Nearly two years after passage of price transparency law, only a small number of the nation’s hospitals are fully compliant, according to two separate reports
Price transparency is a major trend in the US healthcare system. Yet, hospitals, physicians, clinical laboratories, and other providers have been reticent to design their websites so it is easy for patients to find prices in advance of clinical care. Now comes news that federal officials are ready to issue fines to hospitals that fail to comply with regulations mandating price transparency for patients.
Many of the largest healthcare networks claim that complying with federal hospital price transparency regulation is costly, time consuming, and provides no return on investment. Nevertheless, the federal Centers for Medicare and Medicaid Services is quite serious about enforcing price transparency laws, and to that end the agency has, for the first time, levied fines against two hospitals in Georgia that have not complied with the regulations.
As many pathologists and medical laboratory managers know, on January 1, 2021, a federal rule on price transparency for medical facilities went into effect. The rule requires hospitals—as well as clinical laboratories and other healthcare providers—to post a comprehensive list of their services and the pricing for those services on their websites, and to provide access to a patient-friendly tool to help consumers shop for 300 common services.
The CMS recently issued its first penalties to two hospitals located in Georgia for violating the law by not updating their websites or replying to the agency’s warning letters. The letters CMS sent to the two hospitals alleged there were several violations of the transparency rules, including the failure to post a listing of their charges on their websites and requested corrective action plans by the hospitals.
In November 2021, Northside Hospital Atlanta informed regulators that consumers should call or email the facility to obtain price estimates for services. Later in January 2022, during a “technical assistance call,” a hospital representative told CMS “the previous violations had not been corrected and, in fact, the hospital system had intentionally removed all previously posted pricing files,” according to a Notice of Imposition of a Civil Monetary Penalty letter CMS sent to Robert Quattrocchi, President and Chief Executive Officer, Northside Hospital Atlanta.
Under the rules of the Hospital Price Transparency law, each hospital operating in the US is required to provide clear, accessible pricing information online about the items and services they provide in two ways:
As a comprehensive machine-readable file listing all items and services.
In a display of shoppable services in a consumer-friendly format.
CMS fined Northside Hospital Atlanta $883,180 and Northside Cherokee Hospital $214,320 for noncompliance with the law. The penalties are calculated based on the size of the hospital and the length of time of the noncompliance—up to $300 per day. In addition, the facilities could endure further monetary penalties if they continue to fail to comply. The organizations will have 30 days to appeal the charges or have 60 days to remit payment for the fines.
Both hospitals are owned by Northside, a Georgia health system with five acute care hospitals, more than 250 outpatient facilities, over 4,100 providers, and 25,500 employees, according to the provider’s website.
“CMS expects hospitals to comply with the Hospital Price Transparency regulations that require providing clear, accessible pricing information online about the items and services they provide,” said Meena Seshamani, MD, PhD, Director of CMS, in a statement provided to Fierce Healthcare. “This enforcement action affirms the Biden-Harris Administration’s commitment to making healthcare pricing information accessible to people across the country and we are committed to ensuring that consumers have the information they need to make fully informed decisions regarding their healthcare.” Clinical laboratories also are required to comply with federal price transparency regulations. (Photo copyright: Modern Healthcare.)
Compliance with Price Transparency Laws Low
Analysis of the healthcare industry shows that many facilities are not in compliance with the transparency rules. In April, a report released by health IT firm KLAS Research, found that hospitals believe the transparency rule is too costly to implement and confusing to consumers, which helps explain the low compliance issues. KLAS surveyed 66 hospital revenue cycle leaders for their report.
“There are concerns about cost, data accuracy, and patient options of pricing tools; some respondents worry about patients’ ability to understand the displayed pricing data, and today, most patients are unaware online pricing information exists,” the report states. In addition, the report notes that “many organizations are not investing beyond the bare minimum requirements, and they don’t plan to do more until there is further clarity around the regulations and the expectations going forward.”
The KLAS report also noted that organizations are struggling to find the resources to comply with the price transparency rule and consider it a financial burden to continually add new employees and technology to become and remain in compliance. Many organizations see no merit in investing in a regulation that provides no return on that investment.
