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Teaching Hospital Update - October 27–31, 2008


By Reesa Benkoff*

Ascension to Invest $100 Million in Caritas Christi

St. Louis-based Ascension Health said it will invest $100 million to help shore up Boston-based provider Caritas Christi Health Care's finances and improve its network of hospitals.

The financing will come in the form of a five-year, low-interest bond that the 77-hospital Ascension will purchase during a forthcoming Caritas Christi bond offering, according to a joint statement released by the two entities.

The deal comes more than a year after Ascension came close to acquiring Caritas Christi before Ascension learned that Cartias Christi was in a worse financial situation than anticipated because of underfunded pension liabilities and a dwindling number of patients. Earlier this year, however, Caritas officials announced a restructuring plan aimed at bringing the system out of debt. Funds raised through the bond offering will be used to finance the plan.

Under the deal, Ascension will purchase a substantial portion of the bond through a private-placement arrangement that will allow Caritas to access capital at a below-market interest rate, according to system officials. "Ascension Health's financial commitment ensures that critical capital projects, including strengthening our information technology infrastructure and upgrading our emergency departments, will be placed on a fast track," said Ralph de al Torre, Caritas Christi president and chief executive officer in a written statement.

Some speculate this deal raises the possibility that Ascension could eventually take over the six-hospital chain owned by the Archdiocese of Boston. However, de la Torre said he has not discussed a possible merger, but is optimistic that Ascension can help the chain continue to improve its operations.

Shawn Rhea, Ascension to invest $100 Million in Caritas Christi, Modern Healthcare's Daily Dose (Oct. 24, 2008) (note: registration is required to view this content).

Survey Shows that Half of Physicians Routinely Prescribe Placebos

Half of all American physicians responding to a nationwide survey say they regularly prescribe placebos to patients. The results trouble medical ethicists, who say more research is needed to determine whether physicians must deceive patients in order for placebos to work.

The study involved 679 internists and rheumatologists chosen randomly from a national list of such physician specialties. In response to three questions included as part of the larger survey, approximately half reported recommending placebos regularly.

The most common placebos the American doctors reported using were headache pills and vitamins, but a significant number also reported prescribing antibiotics and sedatives. Although these drugs—contrary to the usual definition of placebos—are not inert, the physicians reported using them due to their effect on patients' psyches.

In most cases, physicians who recommended placebos described them to patients as "a medicine not typically used for your condition but [which] might benefit you," the survey found. Only 5% described the treatment to patients as "a placebo."

"This is the doctor-patient relationship, and our expectations about being truthful about what's going on and about getting informed consent should give us pause about deception," said Dr. Miller, director of the research ethics program in the department of bioethics at the National Institute of Health. In addition, the American Medical Association (AMA) discourages the use of placebos by doctors when represented as helpful. "In the clinical setting, the use of a placebo without the patient's knowledge may undermine trust, compromise the patient-physician relationship and result in medical harm to the patient," the AMA policy states.

Controlled clinical trials have hinted that placebos may have powerful effects. Some 30 to 40% of depressed patients who are given placebos see improvement. Placebos have also proved effective against hypertension and pain.

Health Editorial, Half of Doctors Routinely Prescribe Placebos, N.Y. TIMES, Oct. 23, 2008.

Analysis Estimates that States Face Combined $100 Billion Budget Gap by Fiscal Year 2010, Which Could Prompt Cuts in Programs Such as Medicaid

State tax revenues declined in the most recent quarter, with the median state studied experiencing a 5.5% inflation-adjusted decline in total tax revenue, according to an analysis by the Center for Budget and Policy Priorities. CBPP analyzed available data from the revenue departments of fifteen states and found that total inflation-adjusted revenue was down in fourteen of those fifteen states for the quarter that ended in September 2008 compared to 2007. The report estimates that by fiscal year 2010, states will face a total budget gap of $100 billion, or 15% of their budgets.

The decline has potentially broad economic significance because, unlike the federal government, states generally are required to balance their budgets each year and will have to either reduce spending or raise taxes—both the opposite of what many economists say is needed during the current economic downturn. In addition, states often take measures that exacerbate the difficulties created by the recession, such as tightening Medicaid eligibility at a time when workers lose their jobs and their health insurance.

Nicholas Johnson, a co-author of the report and director of the CBPP State Fiscal Analysis Initiative, said cuts in state spending "will take demand out of the overall economy and worsen the economic downturn." He added that moves such as slashing reimbursements to Medicaid providers or reducing grants to nonprofit social-service providers "are all things that take dollars out of families' pockets, and that's money they can't spend in their local economies."

Kaiser Daily Health Policy Report, Analysis Estimates That States Face Combined $100B Budget Gap by Fiscal Year 2010, Which Could Prompt Cuts in Programs Such as Medicaid, Henry J. Kaiser Fam. Fdn.
(Oct. 27, 2008).

