S&P Outlook Highlights ‘Heavy Consolidation Activity,’ Fragmentation in Radiology Sector
By Marty Stempniak | February 17, 2022
Standard & Poor’s issued a “positive” outlook for one growing imaging industry player, but also sees risk given “heavy consolidation activity” in the radiology sector.
S&P shared its updated outlook on Wednesday after US Radiology Specialists recently completed its largest acquisition to date. The agency’s optimism is driven by USRS’ newly enhanced scale, better business diversity with more focus on outpatient settings, and improved bottom line aided by the recent acquisition of “high margin” practices.
Analysts also highlighted US Radiology Specialists’ financial stability, given solid free operating cash flow. They expect the imaging group can maintain this stability “if acquisition activity is moderate.” But there is added risk of credit default because of the industry’s high volume of M&A activity.
“We believe that given the fragmented nature of the business and consolidation in the radiology sector, the company will likely aggressively pursue acquisitions, possibly pressuring its ability to sustain improved credit metrics,” S&P said Feb. 16.
USRS’ earnings—before interest, taxes, depreciation and amortization—margin improved to 23% for the year ending Sept. 30. That’s up from 17% in 2019, driven by both improved scale and revenue cycle management over the last four years. These gains were partially offset, however, by integration costs and wage inflation amid nationwide staffing shortages, S&P noted.
Since its founding in 2018, USRS has grown rapidly through expansion, with revenue increasing more than fivefold, up to $860 million for 2022. Analysts expect the imaging firm to continue on this path. Scale will likely benefit its providers in negotiations with payers but introduce further integration risk. About 69% of USRS’ revenue comes from commercial payers, and it is in-network for 99% of its contracts. About 80% of the company’s business is conducted in outpatient settings, “which we view favorably as payers are billed globally,” the analysis noted.
“The company also benefits from catering to both outpatient imaging and radiology physician services in an integrated manner in many of its markets, which we view positively compared to other competitors,” wrote analysts Richa Deval and David Peknay.
USRS’ credit rating is constrained by the company’s narrow focus on radiology services, limited history under current ownership, and risk of adverse reimbursement changes. About 20% of its revenue comes via Medicare, which has been subject to reimbursement cuts in recent years. But USRS’ margins were insulated from these changes, due to its presence in outpatient settings.
To read more, go to Radiology Business.
HHS Floats $30B COVID-19 Request With No New Provider Funding, Senior Senator Says
By Jessie Hellmann | February 16, 2022
More COVID-19 response funding could be coming from the federal government but—as of now—none of it would be for healthcare providers, a senior senator said Tuesday.
Health and Human Services Secretary Xavier Becerra said his department might soon request an additional $30 billion, according to Sen. Roy Blunt (Mo.), the senior Republican on the HHS appropriations subcommittee.
Rather than seeking further relief for providers that have struggled during the pandemic, HHS is focused on other priorities, such as testing, treatment and vaccines, Blunt said. The department would allocate new money toward the following areas, he said:
• $18 billion to purchase oral antivirals, monoclonal antibodies and vaccines
• $5 billion for testing capacity and at-home test development
• $3 billion for the HHS fund that reimburses providers treating uninsured COVID-19 patients, which is expected to run dry as soon as this spring
• $4 billion to advance vaccines against future variants of the novel coronavirus
• $500 million for the Centers for Disease Control and Prevention to maintain outbreak surveillance and other operations
The American Hospital Association and other provider groups have been lobbying for the Provider Relief Fund to be replenished, so far without success. According to HHS, the program’s $178 billion has either been spent or set aside for pending distributions.
The AHA asked Congress for another $25 billion, citing financial pressure on hospitals related to the omicron and delta variants and to increased labor costs. That request appears to have fallen flat on Capitol Hill as the omicron variant wanes. Hospitalizations are down by about 38% compared to two weeks ago, according to the CDC.
To read more, go to Modern Healthcare.
Only 14% of Hospitals Met Price Transparency Rule Compliance
By Victoria Bailey | February 14, 2022
Less than 20 percent of hospitals are complying with the CMS price transparency rule that went into effect on January 1, 2021, according to a report from PatientRightsAdvocate.org.
The hospital price transparency rule requires health systems to publicly post the costs of their items and services online. The prices must include standard charges for all items and services for all payers and health plans and a standard charges list or a price estimator tool for the 300 most common services.
The policy aims to help consumers compare hospital prices and better estimate their cost of care before a hospital visit. However, compliance with the regulation has been lacking among hospitals since the rule went into effect.
PatientRightsAdvocate.org reviewed 1,000 hospitals and their websites between December 7, 2021, and January 28, 2022, to glean how many hospitals were complying with the rule.
The report builds on the nonprofit’s initial analysis of hospital compliance with the rule in July 2021, which found that out of 500 hospitals, only 5.6 percent were compliant with the rule requirements.
The most recent review found that only 143 of the 1,000 hospitals (14.3 percent) complied with all aspects of the price transparency rule, indicating that 85 percent of hospitals did not meet at least one of the price transparency requirements.
“Unfortunately, the vast majority of hospitals remain noncompliant after more than a year has passed since the hospital price transparency rule took effect,” Cynthia Fisher, founder and chairman of PatientsRightsAdvocate.org, said in a press release. “Hospitals’ omission of comparative price information in advance of care blocks consumers from benefiting from knowing the competition, seeking fair and equitable prices, and having the choice to lower their costs.”
The biggest noncompliance area was posting a complete machine-readable file of standard charges, which 85 percent of hospitals did not do. Similarly, 84.9 percent of hospitals did not provide national drug codes and the associated prices for the drugs and pharmacy items the health system offered.
Just over 600 hospitals did not publish an adequate amount of negotiated rates, while 586 hospitals did not post all payer-specific negotiated charges that the rule requires.
Compliance was slightly higher for the price estimator requirement, with 84 percent of hospitals publishing a price estimator tool. However, 20 percent of these hospitals did not allow uninsured or self-pay individuals to view discounted cash prices, which violates the rule, the survey found.
In addition, only 28 percent of the hospitals posted the 300 most common services in a consumer-accessible way. The majority of these hospitals (216) were still considered noncompliant because their standard charges files were incomplete, the report stated.
To read more, go to RevCycle Intelligence.
Prior Authorization Adversely Impacts Patient Care, Workforce Productivity
By Anthony Vecchione | February 14, 2022
Prior authorization (PA) may delay patient access to care, lead patients to abandon recommended treatments, and result in hospitalization, according to new survey results from the American Medical Association.
“Health insurance companies entice employers with claims that prior authorization requirements keep healthcare costs in check, but often these promises obscure the full consequences on an employer’s bottom line or employees’ well-being,” AMA President Gerald Harmon, MD, said in a statement. “Benefit plans with excessive authorization controls create serious problems for employers when delayed, denied or abandoned care harms the health of employees and results in missed work-days, lost productivity and other costs.”
Among the survey’s key findings are:
• 51% of physicians reported that PA had interfered with a patient’s job responsibilities.
• 34% said PA led to a serious adverse event including hospitalization, disability, or even death for a patient in their care.
• 93% reported care delays while waiting for health insurers to authorize necessary care.
• 82% said PA can lead to treatment abandonment.
In addition, 24% of physicians who responded to the survey report that PA has led to a patient’s hospitalization while 18% said it has resulted in a life-threatening event or required intervention to prevent permanent impairment or damage.
Meanwhile, 8% of respondents said that PA has led to a patient’s disability, permanent bodily harm, a birth defect, or death, according to the survey results.
Only 7% of respondents reported that prior authorizations had no impact on patient outcomes.
“Now is the time for employers to demand transparency from health plans on the growing impact of prior authorization programs on the health of their workforce,” said Harmon.