods are all considered band-aid solutions; in that these methods provide temporary relief and cannot be seen as a long-term solution.
What Can Be Done?
When combating physician burnout, the question isn’t “what can be done,” but rather “what can be taught?”
Experts say the key is fortitude. There is a fallacy of resilience when discussing burnout and it leads to an inaccurate perception. Self-efficacy, mental toughness, optimism, and hope are all characteristics that contribute to fortitude.
The good news is that one isn’t just born with or without these qualities, fortitude can certainly be taught. According to one study, high fortitude decreases burnout on all levels.
Organizations should be teaching physicians the soft skills that build fortitude in order to manage burnout. To do this, there must be an initial mindset shift from looking at issues as challenges rather than obstacles.
Fortitude is malleable, experts say. Organizational support certainly helps, but not without fortitude. Leaders can grow fortitude in their staff to combat burnout. The main idea here is about creating the space for physicians to be open about burnout, acknowledge it, and give them the support they need to develop solutions that work for them. Leaders don’t need to provide the solutions, just the space to discuss them.
Another question is “how can the individual and the organization work together?”
Panelists at the discussion noted that leaders should ensure that they:
Know their numbers on the fortitude scale and where their staff lies
Be proactive about implementing change
Ask for help, collaborate within the system
Be a thriver, not a victim
Know that one size does not fit all. Fortitude, like burnout, is different for each individual
“Lean into action, let courage follow.” says one CFO.
The relationship between a CFO and the revenue cycle team is vital for smooth financial operations. This year at the HFMA conference executives shared their insights on what it takes to make CFOs and rev. cycle the ultimate success.
Six key points stood out:
Trust from both sides. A CFO should trust the rev. cycle team and not micromanage, and rev. Cycle should trust the CFO to guide and eliminate barriers.
Consider system-wide participation. Physicians and the CMO should be involved in revenue cycle decisions. The person with the medical degree is going to understand the ground level operation flaws more than an executive who doesn’t deal with it.
Agree on transparency and payer guidelines to not only ensure the organization chooses the right payer partners, but also stays on top of items like denial trends and rates.
Conduct individual meetings with the rev.cycle team. Ensure there is agreement, or resolutions at each step in the process.
Give space for people to be authentic, vulnerable, and share their struggles.
Learn from each other. Rev. cycle learn finance as a goal to better their relationship with the CFO. CFOs can learn the day-to-day rev. cycle operations.
A digital health management platform is making waves in diabetes care and could help members with other care needs.
Blue Shield of California is seeing positive results from a digital health tool designed to give members access to a broad range of health and wellness resources.
In a partnership with Solera Health, BSC members have access to Wellvolution, which offers holistic and lifestyle medicine services such as diabetes care management, weight management, mental and behavioral health, hypertension management, musculoskeletal health and tobacco cessation services.
The aim of the program is to tackle these chronic conditions by teaching sustainable healthy habits through personal coaching and education. Some of the services provide tools for members such as glucometers, exercise trackers, nicotine replacement therapy or a blood pressure monitor to track progress.
Solera Health officials say Wellvolution has seen positive results across the board. According to the company, after using Wellvolution, participants reported:
A 74% improvement in treatment for moderate to severe depression.
A 71% improvement in treatment for moderate to severe anxiety symptoms.
A 49% decrease in the use of diabetes-related medications.
The Innovation Picture
According to Angie Kalousek Ebrahimi, senior director of lifestyle medicine at Blue Shield of California, the health plan has positioned itself as a digital health innovator with numerous virtual care programs, Ebrahimi told HealthLeaders. Broad acceptance of virtual care and digital health tools during the pandemic has helped BSC to push that strategy even further and develop a digital-first mindset.
“I think digital also has the opportunity to sort of simplify things for members that we have in the healthcare space,” she said. “Healthcare is really complicated. We can do something in the digital space that simplifies it.”
A Big Hit To Diabetes
A key element of the platform is diabetes management. Ebrahimi says platforms like these potentially have the power to transform diabetes management across the country and lower the number of Americans who live with the chronic condition.
When individuals are diagnosed with diabetes, they often think of it as a life sentence of monitoring one’s blood sugar and taking medications, and providers may not offer management tools to help their patients understand that process.
When members are given the opportunity to take control of how they manage their diabetes, Ebrahimi says, that’s when results and transformation begin.
“What we've been able to do with that specific condition [diabetes] is let our members know that there is an alternative to support them in their journey,” Ebrahimi said. “And actually, in many cases with the programs that we're offering, members [with type 2 diabetes] are reversing the condition.”
The Power of Control
Part of the success of the Wellvolution platform, Ebrahimi says, is due to members being able to have transparency in their treatment options and have the power to make decisions on their own, with some guidance.
“They can see all of the different programs that we offer to them, " she said. “They can also use an online quiz to find out what programs are going to be best for them.”
