Weekly Comms Report — Weighing the Price of Private Equity
In times like these, consumers are looking for someone to trust. Recent controversial CDC changes and other politicized issues have put the high trust that Americans have in doctors, nurses, and hospitals in jeopardy. For the sake of their brand and, more importantly, for the sake of the consumer, hospitals and health systems should not hold back on addressing these topics — even if it requires going against federal guidelines in order to demonstrate critical thinking and expertise in public health beyond the politics.
We know it’s not easy, but approaching each situation with truth and transparency is a good start. Because in the end, the public needs somewhere to turn for reliable information — and it should be hospitals and health systems.
Communicating about COVID-19
1. Getting ahead of surprise billing.
What we’re hearing: Months ago, the White House announced that the federal government would reimburse hospitals for uninsured patients who received COVID-19 testing and treatment. Now, those promises are falling short, and hospitals are struggling to navigate the red tape involved with the program. All the while, patients are receiving astronomical bills for their care.
Communications takeaway: Considering the lack of clarity on how the reimbursement program actually works, in addition to many hospitals choosing not to participate given the program’s complexity, patients are continually discovering that their COVID-19 care was ineligible for coverage. Regardless of the federal program’s shortcomings, the ensuing bills ultimately come to patients from the hospital. As such, the majority of the blame for surprise charges falls on hospitals and health systems — fair or not. As patients continue to receive surprise bills and high-profile media stories continue to emerge, expect questions from your own patients, community, and local media. Being aligned with the billing department on these issues and policies is key in getting ahead of stories and mitigating reputational risks.
2. Weighing the price of private equity.
What we’re hearing: Not all M&As are created equal. For those who have been in the healthcare industry for a while, it’s no surprise that the success and resulting efficiency from M&A activity depend completely on the structure of the deal and the motives that led to it. Today, key media outlets are starting to come online to the drawbacks of private equity (PE) deals in healthcare. PE firms have not-so-quietly been gobbling up small practices that were brought to their knees, financially, amid COVID-19. Now, a new research study is focused on the resulting cost hike for consumers. The study reveals that hospitals owned by private equity insurers are raking in almost 30% more income than hospitals that aren’t, thus creating further concerns around the industry.
Communications takeaway: As merger activity continues in the No Normal, we expect stories like these to increase as PE firms continue to acquire smaller practices. For health systems experiencing M&A activity, it will be important to follow the media sentiment about the different types of transactions. The study above suggests that PE acquisitions may become a source of controversy. Provider organizations that are selling to private equity should certainly consider potential scrutiny in their communications about the transaction. On the flip side, organizations engaging in M&A activity that does not include PE should make that abundantly clear to avoid being lumped into this perception that M&A results in higher costs.
3. Continuing to lobby for support.
What we’re hearing: Remember those high profits posted by for-profit health systems in Q2? Unsurprisingly, “high profits” were not the norm in the hospital category broadly. A new report shows operating margins down 96% over the first seven months of the year. This is a clear signal that the financial hardships systems are facing, and the broader economic crisis resulting from the pandemic, are far from over.
Communications takeaway: The for-profit margins covered last month brought forth public doubt about how much hospitals were truly struggling and whether further CARES Act funding was needed. Thankfully, this new report reveals a more comprehensive picture of hospital margins and can be used to address any criticism. More importantly, it gives hospitals a much stronger opportunity to sound the financial crisis alarm bell with less likelihood of getting any blowback or facing retaliation. For the majority of hospital and health system marketing and communication teams, Kaufman Hall’s new report should serve as solid fodder to combat a growing impression that hospitals are doing “just fine.”