Another compliance report released in February by Patient Rights Advocate maintained that only 14.3% of the 1,000 hospitals they reviewed were in full compliance with the Hospital Price Transparency regulation. About 37.9% of the hospitals posted a sufficient detailing of service rates, but over half of those hospitals were noncompliant in other criteria of the rule, such as rates by insurer and insurance plans.
“We are now entering the second year since the Hospital Price Transparency rule became law, and compliance remains at very low levels,” according to the report. “The largest hospital systems are effectively ignoring the law, with no consequences.”
The Patient Rights Advocate analysis also found that a mere 0.5% of hospitals owned by the three largest hospital systems in the country—HCA Healthcare, CommonSpirit Health, and Ascension—were in full compliance of the law.
Notably, only two of the 361 hospitals owned by these three hospital systems were fully compliant. In addition, none of the 188 hospitals owned by HCA Healthcare, the largest for-profit hospital system in the country, were in compliance.
Hospitals Fail to Provide Consumers with Critical Information
The Patient Rights Advocate report found that the most significant reason for noncompliance was failure to post all payer-specific and plan-specific negotiated rates on their websites. They estimated that 85.7% of the 1,000 hospitals reviewed did not post a complete machine-readable file of standard charges, as required by the law.
“The lack of compliance by hospitals is about more than simply the failure to follow the legal requirements,” the report states. “It is also about the failure of hospitals to provide critically needed information to consumers so they can make better health decisions. Empowered with comparative price and quality information in advance of care, consumers, including employers and unions, can improve health outcomes while lowering costs by taking advantage of the benefits of competitive market efficiencies.”
With the CMS starting to issue fines for noncompliance, it is probable that more healthcare organizations will focus on adhering to the Hospital Price Transparency law. Since the transparency rules also apply to clinical laboratories, lab managers should be aware of the regulations and any further enforcement actions taken by the CMS.
From infant formula to contrast dye for CT scans, ongoing healthcare product shortages highlight continuing US supply chain and manufacturing issues
Medical laboratory directors and pathologists have firsthand knowledge of COVID-19 pandemic-driven supply chain issues, having faced backlogs for everything from pipettes and transport media to personal protective equipment (PPE). But the latest shortage impacting blood collection tubes is another example of why it is important to manufacture key products—including clinical laboratory tests, analyzers, and consumables—domestically.
On January 19, 2022, the federal Food and Drug Administration (FDA) issued a Letter to Healthcare Providers and Laboratory Personnel recommending “conservation strategies” to minimize blood collection tube use because of “significant disruptions” in supplies due to COVID-19-increased demand and “recent vendor supply challenges.”
“The FDA updated the device shortage list to include all blood specimen collection tubes (product codes GIM and JKA),” the letter noted.
This announcement followed a similar June 10, 2021, Letter to Healthcare Providers and Laboratory Personnel that stated the FDA was aware “that the US is experiencing significant interruptions in the supply of sodium citrate blood specimen collection (light blue top) tubes because of an increase in demand during the COVID-19 public health emergency and recent vendor supply challenges.”
A spokesperson for Becton-Dickinson (BD), a manufacturer of blood specimen collection products, told Forbes that the COVID-19 pandemic caused “the most unpredictable demand that BD has experienced in our company’s history.” The spokesperson added, “Worldwide, BD produced nearly a half a billion additional blood tubes in 2021 versus 2020 … Like every business across every industry around the world, BD is experiencing limited availability of and access to raw materials, shipping and transportation delays, and labor shortages, which hinders our ability to ramp production.”
“It’s also a challenge because we’ve moved to just-in-time (JIT) inventory across all sectors, including labs … They outdate just like food [and] are no longer fresh. [The product] is no longer reliable and you can’t use it. So, we can’t stockpile either,” Nielsen told Forbes.
Shortages Hit Other Critical Healthcare Sectors
But shortages of supplies and equipment have spread beyond the clinical laboratory. Intravenous contrast—which contains iodine and is used to improve the accuracy of CT scans and exclude life-threatening conditions such as cancer—has been in short supply since GE Healthcare shut down its manufacturing facility in Shanghai, China, during the city’s two-month pandemic lockdown that began in early April.