“We have already come a long way toward embracing the value of personalized care,” said Solera's interim CEO John Santelli. “The best solutions are the ones that are not only able to deliver high quality care, but which resonate with patients while offering good value for payers.”
Learn how production companies can help give hospital revenue a boost.
What’s one way for a hospital to bring in some extra revenue? The big screen. Hospitals can turn to film productions to rake in some extra cash for their organization, and it may be worth it for CFOs to look in to.
When health systems accommodate filming requests, they can charge a filming fee, which may be beneficial in today’s healthcare climate as it battles rising costs and inflation.
A Viable Revenue Boost?
So what goes into this type of arrangement? Set needs will vary based on the production, but they may take over small wings of a hospital or entire unused floors. Often, filming inside an actual hospital or health system is cheaper for production companies than building an entire set and they’re grateful for the space. Without adequate space though, film productions won’t be a feasible option for a health system.
Health systems will also have to consider how long a production company may be there. Filming can vary, from one day to multiple months. Consider how long the organization can or wants to host the film crew. In most cases, productions are grateful to be filming in a real hospital. Crew are often happy to be surrounded by professional health providers who can attest to whether medical equipment props are set up correctly or provide care if there’s an injury on set.
The Sanford Aberdeen Medical Center turned to filming earlier this year, where a crew spent about 50 hours over the span of five days shooting the movie “Thread Bound.” The crew was able to take over a small wing on the third floor that wasn’t being used due to lower patient numbers.
“Seeing the filmmaker’s excitement at the beauty of our facility and the staff willingness to participate in the creation of it has been really fun,” said lead community programs specialist at Sanford Aberdeen Bea Smith.
Next is negotiation. Warner Bros. isn’t going to need the same rate as an independent film company. Other health systems have charged upwards of $2,000 a day for use of their facility, which can quickly add up over multiple days/weeks.
Health systems have said negotiatings with production companies is easy, but the process will vary based on the company.
Hosting a production company can be a potentially quick revenue booster for health systems and might provide the financial wiggle room CFOs are looking for.
Things To Consider
If a health system is looking to work with a production company, patient authorization is vital. Without it, the system’s reputation could be negatively affected, or susceptible to lawsuits and fines.
Health systems must ensure film crews adhere to facility standards and patient confidentiality protocols, as there have been pricey lawsuits in the past, sometimes costing health systems hundreds of thousands.
Another aspect to factor into this decision is the patient’s experience. Typically, patients don’t want to be disturbed by, say, fake gunshots down the hall. Consider the type of production that will be filming and how disruptive it could be to patients.
Lastly, consider the production company’s schedule. These arrangements are often sporadic, and film crews move in and out of the facility throughout their time there. Flexibility will be another important aspect to consider.
The health giant is totaling its losses after the Change attack.
UnitedHealth adjusted its 2024 outlook after assessing the total impact of the Change Healthcare cyberattack.
The health giant is expected to lose roughly $2.3 to $2.45 billion due to impacts from the attack, which is up from $1 billion seen in previous projections. Even after enduring one of the worst cyberattacks in U.S. history though, UnitedHealth’s earnings prevail.
Earnings & Stock Outlook
Despite provider loan initiatives and mounting medical costs, UnitedHealth still reels in large profits. The company’s revenues soared to $98.9 billion, jumping nearly $6 billion year- over- year due to United’s large, diverse portfolio that includes UnitedHealthcare insurance and several Optum health service units. UnitedHealth’s earnings from operations in Q2 were $8.7 billion, which include the Change Healthcare business disruption impacts.
“The consistent outlook absorbs an estimated $0.60 to $0.70 per share of business disruption impacts for the affected Change Healthcare services, which has increased $0.30 per share since the initial estimate was provided last quarter,” the company disclosed in the report.
UnitedHealth confirmed in its latest earnings report that the company’s adjusted net earnings outlook was $27.50 to $28.00 per share.
UnitedHealth also confirmed in the report the sale of its South American operations, and intentions to sell the remaining ones. The total South American impacts in the quarter were $1.28 per share.
Aftermath of Change Attack
When the Change cyberattack hit in February, it brought reimbursement to an almost stand-still for providers all over the country. UnitedHealth had shut down its IT systems, and hundreds of health systems descended into chaos, unable to process claims and pay their providers.
Two of UnitedHealth’s biggest money drainers were loans sent out to struggling health systems and a ransom payment to the cybercriminals behind the attack. CEO Andrew Witty confirmed in a written testimony that it was his decision to pay a $22 million ransom payment to the cybercriminals who exposed patient data regardless. It’s estimated that one in three Amercians had personal health data exposed in the attack.
UnitedHealth also sent payments totaling $9 billion to struggling providers in the form of interest-free loans. UnitedHealth said it continues to provide financial support to providers who are still in need. UnitedHealth has since restored most of its Change services, and Change has also begun notifying individuals who have had their data exposed.
Currently under investigation by the Department of Justice for its business practices, UnitedHealth operates the largest private insurer in the country.
