News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel

News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
Sign In

New Report Reveals That Medicare Part A Fund May Be Tapped Out By 2028, Triggering Calls for Congress to Address This Problem

Experts say it is time to change Medicare financing, even as large numbers of baby boomers continue to enroll in the program each year

Medicare’s fund for payment of inpatient hospital care is expected to be tapped out in 2028. That’s according to a new report from Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds (2022 Medicare Trustees Report). That’s somewhat better than running out of money for inpatient care in 2026, which was what Medicare announced in last year’s Medicare Trustees Report.

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.

Catastrophe in the Making

Kerry Weems, Executive Chairman at Value Based Healthcare Investors Alliance and former Administrator for the Centers for Medicare and Medicaid Services (CMS) said federal lawmakers are apparently waiting to deal with a “catastrophe” in 2028 instead of a “crisis” in 2026. Weems shared his views in an article he penned for 4Sight Health, a Chicago-based healthcare strategy company, titled, “Dead Seniors Save Congress from Tough Decisions.”

“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?

James Capretta, Senior Fellow at the American Enterprise Institute
 
“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.

That’s according to analysis written by James Capretta, a Senior Fellow at the American Enterprise Institute and Member of the Advisory Board of the National Institute for Health Care Management in Washington, DC, published in Health Affairs. He added that by dividing its coverage, Medicare may not be addressing the big picture in patient care.

Baby Boomers, COVID Challenge Medicare

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.

Donna Marie Pocius

Related Information:

2022 Medicare Trustees Report

2021 Medicare Trustees Report

Fact Sheet: 2022 Social Security and Medicare Trustees Reports

Dead Seniors Save Congress from Tough Decisions

FAQs on Medicare Financing and Trust Fund Solvency

Medicare’s Supplementary Medical Insurance Fund: A Growing Burden on Taxpayers

Walmart’s Health and Wellness Chief Discusses Retail Giant’s Move to Healthcare/Telehealth Provider, a Step with Implications for Clinical Laboratory Testing

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.

Cheryl Pegus, MD
 
“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.
One of the first health clinics established by Walmart
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

In “Walmart to Open 4,000 Healthcare ‘Supercenters’ by 2029 That Include ‘Comprehensive’ Clinical Laboratory Services,” Dark Daily covered how Walmart was poised to become a much bigger healthcare player with an expanded menu of clinical laboratory testing services including EKGs, vision care, dental care, and more for children and adults.

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.

Stephen Beale

Related Information:

Q/A with Dr. Cheryl Pegus of Walmart: ‘Consumer Engagement Is a Huge Part of Healthcare’

Nine Numbers That Show How Big Walmart’s Role in Healthcare Is

Walmart Health Opens Two More Locations in Chicago

Change Makers: Dr Cheryl Pegus on How Walmart Is Rethinking Health

Walmart to Open Two Health Clinics in Rogers, Fort Smith

Walmart Deepens Healthcare Offering with Lab Test Partnership

Walmart Tests Leap into Healthcare Business by Opening Second Clinic

Walmart to Open 4,000 Healthcare ‘Supercenters’ by 2029 That Include ‘Comprehensive’ Clinical Laboratory Services

Tale of Two Trials: Unlike Ex-Theranos CEO Elizabeth Holmes, COO/President Ramesh ‘Sunny’ Balwani Found Guilty of All Charges

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.”

How did the trials differ? That’s the question many clinical laboratory directors and pathologists who followed Theranos’ legal saga may be asking, as well as how the Theranos trials reflect on their own duties under the Clinical Laboratory Improvement Amendments of 1988 (CLIA).

Ramesh “Sunny” Balwani
 
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.

In one of her trial’s most dramatic moments, a tearful Holmes accused Balwani of emotional and sexual abuse, including forcing her to have sex, which Dark Daily covered in “Balwani and Holmes’ Personal Relationship Takes Center Stage in Criminal Trial, Fueling Continued Public Interest in Theranos Fraud Saga.” Balwani denied those allegations.

ABC News Rebecca 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 NewsStart 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.

Attorney Jennifer Kennedy Park, JD, a partner at Cleary Gottlieb, told Yahoo Finance the LIS database may have played a role in the jury’s verdict as well.