“This isn’t an ancillary tool. This is something that’s used many, many times every day for both lifesaving decisions in the setting of trauma and for managing cancer patients and determining the appropriate care for them,” he added.
US Rep. Rosa DeLauro (above), lamented the fact these vital products are not being made in sufficient quantities in the US. “In the wealthiest nation on Earth, there should be no reason doctors are forced to ration lifesaving medical scans to compensate for a shortage of material,” DeLauro told The New York Times. “We are seeing supply chains break down because of consolidated industries experiencing manufacturing shortages and offshoring American jobs to China.” Clinical laboratory managers have first-hand knowledge of the severity of supply shortages. (Photo copyright: CNN.)
GE Healthcare is one of four companies that supply iodine-containing contrast to the United States, but the other three manufacturers have been unable to scale-up and offset the shortage.
By June 14, 2022, the Shanghai facility had returned to 100% production capacity following the easing of local COVID restrictions, according to a GE Healthcare statement. But shortages remain.
“There is still the challenge of bringing the contrast media across the ocean and distributing it to healthcare facilities across the nation,” Nancy Foster, the American Hospital Association’s (AHA) Vice President of Quality and Patient Safety Policy, told CNN.
“The hospital association estimates that about half of all hospitals in the United States rely on GE for contrast dye to perform about 20 million scans a year, or about 385,000 scans each week,” CNN reported.
Critical Medical Products Must be Manufactured Domestically
“We’ve been having shortages throughout the pandemic. At the very beginning of the pandemic, it was PPE shortages,” Jain said. “Now, we have contrast shortages and formula shortages for babies.”
The infant formula crisis is the other headline grabbing news in recent weeks. Three companies—Abbott, Reckitt, and Gerber—manufacture 95% of the baby formula sold in the US, with Abbott controlling roughly 42% of the nation’s supply, CNN reported.
“Initially, this problem affected those who are on more specialized formulas or had nutritional issues,” Stephanie Seger, Director of Government Relations at Children’s Mercy Hospital in Kansas City, Mo., told CNN. ‘Then the gap, or the emptiness on the shelves, increased to the point where it’s now any formula. It’s now any parent of any baby.”
The Biden administration took steps in May to increase the supply of imported formula, but like the Intravenous contrast shortage, the problem has not been solved.
The COVID-19 pandemic has served to underscore the serious issues affecting supply chains for hospital, medical laboratory, and other critical supplies. While no quick fix has appeared on the horizon, the clinical laboratory industry should take steps now to work toward long-term solutions.
Either way, if Medicare is allowed to run dry, millions of patients (most among the elderly) may be unable to receive critical care, including clinical laboratory testing and pathology.
“The Hospital Insurance (HI) Trust Fund, or Medicare Part A, which helps pay for services such as inpatient hospital care, will be able to pay scheduled benefits until 2028, two years later than reported last year. At that time, the fund’s reserves will become depleted,” the 2022 Medicare Trustees Report states, which draws its data from a US Treasury Department fact sheet.
“The progressively worse imbalance of expenditures versus revenues will exhaust the trust funds in 2028,” Weems wrote, adding that one of two payment scenarios will likely happen:
Medicare may pay bills on a “discounted basis,” which means if expected revenues are 85% of expenditures, then Medicare would pay bills at 85% of the amount, or
Medicare may put bills aside until it has the money from tax dollars.
“And then (Medicare would) pay them on a first-in-first-out basis,” Weems wrote, adding, “At the time of insolvency, that current Administration would have to pick its poison.”
For hospital clinical laboratory leaders and pathologists who provide care to Medicare beneficiaries, neither approach would be satisfactory. And a solution for funding Medicare Part A beyond 2028 needs to be crafted to ensure hospitals are paid on a timely basis.
But what should it be?