Study Urges Hospitals to Consider Moving Some Patients to Hallways After Admission to Ease Emergency Department Overcrowding

According to a recent study, U.S. hospital administrators should consider shifting patients in emergency departments who already have received care to hallways as a way to reduce emergency department overcrowding.

The study found that the strategy posed no danger to patients and is a way to extend emergency patient care to the whole hospital, thus alleviating the burden on hospital emergency departments. According to a 2007 American College of Emergency Physicians survey of approximately 1,500 emergency department physicians, 13% said they had personally experienced patients deaths as a result of patients' being kept in the emergency department even after they had been admitted to the hospital.

The new study found that fewer deaths and admissions to the intensive care unit occurred among hallway patients, compared with standard bed patients. The study's leader stated that the finding was not surprising because the standard practice is to allocate the first available rooms to patients in need of emergency care, but intensive care patients are not moved to the hallways.

Kaiser Daily Health Policy Report, Study Urges Hospitals to Consider Moving Some Patients to Hallways After Admission to Ease Emergency Department Overcrowding, Henry J. Kaiser Fam. Fdn. (Oct. 27, 2008).

No HHS OIG Sanctions on Charity That Helps Patients Buy Medications

According to a recent Advisory Opinion (No. 08-17) issued by the Department of Health and Human Services Office of Inspector General (OIG), a charitable organization's proposal to provide financial assistance to needy Medicare and Medicaid patients to help them afford their outpatient prescription drugs for a particular diagnosis would not constitute grounds for civil monetary penalties.

While the proposed arrangement could potentially generate prohibited payments under the anti-kickback statute, the OIG would not impose administrative sanctions on the organization absent the requisite intent to induce or reward referrals. Under the proposed arrangement at issue, the parent organization set up a foundation as a nonprofit, tax-exempt, charitable organization to operate exclusively as a charitable prescription drug patient assistance program. The requesting organization and the particular disease the patients have were redacted from the published OIG opinion.

The foundation's patient assistance program will focus primarily on increasing access to high-cost, medically-necessary drug treatment options that are often overlooked by patients with the disease who cannot afford to pay. The foundation anticipates entering into a contractual relationship with the parent organization's affiliate, a national internet-based specialty pharmacy dedicated to serving patients diagnosed with the disease, to administer the program.

The OIG determined that the proposed design and administration of the foundation's program inserts an independent, bona fide charitable organization between donors and patients that effectively insulates beneficiary decision making from information attributing the funding of their benefit to any donor. The foundation's assurances are based on the fact that no donor or affiliate of any donor exerts direct or indirect control over the foundation or its program and the foundation will award assistance in a truly independent manner that severs any link between donors and beneficiaries. In addition, the foundation will award assistance without regard to any donor's interests and without regard to the applicant's choice of product, provider, practitioner, supplier, or insurance plan. Instead, the foundation will provide assistance based upon a reasonable, verifiable, and uniform measure of financial need that is applied in a consistent manner.

Further, the foundation will not provide donors with any data that would allow a donor to correlate the amount or frequency of its donations with the amount or frequency of the use of its products or services, the Advisory Opinion said. Finally, although the pharmacy's regular commercial business relationships potentially create significant risks that the proposal could be misused as conduits to provide payments to Medicare or Medicaid beneficiaries who use their products, the foundation certified that the pharmacy's role is and will remain entirely independent from its other business operations.

The foundation's operation as an independent charitable organization, its interposition between donors and patients, and the design and administration of the proposed arrangement will, if implemented as certified by the foundation, provide sufficient insulation so that the foundation's proposed assistance should not be attributed to any of its donors, the OIG determined. Thus, the OIG found that it is unlikely that donor contributions would influence any patient's selection of a particular provider, practitioner, supplier, or product, or the selection of any particular insurance plan. Similarly, there would appear to be a minimal risk that donor contributions would improperly influence referrals by the foundation.

No HHS OIG Sanctions on Charity That Helps Patients Buy Medications, BNA'S HEALTH L. REP. (Oct. 30, 2008) (note: registration is required to view this content).

FDA Opens Comment Period on MedWatch Portal

The Food and Drug Administration (FDA) is asking for public comment on a new web portal it is developing to collect and analyze drug information.

The portal would allow the agency to electronically collect all adverse-event data, consumer complaints, product problems, and medication errors through one central location. Streamlining data collection through the portal, dubbed the MedWatch portal, will improve the agency's ability to manage drug event reporting.

In addition, FDA participants who are mandated to submit reports on adverse events and drug errors will be able to do so through the portal, and anyone else who would like to submit a report can use the portal's online questionnaire to guide them.

Jean DerGurahian, FDA Opens Comment Period on MedWatch Portal, Modern Healthcare's Daily Dose (Oct. 27, 2008) (note: registration is required to view this content).

*We would like to thank Reesa Benkoff, Esquire (Hall Render Killian Heath & Lyman PLLC, Troy, MI) for providing this week's Teaching Hospital Update.

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