United States: 8 Of The Most Interesting Things We Are Seeing In Healthcare

Last Updated: March 26 2014
Article by Scott Becker and LauraLee Lawley

1. Patient Protection and Affordable Care Act

Will the benefits of the PPACA outweigh the costs for consumers and providers?
As the Patient Protection and Affordable Care Act unfolds, two things seem to be happening: (1) people are becoming less clear about the benefits of the Act, and (2) the costs and taxes associated with the Act are becoming clearer. In terms of benefits, the PPACA has resulted in healthcare coverage for fewer people than originally estimated. With just two weeks left until the end of healthcare exchange open enrollment, the Obama administration announced 5 million had enrolled in coverage through the federal or state exchanges, suggesting it's unlikely 7 million will enroll by March 31, as the Congressional Budget Office originally projected. This shortfall is a letdown for hospitals and healthcare providers, who have experienced decreased reimbursements under the Act without as many newly insured patients as originally anticipated.

And, as providers get less, many people are paying more in taxes under the Act. Given this, one might wonder if the public mood toward the entire program will be connected (i.e., will people look at the tax increases on investment income and in several other places and equate it to a question of cost benefit analysis of the PPACA?). Further, the biggest potential benefit from the PPACA (for both individuals and the nation's fiscal health) would likely be lower healthcare costs. Yet, lower healthcare costs mean decreased revenues for healthcare providers throughout the country, which could result in layoffs. Will people couple this decrease in spending with increased taxes and be able to understand the accounting? In essence, how do taxes go up and employment and benefits go down? We think this will be interesting to watch play out financially and politically.

2. Hospital mergers

Will the FTC's interest in hospital mergers change if one is struggling and a local partner is the obvious choice?
More hospitals within the same or neighboring markets are exploring mergers than in the past, when acquisitions and mergers involving a larger system partnering with a smaller organization in order to gain a foothold in the market were more common. Traditionally, the Federal Trade Commission has been somewhat cautious in challenging such mergers on anticompetitive grounds. In the past few years, however, it has become much more aggressive, having been successful in several high-profile challenges. Most recently, the FTC sued Albany, Ga.-based Phoebe Putney Health System over its $195 million acquisition of Palmyra Park Hospital from the Hospital Authority of Albany-Dougherty County. Last February, the Supreme Court sided with the FTC, and in August, the hospitals announced a settlement with the FTC that would avoid a divestiture. Hospital systems entering into intra-market mergers will have to look at the extent of their market power, the extent to which patients have access to alternative hospitals and providers, and whether payers still have significant options in providers in order to assess the likelihood of FTC intervention. What will be interesting to watch play out in the next few years will be whether or not the FTC keeps up its aggressive stance toward these mergers, especially in situations where one hospital is clearly struggling. As the second- or third-tier (or market share) hospitals in many of these towns continue to struggle, the obvious alignment choice for many will be another local hospital.

3. Hospital alignments short of merger

Can these partnerships be designed to be mutually beneficial, or will one hospital benefit over the other?
Many systems are still looking at alignment models short of a complete merger or acquisition. Here, the parties are looking at independent practice association-type models, accountable care-type models and other arrangements amongst providers, whether on the vertical level with practices or side by side with other hospitals. These types of arrangements raise interesting antitrust questions as to whether such arrangements have enough clinical and financial integration to withstand claims of price fixing. There are also questions of whether the parties can truly work well together in an aligned strategy short of an acquisition. For example, does one hospital always look to the other hospital and expect that the second hospital will be less important to it in terms of managed care contracting and every other effort? In essence, is there always a winner or loser, or is there actually a situation in which aligned hospitals can be mutually beneficial to each other? For example, can the partners be helpful to each other in contract alignment and not perceive one hospital as taking dollars or patients from the other?

4. Rise in qui tam cases

Will the growth in qui tam cases affect providers' ability to fully defend themselves?
The number of qui tam, or whistle-blower, cases being filed against healthcare providers pursuant to the False Claims Act is growing. In 2008 there were 378 qui tam cases filed, and in 2013 that number soared to 752 cases. The PPACA expanded False Claims Act liability, making it possible for a fraud and abuse, anti-kickback or Stark violation to serve as the basis for a false claims case. It used to be unclear that an anti-kickback claim, for example, could give rise to a false claims case, but now, under PPACA, such actions are actually direct paths to such claims.

Additionally, there is an increased frequency in which the government is joining qui tam relators in their cases. When the government joins, the chances of collection and the amount of collections by the relator go up significantly. Perhaps as a result of this, there has been a significant increase of attorneys who work solely in this area to drive qui tam cases, in essence creating an industry around qui tam cases. Further, the potential exposure in qui tam cases ($11,000 per claim plus feasible damages) makes it difficult to not settle such cases.

5. Dr. Ezekiel Emanuel questions choice in healthcare

Do we really need 5,000 hospitals?
In his new book Reinventing American Health Care, Ezekiel Emanuel, MD, PhD, former health policy adviser to the Obama administration, makes the statement that there is not a need for 5,000 hospitals in the United States. While he is harsh with his point, he may be right. Unfortunately, any future state with fewer hospitals will not come without a lot of pain for many communities across the country. As many small communities look at their hospitals really struggling due to not being able to recruit enough physicians, invest in technology or create the infrastructure necessary to maintain a true inpatient facility, he may in fact be right. However, like Army bases used to be, many of these hospitals are the largest employers in their towns and a hub of the community. Thus, the transition and restructuring of healthcare away from these smaller independent hospitals will mean a lot of pain for communities.