“Medicare’s two-part insurance and trust fund design may have made sense in the mid-1960s, but it no longer does. Modern coverage is not bifurcated in this way and imposing stricter financial control over facility spending than clinician and outpatient services can distort the policy-making process, and thus also patient care,” wrote James Capretta (above), Senior Fellow at the American Enterprise Institute, in his analysis of the 2022 Medicare trustees report, published in Health Affairs. If Medicare truly does run out of money, millions of elderly people may lose access to critical healthcare services, including clinical laboratory testing. (Photo copyright: American Enterprise Institute.)
Medicare Funding Scheme is ‘Flawed’
According to the Kaiser Family Foundation (KFF), the amount of money Medicare needs to cover the deficit between 2028 through 2031 (the period studied in the trustees’ projections), is estimated at $247.4 billion.
Medicare is supported by employers and employees, who each pay a 1.45% tax on earnings, KFF explained. Balancing the fund supporting Medicare Part A requires either an increase of .70% of taxable payroll or a 15% reduction in benefits, KFF estimated.
“Medicare will not cease to operate if assets are fully depleted, because revenue will continue flowing into the fund from payroll taxes and other sources,” KFF noted.
However, the current set-up of Medicare trust funds (one for Part A and another funded differently for Medicare Part B, which includes outpatient coverage such as medical laboratory tests), is “flawed” and needs updating to enable reform.
Furthermore, Medicare faces challenges brought on by an aging population and increasing enrollees.
Baby Boomers (born between 1946 and 1964) will qualify for Medicare by 2030 and potentially leave the workforce, depleting their payroll tax contributions to the program, KFF pointed out.
Also, Medicare reform needs to reflect the impact of the COVID-19 pandemic. An analysis of 114,000 COVID-19-associated deaths from May to August 2020 showed 78% of the people were age 65 and older, according to the federal Centers for Disease Control and Prevention (CDC).
“Medicare beneficiaries whose deaths were identified as related to COVID-19 had costs that were much higher than the average Medicare beneficiary prior to the onset of the pandemic,” the 2022 Medicare Trustees report noted.
“The surviving Medicare population had lower morbidity, on average, reducing costs by an estimated 1.5% in 2020 and 2.9% in 2021. This morbidity effect is expected to continue over the next few years but is assumed to decrease over time before ending in 2028.”
In his 4Sight Health article, Weems suggested that the Medicare reform deadline was bumped to 2028 from 2026 due to fewer people living and able to access Medicare in coming years.
“Let’s honor those seniors by using the time for real Medicare reform,” Weems wrote.
Hospital laboratory managers and pathologists will want to keep a watchful eye on Congress’ handling of the 2022 Medicare Trustees Report. Though it is unlikely the nation’s decision-makers will act on the report during an election year, pressure to develop a solution to meet the funding needs of Medicare Part A hospital care beyond 2028 will start to build in 2023.
Retail giant now has primary care clinics at stores in five states, but the rollout has not gone smoothly
Healthcare is increasingly being driven by consumerism and one clear sign of this trend is Walmart’s ambitious plan to open health clinics at its retail locations. The retail giant set its plans in motion in 2019 with its first primary care site in a suburban Atlanta store, however, the rollout since then has presented certain challenges.
Nevertheless, the trend of placing nearly full-service primary care clinics in retail locations continues. Clinical laboratories in these areas need strategies to serve customers accessing healthcare through these new channels, particularly as Walmart and the national retail pharmacy chains continue to expand the clinical services offered in their retail stores.
“Consumer engagement is a huge part of healthcare, [yet it is also a] gap for us in healthcare,” cardiologist and Walmart VP of Health and Wellness Cheryl Pegus, MD, told Modern Healthcare. “Healthcare is incredibly complicated,” she added. “And where we are in healthcare today is not in having great treatments. It’s not in having evidence-based medicine. It’s understanding how we engage consumers.”
The company also entered the telehealth business with last year’s acquisition of multispecialty telehealth provider MeMD.
“Telehealth offers a great opportunity to expand access and reach consumers where they are and complements our brick-and-mortar Walmart Health locations,” said Pegus in a Walmart new release announcing the acquisition. “Today people expect omnichannel access to care and adding telehealth to our Walmart healthcare strategies allows us to provide in-person and digital care across our multiple assets and solutions.”
