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CMS drug proposal would wallop hospitals that serve poor


The Centers for Medicare & Medicaid Services has proposed deep cuts to how much it reimburses many hospitals to buy drugs.

The proposal would change the rate paid to hospitals for drugs under  the 340B program. The  program gives hospitals that serve many low-income patients access to deep discounts on some pharmaceuticals. The new proposal would significantly cut the payments that hospitals that serve many such patients receive for those medications.

Michael Newshel, an Evercore ISI analyst, told clients: “Medicare would essentially be clawing back most of the discount from hospitals, (without any impact to payment made to drug manufacturers).”

Mr. Newshel said that while the  proposal would affect about half of all U.S. hospitals, such for-profit chains  as Tenet Healthcare Corp. and HCA Healthcare Inc. wouldn’t feel any impact, because they don’t qualify for the discount program.

Tenet fires Detroit Medical Center CEO


Part of Detroit Medical Center.

Tenet Healthcare Corp. has fired Joe Mullany   as CEO of Detroit Medical Center. Crain’s Detroit Business  cited his refusal to lay off more employees the past two years, his negotiation of a contract with Wayne State University’s medical school that purportedly paid physicians too much for administrative work, and that he spent more to fix problems with dirty surgical instruments than Tenet had wanted.

Now many worry that further cost-cutting may be imminent, including budgets for capital spending and maintenance at the Detroit-based hospital system, Michigan’s largest provider of Medicaid and indigent care.

Mr. Mullany is one of the first of several top executives to be cut in a national restructuring plan at Tenet, which involves reducing corporate overhead costs by, among other things, cutting the number of its markets to 10 or fewer from 13.

Tenet and DMC officials declined to comment on why Mr. Mullany has been replaced by Tony Tedeschi, M.D., an executive from Tenet’s Chicago market. Tenet also refused to talk about its regional-restructuring plans. Mr. Mullany also declined to comment on his ouster.

WellStar to expand into Atlanta


WellStar Health System  will acquire five Tenet Healthcare Corp. hospitals in a deal valued at $661 million.

The purchase will expand Marietta, Ga.-based WellStar’s  reach into Atlanta and add two trauma centers and 26 physician clinics to its  operations.

Tenet goes further outpatient


As the push for outpatient business accelerates:

Tenet Healthcare Corp. is buying two companies from private equity firm Welsh, Carson, Anderson & Stowe that will significantly expand its footprint in the U.S. ambulatory surgery market and add several facilities in the United Kingdom,” Modern Healthcare reports.”The deal creates a path for the Dallas-based chain to take over United Surgical Partners International (PDF), an ambulatory surgery center operator also based in Dallas.”Tenet also will buy Aspen Healthcare, a London-based operator of four private acute-care hospitals, three ambulatory surgery centers and a cancer center, from Welsh Carson.

“The combined surgery assets will continue to operate under the United Surgical Partners brand and include 244 ambulatory surgery centers, 16 short-stay surgery hospitals and 20 imaging centers in 29 states, according to Tenet.”

Chris Powell: The great Conn. hospital crisis, continued

Who will take the blame for the reduction in services, staff and payroll at Connecticut’s financially stressed nonprofit hospitals?

That’s the question behind the renewed dance of the  administration of Gov. Dannel Malloy and Tenet Healthcare Corp., the hospital chain that proposed to acquire Waterbury’s two hospitals and hospitals in Bristol, Manchester and Vernon but withdrew in the face of onerous conditions imposed by the state Office of Healthcare Access. Those conditions would have prevented Tenet from changing anything substantial at the hospitals for five years, making it impossible for the new owner to earn a profit.

In a letter sent this week to Tenet’s CEO, Governor Malloy sought to revive the company’s bid for the Waterbury hospitals as a step toward reviving the bid for the others too. “We can find a settlement that will be beneficial to your company as well as the state, Waterbury residents, and the Waterbury hospitals,“ the governor wrote.

So if the governor really wants the hospital acquisitions to happen, why did the Office of Healthcare Access obstruct them so? After all, that office is part of governor’s own administration.

The governor is playing charades and a double game here.

On one hand, both the federal government and state government are trying to squeeze money out of medical care, of which government is the biggest purchaser. Government long has underpaid hospitals for services they are required to provide to the poor, and lately the Malloy administration has greatly reduced subsidies to hospitals on the pretext that they would recover the money through the new national medical insurance program. That hasn’t happened.

On the other hand, organized labor and social service groups, constituencies of the governor’s party, the Democratic Party, oppose the sale of the hospitals, realizing that a profit-seeking corporation would be tougher than the current management of the hospitals.

While some hospitals in Connecticut are not managed well, what happens to hospital services and staff will be largely government’s decision, a matter of how much money government puts into them and how much it economizes with them.

Since the decision is to economize, the government generally and the governor particularly must want Tenet to do their dirty work and take the blame for it along with any profits.

* * *

With the Tenet deal suspended, Eastern Connecticut Health Network’s board of trustees and community corporators are back in business. Manchester Memorial and Rockville General hospitals remain their responsibilities for the time being, and although the hospitals are so insolvent that the trustees and corporators have given up on them and want to sell them, a former trustee who is now a corporator insists that they all have been doing a great job.

The former trustee and current corporator, Robert D. Rodner of South Windsor, wrote the other day that the trustees and corporators “always have been and continue to be well-respected, knowledgable, and dedicated members of our multi-town community … insightful, cautious, challenging, questioning, and supportive.”

In fact ECHN’s Board of Trustees has been rife with financial conflicts of interest, with several trustees owning companies that have done millions of dollars of business with ECHN. Of course those “questioning” trustees have never seen anything wrong in the grotesquely excessive salaries paid to ECHN’s executives, who have arranged that lucrative business for the trustees’ own companies.

That is, ECHN’s board has never been independent, has never been in a position to distinguish the interest of the hospitals from the interests of board members themselves. A few weeks ago, even as ECHN was laying off employees and freezing salaries, the company was paying big raises to its already overpaid executives.

The corporators should install a new board without conflicts of interest. Managed for public benefit rather than the benefit of its executives, ECHN still might survive with local nonprofit ownership.

Chris Powell is managing editor of the Journal Inquirer, in Manchester, Conn.

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