“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.

In a statement to CNN Business, Balwani attorney Jeffrey Coopersmith, JD, of Orrick, Herrington and Sutcliffe, LLP, said the defense is exploring avenues to possibly fight the jury’s decision.

“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.

Andrea Downing Peck

Related Information:

Tweet: FBI San Francisco

Theranos Trial: Legal Saga Reaches Final Chapter as Sunny Balwani Faces Verdict

No. 2 Theranos Executive Found Guilty of 12 Counts of Fraud

The Key Moments from Elizabeth Holmes’ Trial

Theranos Ex-President Balwani Found Guilty of Fraud

ABC: Start Here Podcast

Theranos: Elizabeth Holmes Co-Defendant Sunny Balwani Found Guilty of All 12 Counts

Former Theranos COO Is Guilty of Federal Fraud

Closing Statements Made in Trial of Sunny Balwani

Theranos Trial: Legal Saga Reaches Final Chapter as Sunny Balwani Faces Verdict

Former Theranos President’s Defense Rests in Criminal-Fraud Trial

Former Theranos Executive Sunny Balwani’s Fraud Trial Heads to Jury

Kaufman Hall Study Concludes Operating Margins are Declining in Nation’s Hospitals and Health Systems during 2022, a finding with implications for Hospital Laboratories

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.
Erik Swanson
 
“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.

JP Schlingman

Related Information:

Hospitals Off to a Poor Financial Start in 2022

Kaufman Hall: Hospitals Face 4th Straight Month of Declining Operating Margins

National Hospital Flash Report: May 2022

National Hospital Flash Report: April 2022

National Hospital Flash Report: March 2022

National Hospital Flash Report: February 2022

Despite March Rebound, Hospital Revenues See Drastic Drop in April

That Giant Sucking Sound: Lost Patient Volume

Vanderbilt University Researchers Combine Genetic Data and EHR Records to Identify Undiagnosed Disease in Patients

Multi-university research group discovers that heart arrhythmia genes may be more common than previously thought

For years, big data has been heralded as the key to unlocking the promise of personalized medicine. Now, researchers at Vanderbilt University are bringing that goal a step closer to reality by combining genetic testing data with data stored in electronic health record (EHR) systems to reveal undiagnosed disease in individual patients.

Should their research result in new ways to identify and diagnose disease, doctors and clinical laboratories would do confirmatory testing and then initiate a precision medicine plan.

Vanderbilt University Medical Center (VUMC) led a multi-university team of researchers that used data from the eMERGE (Electronic Medical Records and Genomics) network in two separate studies. eMERGE is a consortium of medical centers funded by the National Human Genome Research Institute (NHGRI) for the advancement of EHR data in genomics research.

The first study, published in the journal Circulation, titled, “Arrhythmia Variant Associations and Reclassifications in the eMERGE-III Sequencing Study,” looked at 10 arrhythmia-associated genes in individuals who had no prior indication for cardiac genetic testing.

The second study, published in Jama Oncology, titled, “Association of Pathogenic Variants in Hereditary Cancer Genes with Multiple Diseases,” explored the spectrum of diseases associated with hereditary cancer genes.

Dan Roden, MD, Senior Vice President for Personalized Medicine at VUMC and Senior Author of the Circulation study, said in a VUMC news release that the findings support the growing use of genetic information in clinical care.

“The questions we asked were: How many people who had no previous indication for cardiac genetic testing had pathogenic or likely pathogenic variants, and how many of those people actually had a phenotype in the electronic health records?” he explained.

Arrhythmia More Common than Previously Thought

The VUMC researchers drew data for their reports from the eMERGE Phase III study, which investigated the feasibility of population genomic screening by sequencing 109 genes across the spectrum of Mendelian diseases—genetic diseases that are caused by a mutation in a single gene—in more than 20,000 individuals. The scientists returned variant results to the participants and used EHR and follow-up clinical data to ascertain patient phenotypes, according to a Northwestern University Feinberg School of Medicine news release.