Currently, Walmart Health centers only operate in Georgia, Florida, Illinois, and Arkansas. But telehealth enables Walmart “to provide virtual healthcare across the country to anyone,” Pegus said. With both offerings, “we’re really attempting to allow people to get healthcare the way they need it without disrupting the rest of their life.” Many users of these services are Walmart “associates,” she added, using the company’s term for its retail employees.
“In this country, about 25% of people don’t have a primary care physician,” cardiologist Cheryl Pegus, MD (above), Walmart’s VP of Health and Wellness, told Medscape. “So, your options for being able to solve in real time something that will help you, they’re quite limited. What we’re trying to do is give those options. We’re not trying to take away emergency rooms, or healthcare systems, or existing primary care. We’re asking, how do we expand that infrastructure so that people get care when they need it?” And this includes clinical laboratory testing, radiology, and telehealth services as well. (Photo copyright: Walmart.)
Large Portfolio of Healthcare Offerings
Pegus joined Walmart (NYSE:WMT) in December 2020 to oversee a portfolio that now includes more than 4,700 pharmacies and 3,400 Vision Centers, in addition to the telehealth operation and the Walmart Health centers. She was previously chief medical officer at Walgreens and Cambia Health Solutions and worked in private practice as a cardiologist.
The retail giant opened its first Walmart Health center in Dallas, Ga., an Atlanta suburb, in September 2019, followed by additional centers in Georgia, Arkansas, and Illinois.
Earlier this year, it opened five new clinics in northern and central Florida with plans for at least four more in the Jacksonville, Orlando, and Tampa areas, according to a press release. Each health center is adjacent to a Walmart retail location.
These centers offer a range of primary care medical services, including:
physicals,
injury care,
immunizations,
radiology, and
care for chronic health conditions.
Pictured above is one of the first health clinics established by Walmart. This location is in a western Atlanta suburb. Note that the services advertised include more than just primary care. Also offered are “labs and X-ray,” along with dental, hearing, optometry, and counseling. Clinical laboratory managers and pathologists may want to monitor whether consumers embrace primary care delivered from clinics located in retail stores. (Photo copyright: Georgia Health News.)
As Dark Daily reported in May 2020, the Walmart Health centers also offer clinical laboratory testing at cut-rate prices, such as:
$10 for a lipid test,
$10 for Hemoglobin A1c, and
$20 for a strep test.
On the Walmart Health website, patients can enter their Zip code to view a list of Walmart Health clinics in their area, including links to price lists.
Walmart’s Expansion into Healthcare Not Without Problems
However, the company’s expansion into healthcare has not gone smoothly. In 2018, the Walmart board signed off on a plan to open 4,000 health centers by 2029, Insider reported. By the end of 2021, Walmart expected to have 125 health centers in operation, but as of June 2022, the Walmart Health website listed only 25 locations, mostly in Georgia.
Citing anonymous sources, Insider reported problems that include “leadership changes, competing business priorities brought on by the coronavirus pandemic, and the complexity of scaling a massive healthcare operation.”
In Sept. 2021, Insider further reported that the clinics were experiencing operational difficulties including hidden fees and billing problems. One culprit, the story suggested, was the company’s electronic health record (EHR) software. That same month, Walmart announced it would adopt the Epic health records system, beginning with the opening of new clinics in Florida locations.
Pegus’ arrival at Walmart appears to be part of a management shakeup. In January 2022, Insider reported that she had assembled a new executive team, with David Carmouche, MD, Senior VP, Omnichannel Care Offerings, overseeing the health centers and telehealth operations. By then, the original executives leading the rollout of the health centers had all left, Insider reported. Carmouche was previously an executive VP with Ochsner Health in New Orleans.
Partnership with Quest Diagnostics
Meanwhile, in January, Walmart announced a deal with Quest Diagnostics that allows consumers to order more than 50 lab tests through The Wellness Hub on Walmart.com, which is separate from the Walmart Health website. The tests cover “general health, digestive health, allergy, heart health, women’s health, and infectious disease,” according to a press release announcing the partnership.
