Biggest Healthcare Stories Of 2015
Many things happened in California’s healthcare sector in 2015, and Payers & Providers has decided to revisit some of the most significant events.
We decided to focus primarily on issues that impacted payers and providers and patients within California. So, the U.S. Supreme Court’s decision regarding King v. Burwell is not included here, as it would have had little impact here in the state.
Here are the stories, ranked in descending order of importance:
1. Blue Shield of California Loses Its State Tax Exemption. The San Francisco-based health insurer had its exemption stripped by the Franchise Tax Board in 2014, although news of the event did not surface until the first quarter of 2015. Blue Shield lost its exemption primarily due to the lavish salaries it pays its top executives, and the $4.2 billion it holds in cash reserves – vastly more than it is required to hold under state law. The Franchise Tax Board ordered Blue Shield to file tax returns retroactive to 2013. Blue Shield had had a tax exemption as a not-for-profit organization since its founding in 1939. The health plan said it is fighting the ruling.
2. A Superbug Outbreak Linked To Hospital Duodenoscopes. The initial outbreak of antibiotic-resistant Enterobacteriaceae was tied to the use of an Olympus-manufactured device at Ronald Reagan UCLA Medical Center that exposed nearly 200 patients, but Cedars-Sinai Medical Center also reported patients exposed to the superbug. The exposures were linked to the difficulty in cleaning the device between procedures, prompting Olympus to revise its process for sterilizing its duodenoscope. Two of the UCLA patients died. Improperly cleaned scopes were tied to as many as 18 patient deaths at Virginia Mason Medical Center in Seattle.
3. Assisted Suicide Legislation Signed Into Law. Gov. Jerry Brown admitted that he had conflicted feelings about the landmark End of Life Option Act. Nevertheless, he signed it into law in October and it will go into effect next year. It allows physicians to prescribe lethal doses of medications to terminally ill patients who are of sound mind and are expected to have less than six months to live. California joins just three other states – Washington, Oregon and Montana – in allowing residents to voluntarily end their lives. California was prodded to action after resident Brittany Maynard moved to Oregon last year in order to voluntarily end her life after battling terminal brain cancer.
4. The Daughters of Charity/Prime Healthcare/Kamala Harris Mashup. Ontario-based for-profit Prime Healthcare Services wanted to acquire the six hospitals owned by the struggling Daughters of Charity Health System. California Attorney General Kamala Harris approved the deal. Prime didn't approve of the conditions Harris attached and walked away. Prime sued Harris. Daughters of Charity found a new partner – hedge fund BlueMountain Capital Management. Harris has also approved that deal with conditions earlier this month. So far, BlueMountain appears to be mollified. However, if everyone gets too bored, that could always change.
5. Kaiser Permanente Acquires Group Health. This recently announced deal was by far the biggest in 2015 involving a California-based healthcare business. The Oakland-based Kaiser will contribute $1.8 billion to a new foundation in lieu of Seattle-based Group Health Cooperative, with 590,000 lives, joining its ranks. And Kaiser has also pledged $1 billion for new hires, technology and other infrastructure improvements for Group Health in Washington State.
6. Theranos Stumbles. The Palo Alto-based Theranos, founded and headed by the Stanford University dropout Elizabeth Holmes, was to revolutionize laboratory testing by requiring just a few drops of blood. But reports by the Wall Street Journal in late summer – and actions against the company by the Food and Drug Administration -- led to more than a couple of drops in confidence that Theranos will actually deliver on its proprietary testing system.
7. Great Strides In Seismic Compliance. After what was a monumental struggle by California's hospitals to comply with more stringent seismic guidelines signed into law after the 1994 Northridge earthquake, the Office of Statewide Health Planning and Development announced in October that 90.9% of acute care facilities statewide were compliant. More than 1,000 buildings considered at risk for a collapse little more than a decade ago were now safe, and OSHPD said the laggards should all be in compliance by 2020.
8. Data Breaches. UCLA Healthcare had by far the biggest data breach of 2015, when a hacking incident exposed the data of 4.5 million current and past patients. But the theft of a laptop belonging to San Francisco-based North East Medical Services exposed data for more than 69,000 of its patients, and Long Beach-based Molina Healthcare experienced a desktop computer theft that exposed the data of more than 54,000 enrollees. The health departments of both Los Angeles and Ventura Counties also reported data breaches, as did Blue Shield of California and UCI Health.
9. Increasing CEO Pay. Payers & Providers' semi-annual C-suite compensation survey found that the number of hospital CEOs earning more than $1 million a year had increased by nearly 50%, and retiring Kaiser Chairman and CEO George Halvorson was paid more than $10 million in 2013.
10. The Drought Impacts Hospitals. In June, OSHPD and other state regulators imposed water usage restrictions on California's hospitals and skilled nursing facilities, although they were confined primarily to landscape irrigation and not the delivery of healthcare services.
11. California Introduces A Touch Of Price Transparency In Healthcare. The team effort between the California Department of Insurance, Consumer Reports and UC San Francisco provides insured consumers with a range of out-of-pocket costs for various procedures, but is far short of genuine price transparency in the delivery of healthcare.