The research team looked specifically at the 120 consortium participants that had disease-associated pathogenic or likely pathogenic (P/LP) variants in the arrhythmia-associated genes. An analysis of the EHR data showed that 0.6% of the studied population had a variant that increases risk for potentially life-threatening arrhythmia, and that there was overrepresentation of arrhythmia phenotypes among patients, the VUMC news release noted.

The research team returned results to 54 participants and, with clinical follow-up, made 19 diagnoses (primarily long-QT syndrome) of inherited arrhythmia syndromes. Twelve of those 19 diagnoses were made only after variant results were returned, the study’s authors wrote.

Carlos G. Vanoye, PhD, Research Associate Professor of Pharmacology at Northwestern University (NU), said the study suggests arrhythmia genes may be more common than previously thought.

“A person can carry a disease-causing gene variant but exhibit no obvious signs or symptoms of the disease,” he said in the NU news release. “Because the genes we studied are associated with sudden death, which may have no warning signs, discovery of a potentially life-threatening arrhythmia gene variant can prompt additional clinical work-up to determine risks and guide preventive therapies.”

Dan Roden, MD

“The take-home message is that 3% of people will carry a pathogenic or likely pathogenic variant in a disease-causing gene and many others will carry variants of uncertain significance,” said Dan Roden, MD (above), Senior Vice President for Personalized Medicine at VUMC and Senior Author of the Circulation study in the VUMC news release. “We can use genetic testing, electronic health record phenotypes, and in vitro technologies to evaluate and find people who have unrecognized genetic disease and save lives by making earlier diagnoses.” Clinical laboratories will play a key role in making those early diagnoses and in managing personalized medical treatment plans. (Photo copyright: Vanderbilt University.)

Variants of Uncertain Significance

According to the NU news release, the scientists determined the functional consequences of the variants of uncertain significance they found and used that data to refine the assessment of pathogenicity. In the end, they reclassified 11 of the variants: three that were likely benign and eight that were likely pathogenic.

In the JAMA Oncology study, the VUMC scientists and other researchers conducted a phenome-wide association study to find EHR phenotypes associated with variants in 23 hereditary cancer genes. According to the VUMC news release, they identified 19 new associations:

The VUMC study findings could improve disease diagnosis and management for cancer patients and help identify high-risk individuals, the researchers noted in their published report.

Other Scientists Urge Caution

Nonetheless, Amsterdam University Medical Centers professors Roddy Walsh, PhD,  Connie Bezzina, PhD, and Arthur A.M. Wilde, PhD, urged caution with coupling large-scale genomic analysis to EHRs.

In an editorial published in Circulation, titled, “First Steps of Population Genomic Medicine in the Arrhythmia World: Pros and Cons,” the professors noted that using genomic information in the case of potentially lethal inherited arrhythmia syndromes could be “lifesaving,” but questioned the benefits of reporting such secondary findings when patients are undergoing genome sequencing for other indications such as cancer.

“The likelihood that these ‘genetic diagnoses’ are translated into clinical diagnoses have not been completely evaluated,” they wrote. “In addition to the challenge of accurately identifying disease-causing genetic variants, defining the penetrance of such variants is critical to this process, i.e., what proportion of individuals in the general population with apparently pathogenic variants will develop the associated phenotype? If penetrance is low for particular gene/phenotype combinations, the costs associated with clinical screening and the psychological effects on individuals informed that they have potentially life-threatening variants may outweigh the benefits of the few new clinical diagnoses.”

These latest studies provide further evidence of the value of big data in healthcare and offer another lesson to clinical laboratories and pathologist about the future role data streaming from clinical laboratories and pathology assays may have in the growth of personalized medicine. 

—Andrea Downing Peck

Related Information:

Studies Combine Genetic Testing, Electronic Health Records to Find Undiagnosed Diseases

Arrhythmia Variant Associations and Reclassifications in the eMERGE-III Sequencing Study

Electronic Medical Records and Genomics (eMERGE) Phase III (eMERGE)

First Steps of Population Genomic Medicine in the Arrhythmia World: Pros and Cons

Association of Pathogenic Variants in Hereditary Cancer Genes with Multiple Diseases

Arrhythmia Genes More Common than Previously Thought

;