Consumers can order at-home test kits for certain conditions or set up appointments for tests at Quest Patient Service Centers. The tests on the Walmart/QuestDirect website include:
COVID-19 Active Infection ($119+)
COVID-19 Antibody Test ($69)
Cholesterol Panel ($59)
Complete Blood Count ($59)
Comprehensive Metabolic Panel ($49)
CRP Inflammation Marker ($59)
Diabetes Management ($69+)
Diabetes Risk ($99+)
Food Allergy Test Panel ($209)
Chickenpox ($59)
The website also offers a combined Basic Health Profile with CBC, CMP, cholesterol panel, and urinalysis for $149. “Each purchase is reviewed and, if appropriate, ordered by a licensed physician,” the press release states.
What does all this mean for clinical laboratories? “They need to recognize that the Millennials and Gen Zs are driving a consumer revolution in healthcare,” said Robert Michel, Publisher and Editor-in-Chief of Dark Daily and its sister publication The Dark Report.
“Walmart was early to recognize and respond to this, in part because it employs 1.3 million Americans, many of whom are Gen Y and Gen Z and quick to use telehealth and similar virtual health services,” he added.
Clinical laboratory leaders need to understand this trend and develop strategies to attract and serve new patients who are willing to access healthcare virtually, while still needing to provide blood and other specimens for the lab tests ordered by their providers.
Balwani’s lawyers opted not to have their client testify in his own defense and called only two witnesses, while Holmes’ defense team offered jurors the opportunity to hear her testimony
Elizabeth Holmes and Ramesh “Sunny” Balwani dreamed of revolutionizing the clinical laboratory blood-testing industry with their now defunct Theranos Edison device, which they claimed could perform multiple tests with a single finger prick of blood. Instead, they became the rare Silicon Valley executives to be convicted of fraud.
On July 7, ex-COO/President Balwani was convicted on all 12 counts of wire fraud and conspiracy charges in his federal fraud trial. Holmes, Theranos’ founder/CEO and former romantic partner to Balwani, avoided convictions six months ago in January on seven of the 11 counts she faced for her role in exaggerating the accuracy and reliability of the company’s Edison blood-testing device and providing false financial claims to investors.
“Once again, a jury has determined that the fraud at Theranos reached the level of criminal conspiracy,” said FBI Special Agent in Charge Sean Ragan in a press release posted on Twitter following the verdict. “The FBI has spent years investigating this investment fraud scheme with our partners at USPIS and the FDA Office of Criminal Investigations. Lies, deceit, and criminal actions cannot replace innovation and success.”
Ramesh “Sunny” Balwani (above center), former COO/President of Theranos, is shown leaving the federal courthouse in San Jose, Calif., on July 7 after he was found guilty on all 12 counts of fraud, a verdict more severe than ex-CEO and Theranos founder Elizabeth Holmes received in January for similar charges. Clinical laboratory directors and medical laboratory scientists have been closely monitoring both trails. (Photo copyright: Jim Wilson/The New York Times.)
Balwani’s Age and Experience May Have Worked Against Him
Michael Weinstein, JD, a former Justice Department prosecutor who is the Chair of White-collar Litigation at Cole Schotz, told The New York Times that Balwani’s age and his trial date—three months after Holmes’ conviction—worked against him. Balwani, 57, could not present himself as a young and inexperienced tech executive easily manipulated by those around him, as Holmes, 38, had attempted to do.
“Holmes could come off as a bit naïve, and [her defense team] tried to sell that,” Weinstein said of the former Stanford University dropout who founded Theranos in 2003 when she was 19.
In Holmes’ case the verdict was mixed, with jurors acquitting her of the patient fraud counts but unable to reach a decision on some of the investor fraud counts, Bloomberg reported.
Mr. Balwani, however, “came off as more of an experienced technology executive,” Weinstein added.
Weinstein pointed out that because the government’s case against Balwani mirrored its case against Holmes, prosecutors had time to refine their strategy before making a second appearance inside US District Court Judge Edward Davila’s San Jose courtroom.
“The streamlined presentation, the streamlined evidence, the streamlined narrative—all was beneficial for the government in the end,” he said.
Ever since opening arguments in March, Balwani’s legal team portrayed him to the jurors as a loyal partner who believed in Theranos’ technology and “put his money where his mouth is,” the Guardian noted.
Prosecutors, however, made the case that Balwani had a hands-on role in running the lab and was the source of Theranos’ overinflated financial projections.
Balwani invested about $15 million in the startup between 2009 and 2011 and never cashed in when his stake grew to $500 million. That money evaporated when Theranos collapsed.
In all, 24 witnesses testified against Balwani. He was ultimately convicted of all 12 counts he faced:
Two counts of conspiring with Holmes,
Six counts of defrauding investors, and
Four counts of patient fraud.
Major Differences in Trial Testimony
The Balwani trial made headlines due to COVID-19 pandemic related delays, but otherwise did not produce the news-generating moments that punctuated Holmes’ nearly four-month-long court appearance. Thirty-two witnesses appeared at the Holmes trial, including Secretary of Defense James Mattis, according to CNN.
Another significant difference in the two trials was that Holmes testified in her own defense. Holmes spent nearly 24 hours on the stand, CNN Business noted at that time, during which she cast the blame for Theranos’ failings on those around her, including Balwani.
ABC NewsRebecca Jarvis, host and creator of the podcast “The Dropout,” believes Balwani’s decision not to testify worked against him.
“[The abuse claims] did not come up at his trial, but during [Holmes’] seven days of testimony, they were a big portion of what she talked about,” Jarvis said in an ABC News “Start Here” podcast. “The biggest difference is that he didn’t take the stand to say, ‘I didn’t do this,’ or … raise his own objections to the claims against him.
“You think about a jury who is supposed to know nothing about any of [the defendant’s] backstory, and they’re shown these things like … case pictures of [Holmes] so much younger than [Balwani], supposedly having to rely on him for his expertise,” Jarvis added.
“You can imagine where the jury may have found that presentation more sympathetic than Sunny Balwani who had experience,” she said.
Text May Have Been Balwani’s Undoing
Balwani’s defense team called only two witnesses:
A naturopathic physician who used Theranos’ blood-testing lab, and
A technical consultant who Balwani’s legal team hired to assess the accessibility of patient data in Theranos’ Laboratory Information System (LIS), which the defense argued could have provided evidence of the accuracy of Theranos’ test results.
“This verdict also signals the jurors did not buy Balwani’s highly speculative argument that the database Theranos lost in 2018 would have proven his innocence,” Park said.
“We are obviously disappointed with the verdicts,” he said. “We plan to study and consider all of Mr. Balwani’s options including an appeal.”
Following the verdicts, Judge Davila raised Balwani’s bail to $750,000 and set a Nov. 15 sentencing date. Holmes is scheduled to be sentenced Sept. 26.
Balwani’s own words may have been his final undoing. During closing arguments, prosecutors again showed jurors a text message Balwani sent to Holmes in 2015, The New York Times reported.
“I am responsible for everything at Theranos,” he wrote. “All have been my decisions too.”
Clinical laboratory directors and medical laboratory scientists will no doubt continue to monitor the fallout from these two extraordinary federal fraud trials. There’s still much to learn about CLIA-laboratory director responsibility and how the government plans to prevent future lab testing fraud from taking place.
Clinical laboratory managers and pathology group leaders may want to pay closer attention to shrinking hospital margins and whether this may put pressure on hospital laboratory budgets
Financial performance of the nation’s hospitals and health systems continues to disappoint hospital leaders. For the fourth consecutive month this year, hospital operating margins have remained in the red. This will, of course, affect the clinical laboratories and pathology departments at these institutions.
A recently released National Hospital Flash Report from healthcare management consulting firm Kaufman Hall indicates that 2022 has started off poorly for most healthcare organizations. The information in Kaufman’s report is based on data gathered from more than 900 hospitals and healthcare systems across the country.
The key takeaways outlined in the report for the month of April that are negatively affecting hospitals’ bottom lines include:
More patients are utilizing urgent care facilities, telemedicine options, and primary care providers instead of seeking care at hospital emergency departments.
Patients tend to be sicker, more expensive to treat, and require longer hospital stays compared to April of 2021.
Expenses remain high due to labor shortages, specialty supplies, supply chain issues, and costly pharmaceuticals.
“Labor shortages, high prices for supplies, and cost increases to treat sicker patients over longer stays are ballooning hospital expenses,” Erik Swanson (above), Senior Vice President of Data and Analytics for Kaufman Hall, told Fierce Healthcare. “With a bleak consensus outlook for the US economy, those factors and their effects could be here for a while.” Clinical laboratories have been grappling with supply and personnel shortages and rising costs for many years. (Photo copyright: Kaufman Hall.)
According to the report, the operating margins for the hospitals were down nearly 40% compared to March 2022 and declined 76% when compared to April 2021. The calculated median operating margin index was -3.09% throughout April 2022. In addition, operating earnings declined almost 27% from March to April of this year and 51.5% when contrasted with April of last year.
The report also found that patient volumes, average lengths of stays, and surgeries performed had declined overall during the month of April—but that hospital expenses rose during that period—thus decreasing profit margins. Total expenditures increased by 8.3% over April 2021, and 9.6% between March and April of this year.
Inflation, COVID-19 Key Factors in Hospitals’ First Quarter Losses
The report noted that the historic rise in inflation during the month of April is fueling negative revenues for healthcare systems and hospitals. Several for-profit and nonprofit hospital systems reported losses for the first quarter of 2022.
Kaufman’s report for the month of March was slightly more positive as the healthcare organizations surveyed reported an incremental rise in patient volumes and minor expense relief, resulting in gains in volumes and revenues. March also saw an increase in outpatient and surgery volumes and lower numbers of high-acuity patients. However, that slight upward trend did not last through April.
Another reason for the year-to-date unsatisfactory revenue margins for hospitals across the country was the surge of patients seeking care for the SARS-CoV-2 omicron variant of the COVID-19 infection earlier in the year.
“The first few months of this year were decimated by the impact of the omicron wave, but as the omicron wave subsided, we had a bit of a rebound in those volumes, and that’s what you saw in March,” Erik Swanson, Senior Vice President of Data and Analytics for Kaufman Hall told HealthLeaders. “However, it wasn’t a rebound to the full historical volumes, and that is again because of that wave.”
Healthcare Organizations are Advised to Look at Expenses
The National Hospital Flash Report is published monthly by Kaufman Hall and provides vital analyses and observations on the fiscal performance of hospitals and healthcare systems. The information contained in the report includes data on margins, volumes, revenues, and expenses.
“The revenue side is a bit more challenging for organizations to control. Many are looking at their internal revenue cycle, understanding where there can be improvements in their own process, improving just the performance of the revenue cycle that improves the collections rates,” Swanson said. “Many are also trying to renegotiate with payers and negotiate perhaps as aggressively as possible to get the best rates. But I think where you see much of the levers that organizations can pull is on the expense side.”
Fluctuations in revenue mean that organizations—including clinical laboratories—will have to establish new strategies to diminish their financial shortfalls.
“Finally, because a lot of these challenges are due to these ebbs and flows in volumes, many organizations are also looking to see how they can embrace more data-driven predictive type models to look at volumes and think about how they can optimize their workforce to better handle these ebbs and flows of volume,” Swanson added. “This very often includes thinking about the appropriate size of float pools, the number of times that you need to pay overtime versus hiring new individuals, so many organizations are taking those approaches to bend the cost curve. There are quite a few levers that organizations are pulling to bend this cost curve down to ultimately improve their margins overall.”
The most recent report concluded that the first four months of 2022 have been extremely challenging for hospitals and health systems with extended negative margins taking their toll. The report also projected that the overall picture does not look favorable for these organizations for the remainder of the year and that many healthcare facilities may finish out 2022 with substantially depressed margins.
Clinical laboratory managers and pathology group leaders serving hospital and integrated delivery networks (IDNs) may want to consider how these depressed hospital margins will affect their own laboratories. It may be timely to anticipate how this fall’s budget-planning cycle might require their labs to specify how costs can be cut in the coming budget year.
