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California hospitals are asking for $1.5 billion of additional funding, even as the state projects a budget deficit forecast to be almost $32 billion. It appears that the trigger for the request was the recent closure of Madera Community Hospital. The dynamics seem to be such that the industry wants to make the closed hospital a poster child for what might happen to other hospitals if the state does not give more money, and hospitals probably feel that their request for additional funds is more likely to be heeded if they band together rather than having only select hospitals ask. KFF Health News reported on why the state probably should not simply accede to the request, even if it makes sense to bolster the finances of some hospitals -- namely that some of the financially better-off hospitals would benefit disproportionately.

California hospitals are asking for $1.5 billion of additional funding, even as the state projects a budget deficit forecast to be almost $32 billion. It appears that the trigger for the request was the recent closure of Madera Community Hospital. The dynamics seem to be such that the industry wants to make the closed hospital a poster child for what might happen to other hospitals if the state does not give more money, and hospitals probably feel that their request for additional funds is more likely to be heeded if they band together rather than having only select hospitals ask. KFF Health News reported on why the state probably should not simply accede to the request, even if it makes sense to bolster the finances of some hospitals -- namely that some of the financially better-off hospitals would benefit disproportionately.

Not surprisingly, a leader of the state hospital lobby said "The real underlying issue here is government underfunding." Given that reimbursements for serving Medi-Cal may be below the cost of the service, "government underfunding" is indeed likely an issue. However, the article points out that hospitals already receive bonus and incentive payments that can substantially change the profitability picture.

Interestingly, the article links to some financial reports of Madera Community Hospital, showing that the hospital actually made gross profit (profit before fixed expenses are subtracted) on serving Medi-Cal patients ($6.6 million from traditional plans and $8.4 million from managed care plans). While these reports provide some visibility into the hospital's finances, a big question is what is included in the $104 million of operating expenses (presumably fixed expenses such as building maintenance and administrator salaries). For example, a self-serving hospital administrator could advocate for more money from the state by showing a loss in order to increase his salary. Presumably, the leadership of Madera Community Hospital considered all possible options to trim expenses before deciding to close the hospital. However, who should scrutinize the financial reports for all state hospitals before deciding whether or not the state should give additional funding? It is not hard to imagine legislators deciding it easier and politically more expedient to simply grant the request for additional funding -- after all, which legislator wants to be known as the one who voted against maintaining hospitals?

Challenges with mental health care have been on the rise, and the Affordable Care Act mandated that insurers offer parity between mental health and physical health coverage. However, the efforts of insurers have been oriented around physical health for so much longer than for mental health, making parity in the short-term difficult. KFF Health News highlighted recent efforts by technology companies to offer apps as a partial substitute for mental health providers.

Challenges with mental health care have been on the rise, and the Affordable Care Act mandated that insurers offer parity between mental health and physical health coverage. However, the efforts of insurers have been oriented around physical health for so much longer than for mental health, making parity in the short-term difficult. KFF Health News highlighted recent efforts by technology companies to offer apps as a partial substitute for mental health providers.

Understandably, insurers are eager for alternatives to offering mental health providers higher reimbursements. Unfortunately, the article points out that these solutions in their current form might not be effective, and might even do harm. Given the rapid pace of technological innovations, these apps might eventually offer convenient and cost-effective options for diagnosis and maybe even treatment. However, in the meantime, mental health continues to be a problem for many, and insurers might struggle to achieve parity between mental health coverage and physical health coverage.

KFF Health News published an illuminating article on how pharmacy benefit managers (PBMs) operate and complicate drug sales. The initial idea was probably for PBMs to specialize in the procurement of drugs to reduce drug costs for insurers and patients by purchasing drugs in large volumes. The article paints a very different picture of the role of PBMs. Over time, PBMs popularized the concept of large rebates while keeping list prices high (PBMs are frequently paid a percentage of prices, not of net payments). It appears that PBMs have gone far beyond large rebates, with the article offering:

KFF Health News published an illuminating article on how pharmacy benefit managers (PBMs) operate and complicate drug sales. The initial idea was probably for PBMs to specialize in the procurement of drugs to reduce drug costs for insurers and patients by purchasing drugs in large volumes. The article paints a very different picture of the role of PBMs. Over time, PBMs popularized the concept of large rebates while keeping list prices high (PBMs are frequently paid a percentage of prices, not of net payments). It appears that PBMs have gone far beyond large rebates, with the article offering:

"In other words, drug companies blame PBMs for high drug counter prices, PBMs blame insurers, and insurers blame the drug companies, all part of a health care system that hinges on an unspoken bargain: Make life comfortable for some — mostly the upper and middle classes — at the expense of lower-income and poorly insured people who get what they get."

Of particular concern is how the system has become complex enough that patient health is affected, with some patients believing that they are not able to find affordable options. The article reports on one provider who complains that the system is designed to obfuscate prices and how some of that provider's patients skip medications because of cost.

One of the major problems seems to be that the PBM industry was allowed to consolidate, with now only three PBMs controlling about 80% of prescription drug sales in the US. Earlier policy-makers might have expected that more powerful PBMs would have been able to bring more pressure to insurers and manufacturers, but perhaps missed other distortions that the powerful PBMs have brought.

Last, week, we launched our series of articles capturing interviews with people who have had mental health journeys. You can view the series here. We plan on releasing additional content later this month, so if you are interested, we encourage you to check back.

Last, week, we launched our series of articles capturing interviews with people who have had mental health journeys. You can view the series here. We plan on releasing additional content later this month, so if you are interested, we encourage you to check back.

These interviews have been a very interesting opportunity for us to learn more about how different issues affect different people. If you have had your own mental health journey and would like to share your life story with us, feel free to get in touch.

We have been working on a series of articles about mental health that will be launching soon. The idea behind the series has been to interview people and chronicle their mental health journeys so that others can learn from their life stories. Preparing the articles for this series has taken a surprising amount of time, and we hope you enjoy the content.

We have been working on a series of articles about mental health that will be launching soon. The idea behind the series has been to interview people and chronicle their mental health journeys so that others can learn from their life stories. Preparing the articles for this series has taken a surprising amount of time, and we hope you enjoy the content.

We plan on publishing our first article tomorrow to coincide with the start of National Mental Health Awareness Month. To read the articles, check on our home page throughout next month for a link to the most recent article. If this series goes well, we might expand it to include other topics as well.