BISBEE'S BRIEF:  Trustees Matter

BlackRock CEO Larry Fink sent his annual letter Tuesday to the leaders of public companies. 

The message from the head of the world’s largest investment firm was that CEOs “need to do more than just deliver profits.”  They also need to make a positive impact on society.  With Blackrock’s $6.3 trillion in assets, company leaders undoubtedly will take notice. 

As I reviewed the full letter, I was intrigued to see that Fink dedicated several paragraphs to the importance of Boards.  He asserted that board engagement in “developing long-term strategy is essential.”  More pointedly, he noted that “directors whose knowledge is derived from only sporadic meetings are not fulfilling their duty.” 

The Fink commentary felt timely on the front end of our annual Trustee Summit this coming week.  Our overall theme is Leadership Matters.  We will be exploring four core issues over the course of the Summit: cost and margins, consumer alignment, organizational restructuring and growth.

Fink rightly contends that Boards are “essential to helping a company articulate and pursue its purpose.”  It starts with our charter this week as set by our Co-Chairs, Warner Thomas and Andy Wisdom, CEO and Board Chair of Ochsner Health System: to build on our foundational understanding of healthcare during this era of dynamic change.       

For comment or reaction, please write: gary@hmacademy.com

THE WEEK THAT WAS, January 15, 2018

The federal government shut down early Saturday morning after the Senate failed to reach 60 votes in support of legislation that would fund the government through early February. There have been two short-term spending deals to fund the government since September, as Republicans and Democrats continue to negotiate on a longer term deal. Differences between the two sides have largely centered on the future of the Deferred Action for Childhood Arrivals (“DACA”) program, which allows undocumented residents who entered the U.S. as minors to remain in the country for two-year periods, which are subject to renewal. The program was created by executive order under President Obama and rescinded last summer by President Trump, and the future of the program is a point of strong disagreement between the parties. Specific to the healthcare industry, long term funding for the Children’s Health Insurance Program (“CHIP”) is expected to be tied to a government funding deal (a 6-year extension was included in legislation passed in the House). Several states are close to running out of money for the program, which provides coverage to 9 million children. Additionally the Department of Health and Human Services (“HHS”) has placed roughly half of its 80,000+ employees on furlough and the Centers for Disease Control (“CDC”) has suspended its flu-tracking program. The shutdown comes on the 1-year anniversary of President Trump’s inauguration. The Senate will vote at 1:00a ET on Monday on a bill that would fund the government through February 8. https://www.wsj.com/articles/lawmakers-struggle-to-seek-compromise-as-government-shutdown-continues-1516545587; https://www.reuters.com/article/us-usa-congress-shutdown-impact-factbox/factbox-what-happens-in-a-u-s-government-shutdown-idUSKBN1F9145;

On Thursday health systems Intermountain Healthcare, Ascension, Trinity Health and SSM Health announced they are partnering together to create a nonprofit generic drug company to combat drug shortages and rising drug prices. The U.S. Department of Veterans Affairs (“VA”) is also involved in the effort and the organizations expect additional provider organizations to join the new company, which will focus on manufacturing drugs where current prices are extreme or current stock is in short supply. According to a joint statement from the organizations, the new company will seek approval from the Food and Drug Administration (“FDA”) and plans to directly manufacture generic drugs or sub-contract manufacturing to reputable contract manufacturing organizations. The new company will be governed by the participating systems and an advisory board that includes former CMS Administrator Don Berwick, M.D., Harvard Business School professor Clayton Christensen and former Nebraska Governor and Senator Bob Kerrey. https://www.nytimes.com/2018/01/18/health/drug-prices-hospitals.html; https://www.cnbc.com/2018/01/18/hospitals-plan-to-create-their-own-generic-drug-company.html

Congressional members continued to signal significant changes are coming to the 340B Drug Pricing Program this week, as Senator Bill Cassidy (R-LA) introduced legislation increasing reporting requirements and freezing new enrollment in the program. Cassidy, a physician, introduced the Helping Ensure Low-income Patients have Access to Care and Treatment (“HELP”) Act, which, according to a statement from his office, will “increase transparency and strengthen reporting requirements to prevent abuse and ensure 340B discounts are used efficiently and to lower drug costs.” Cassidy also said “too often the program’s discounts are used to pad hospitals’ bottom lines instead of helping disadvantaged patients afford their treatments.” Separately, Representative Chris Collins (R-NY) indicated this week that the House Committee on Energy and Commerce plans to advance legislation next month that would introduce user fees on program participants as well as increase reporting requirements. http://www.modernhealthcare.com/article/20180117/NEWS/180119918;

On Thursday the Center for Medicare and Medicaid Innovation (“CMMI”) announced that 58 Accountable Care Organizations (“ACOs”) will participate in the Next Generation (“NextGen”) ACO Model in 2018. The NextGen model allows provider organizations to assume higher levels of financial risk and reward than they can through the Pioneer Model and Shared Savings Program (“MSSP”). In 2016, the first year of the program, 11 of the 18 NextGen participants combined to achieve $71 million in savings. 2017 performance data is expected later this year. Of the 58 ACOs participating in 2018, 44 are renewing their participation while 14 are new participants. The list of NextGen ACOs can be found here. https://innovation.cms.gov/initiatives/Next-Generation-ACO-Model/

Gallup released the results of its fourth quarter survey on the percentage of uninsured adults in the U.S., showing the uninsured rate rose 1.3 percentage points from Q4 2016 to Q4 2017, marking the biggest increase in over a decade. 12.2 percent of U.S. adults are uninsured, up from a record low of 10.9 percent in late 2016, an increase of 3.2 million uninsured Americans. Lower income and minority households experienced the largest increase in the uninsured rate. The researchers attribute the increase to several factors, including increased premiums, carrier exits from the Affordable Care Act (“ACA”) marketplace, confusion about enforcement of the individual mandate and efforts to repeal and replace the ACA. The results are based on more than 25,000 interviews with adults 18 and older from October 1 to December 31. The Gallup-Sharecare Well-Being Index can be found here. https://www.healthaffairs.org/do/10.1377/hblog20180117.640212/full/

THE WEEK AHEAD, January 22, 2018 

Attention will center on efforts to reach a deal to re-open the federal government.

  • Tuesday: The Senate Committee on Health, Education, Labor and Pensions will hold a hearing entitled “Facing 21st Century Public Health Threats: Our Nation’s Preparedness and Response Capabilities, Part II”
  • Wednesday-Friday: The Health Management Academy will host its annual Trustee Summit 

SELECTED READINGS FROM THE PAST WEEK