6. Out-of-network pressure

How will regulators approach network access issues?
As payers look to bring down costs in general as well as develop lower-cost narrow networks, they are getting more aggressive with out-of-network providers. As a result, we are seeing an increase in litigation by providers over these benefits, or lack thereof. Seattle Children's Hospital, which is an out-of-network provider for every plan on the state's health exchange, is suing the state's Office of the Insurance Commissioner, arguing its approval of the narrow network plans fails to meet mandated requirements for adequate access to care. Seattle Children's argues the exchange plans have no out-of-network benefits, which means parents who send their children to the hospital for care will be responsible for 100 percent of costs. The hospital has agreed to continue to treat children covered by these plans, but will now be on the hook for recouping charges directly from patients' families. Surgery centers and other providers, who have in the past relied on out-of-network options in order to maintain leverage with payers, can expect challenges in payer contracting to continue, which will put material pressure on these providers.

7. Data privacy and HIPAA

How much of hospitals' resources will continue to need to be expended to protect patients' personal information?
Data privacy and HIPAA have become a huge issue in and of themselves. For the last few years, there has been a tremendous amount of attention paid to privacy breaches and to government investigations of these breaches. When privacy started to become an issue a decade ago, it was typically because drug companies were buying patient information and aggressively selling products to people with certain diseases (often very private in nature). Now, privacy and data security have become much more about identity theft, which never would have been expected a decade or more ago. And, healthcare data breaches are more frequent. In 2013, 199 data breaches were reported to HHS, a 138 percent increase over 2012, according to a report from Redspin . Since 2009, the protected health information of more than 30 million Americans has been compromised in data breaches. Seven million records were exposed in 2013, 4 million of which were exposed in a single incident. It is unclear whether the regulatory scheme matches the real problems. However, it is clear that an incredible amount of spending is here to stay on data security, privacy and HIPAA issues.

8. Private equity investment

Which areas are most attractive to PE investors?
We are seeing marked interest in three core areas:

Pain management

There has been a substantial increase in interest by private investors in pain management clinics. Nearly 100 million Americans suffer from acute and chronic pain, and billions of dollars are spent each year on treatment. After modest private equity activity in this space since 2010, including Chicago Growth Partners' acquisition of Advanced Pain Management and Sentinel Capital Partners' investment in National Spine & Pain Centers, significant investments were made in 2013. Prospira PainCare, for example, was formed in 2012 with the backing of three significant private equity firms. It acquired a number of pain centers across the country, including The Pain Management Center based in New Jersey and Neuro Pain Consultants based in Michigan.

Dental practice management

Tremendous investor interest remains in the dental practice management arena. Dentistry, traditionally comprising only small group practices and solo practitioners, is shifting toward more DPM arrangements. In the past decade, more than 25 private equity firms have invested significantly in this sector, in which certain large DPM companies already have annual revenue exceeding $100 million. In 2013, this interest included Monroe Capital's providing a $16.6 million credit facility to private equity-owned Smiles Services LLC, a leading DPM in the Pacific Northwest. Such investments are paying off for private equity firms: a Sageworks analysis found DPM investments generated the highest return on equity of the industries it examined. The investor interest in DPM companies may grow in 2014 if certain opportunities materialize. First, many state Medicaid programs have supported dentistry fairly well, especially pediatric dentistry. This support allows dental practices to thrive with substantial Medicaid business, unlike other healthcare providers. Yet, during the past few years, stretched state budgets forced many legislatures to cut spending on dental care, especially for adults. Second, the PPACA strengthened support for dental services, especially for children, by funding Medicaid program expansions and including pediatric dentistry as part of the essential health benefit packages for individual and small employer plans. On the other hand, increased regulatory scrutiny of DPM structures could put new pressures on the sector. For example, a 2013 Senate committee investigation into DPM practices in the Medicaid program recommended some practices be excluded from Medicaid. Similarly, states such as North Carolina have considered legislation at the bequest of their state dental associations to reduce DPM companies' involvement in Medicaid.

Urgent care

The urgent care industry is a rapidly growing healthcare sector. There was an almost 20 percent growth in existing clinics in the past four years, totaling more than 9,400 urgent care clinics. Furthermore, the existing clinics are looking to expand. In 2013, almost 40 percent of these clinics told the Urgent Care Association of America they would be expanding their facilities or adding new locations, up from 18 percent in 2010. This expansion is not expected to slow; indeed, estimates by IBISWorld predict the sector will see more than $18 billion in revenues in 2017 at more than 12,000 clinics, up from $13 billion in revenues in 2012. Millions of private equity dollars from at least a dozen firms have gone to urgent care clinics in the past few years. For example, in 2013, NextCare Holdings Inc., backed by Enhanced Capital Partners, acquired 11 PrimaCare Medical Centers in the Dallas/Fort Worth area to bring its total to 86 clinics nationwide. These investments should continue, in part as a response to fiscal pressure by lawmakers and insurers on hospitals to cut costs and the health insurance mandate's potential increased demand, according to a recent Forbes article. The potential positives for urgent care are twofold. First, patients love the convenience of urgent care clinics. Second, these clinics have the advantage of saving significant payer dollars. For instance, a 2010 Rand study found that almost one in five visits to hospital emergency rooms could be treated at an urgent care clinic, potentially saving $4.4 billion annually in healthcare costs.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions