Hospital financial officers see investments key to addressing post-Covid ‘new normal'

Health systems are seeing patient volumes recover but are recognizing the need for investments into their hospitals to help them address future health crises better.

Chief financial officers discussed the demand during a panel discussion for the Healthcare Financial Management Association New York chapter’s annual meeting on Wednesday, along with organizational leaders who spoke with Crain’s outside the panel.

However, those goals might be challenging to achieve in a future as pandemic-era aid dwindles.

“When Covid came, we were in a difficult financial position. We didn’t have more than four days of cash on hand,” said Vali Gache, chief financial officer at Wyckoff Heights Medical Center in Bushwick, during the panel.

The influx of relief, including money from the Cares act, a $2.2 trillion stimulus, and FEMA helped safety-net hospitals enact initiatives to invest in community health. “We can now… think about where we need to invest next and survive the post-Covid landscape,” Gache said. Those programs improve community health, which in turn mitigates the need for the emergency room, she added.

Reimbursement rates post-Covid could drop as the metric known as the case-mix index—which measures complexity of cases—falls, said James Lindhart, deputy corporate comptroller at NYC Health + Hospitals, who was not on the panel. The Centers for Medicare and Medicaid Services reimburses hospitals providing care for more complex care at higher rates, with the index used in those calculations.

Safety-net hospitals could particularly see their case-mix index fall more than hospitals providing specialized care, Lindhart said. “During the pandemic, all safety-net hospitals saw their case-mix index go up, which helped with reimbursement, but it’s almost expected that index will go down once Covid goes away,” he noted. “We’re not like Hospital for Special Surgery that does highly specialized, complex procedures, but instead cover less complex cases in the community.”

Even if reimbursement rates were to fall back to pre-pandemic numbers, NYC Health + Hospitals remains ready to budget accordingly, Lindhart said. “We’ve functioned in the past at lower rates than what we’re currently seeing.”

As the federal moratorium for claims denials from payers expired, the number of denials ticked up, leaving reimbursement uncertain for hospitals, said Michael Harrington, executive vice president and chief financial officer at Memorial Sloan Kettering. Surprisingly, federal transparency requirements for hospital to post procedure prices have caused problems for hospitals when negotiating rates with payers, he said. “It’s going to get worse.”

Panelists agreed that patients have deferred care and are showing up at emergency rooms with underlying conditions in worsened states. That requires investments into facilities that can be flexible enough to address a variety of case severity.

“Procedures that used to take two hours might now require six,” noted Gerard Brogan, chief revenue officer at Northwell Health, who was also not a panelist. With more need for intensive care and emergency care, Northwell is thinking about building or retrofitting facilities that can serve hybrid functions. There is also a corresponding need to think about investing in personnel that can man those facilities, he said.

Striving for those goals will require careful balancing of the budget, but these are necessary investments, Brogan said. “These plans had been in motion prior to budget, but Covid has put them on steroids.” —Shuan Sim

Health Department’s data practices scrutinized after nursing-home audit

Stakeholders are advocating improvements in the state Department of Health’s data practices after an audit released Tuesday found that it understated the number of Covid-related nursing home deaths by at least 4,100 and did not make effective use of data to address nursing-home outbreaks.

State Comptroller Thomas DiNapoli, whose office conducted the audit, said the Health Department should improve the quality of nursing homes’ self-reported data by collaborating more closely with the industry.

“Too often regulatory entities are just seen as being hostile to the industry,” DiNapoli said in an interview.

That could mean additional training sessions to ensure that nursing home employees properly use reporting tools such as the Nosocomial Outbreak Reporting Application, or NORA, DiNapoli said.

“I don’t subscribe to the idea of less regulation, just more collaboration,” he said. “The problem has not been an overregulation of nursing homes. It’s been an inadequate implementation of the regulations we already have.”

Richard Mollot, executive director of the Long Term Care Community Coalition, a nonprofit that advocates for nursing-home and long-term-care residents, said the Health Department should more closely monitor nursing home staffing levels and other key metrics to spot potential problems.

The audit found that the Health Department “routinely underreported death counts” in nursing homes. It also found that the department does not broadly analyze the data it collects from multiple sources to detect outbreaks across facilities or identify other patterns in infectious diseases.

If the department had more accurate data and conducted proactive analyses, the audit said, it could have better helped nursing homes respond to the pandemic.

The audit said the department “conformed its presentation to the executive’s narrative, often presenting data in a manner that misled the public,” referring to former Gov. Andrew Cuomo, his staff and members of a state interagency task force, including Dr. Howard Zucker, former state health commissioner.

Zucker, who resigned in September, disputed the characterization.

“The Department of Health under my leadership worked tirelessly and with the highest level of integrity and provided the governor’s office regularly with data,” he said in a statement to Crain’s. “However, the department did not have control over how the governor’s office represented that data to the public.”

Health Department officials told the auditors that “decisions on how to report death data are made by officials outside those collecting the data,” but did not identify the decision-makers.

In a written response to the audit, the Health Department said the comptroller’s office conflated the lack of transparency under the Cuomo administration with the department’s development and use of data to detect and control infections. The department said each of its data sources has a distinct use and that aggregating data across systems would be statistically problematic.

“The Department respectfully disagrees with the Draft Report’s conclusions in its entirety,” its response said.

The infection-control audit was part of a series conducted by the comptroller’s office that focused on the Health Department’s oversight of nursing homes. —Maya Kaufman

Midtown mobile health firm’s revenue skyrocketed last year

Scoring key contracts led DocGo to more than triple its revenue in the fourth quarter last year, as well as 2021 as a whole.

Total revenue for the provider of mobile health services in the fourth quarter was $121.3 million, a near-fourfold increase from $31.2 million in the same period of 2020. Revenue for all of 2021 was $318.7 million, better than triple 2020’s revenue of $94.1 million.

The mobile health segment—DocGo’s largest by share—saw the biggest growth, helped by extensions of certain key contracts as well as significant recent contract wins, such as with NYC Health + Hospitals. The segment’s fourth-quarter revenue was $102.6 million, compared with $15.8 million the previous year. Full-year 2021 revenue was $234 million, compared with $30.9 million in 2020.

The medical transport segment revenue grew modestly compared with the same periods in 2020: up 21% to $18.7 million in the fourth quarter and 33% to $84.3 million for the year.

Growth was particularly high during the fourth quarter as the Midtown South–based company launched into nine new markets, Chief Executive Stan Vashovsky said.

“We are operating in a vast, untapped market with a scalable and capital efficient business model,” Vashovsky said. “I believe we are in the very early stages of accelerating recurring revenue growth.”

Expenses for DocGo nearly tripled last year: $303 million, compared with $109 million in 2020. The biggest increases were in general and administrative costs, which more than doubled to $75 million; and in advertising and marketing, which increased more than sixfold to $5 million.

The firm thus saw operational income gain of $15 million for the year; it had a loss of $15 million in 2020.

After accounting for other expenses, net income for last year was $24 million, after it had a net loss of $14 million in 2020. Diluted earnings per share for 2021 was 30 cents; it had been a loss of 25 cents per share in the prior year.

DocGo anticipates this year’s revenue to be between $400 million and $420 million, which would represent growth of 27% to 32%. The current projection assumes less robust revenue from Covid-19 testing in the second half of the year. Adjusted earnings before interest, taxes, depreciation and amortization is expected to be between $35 million and $41 million.

Founded in 2015, DocGo went public last March via a merger with Motion Acquisition, a special-purpose acquisition company. The deal, along with equity financing, raised net proceeds of $158 million. DocGo hired 2,340 employees last year, bringing its total to more than 3,800. —S.S.

Exclusive: Allergy-care startup raises $8M in seed funding

Allergy-care startup Nectar left stealth mode Thursday after securing $8 million in seed funding for its upcoming launch of a direct-to-consumer platform.

Founder and CEO Kenneth Chahine said Nectar will use the capital to continue developing a virtual care model that involves creating its own compounding pharmacy and addressing other aspects of the supply chain in house. Proceeds also will go toward establishing a New York City headquarters, he said.

NoHo-based venture-capital firm Juxtapose, whose portfolio includes local dental startup Tend, and San Francisco–based Obvious Ventures led the all-equity round. The firms are building Nectar and recruited Chahine, a former executive at who launched its DNA-testing division, to serve as chief executive. He is currently working from Juxtapose’s office, while other employees are in Salt Lake City and Los Angeles.

Its inaugural solution will be an alternative to allergy shots—which give patients incremental doses of an allergen to train their immune system to not trigger an allergic reaction—that is instead administered as drops under the tongue and delivered to patients’ homes, the company said. Nectar said it will determine the dosage and formulation based on a patient’s blood spot card, which tests for reactions to trees, grass, mold, pets and other common allergens.

Chahine said the platform will launch in the coming months. It will not initially take insurance but will be affordable, he said. He added that he did not have specific pricing details to share.

He said he plans to quickly scale Nectar’s platform nationwide to address what he deemed a $360 billion health care opportunity, given that allergies are a leading cause of chronic illness in the U.S. He added that Nectar eventually will open brick-and-mortar clinics to offer therapies for food allergies and asthma, which often are triggered by environmental allergies, so initial dosing can be done in-person.

“The market is super fragmented,” Chahine said. “When you look at who is treating allergies, it’s a lot of small clinics or single practitioners.”

Patrick Chun, co-founder and managing partner of Juxtapose, referred to allergies as a “massive, and largely unsolved, corner of health sciences.” In addition to treating allergies, Nectar plans to collect data using artificial intelligence and use it in collaboration with researchers to advance clinical research in the field.

Nectar is the consumer-facing brand of Nectar Life Sciences, an allergy-focused health care holding company led by Chahine. It was founded in 2021 and has 16 employees. —M.K.


WHO’S NEWS: Dr. Bryan Wolynski was named chief technology officer at Lighthouse Guild, the not-for-profit vision and health care organization said Wednesday. Wolynski, an optometrist, most recently served as an adjunct clinical instructor with SUNY College of Optometry and consulted on clinical and professional relations for Israel-based company OrCam Technologies.

HPV VACCINATIONS: HPV vaccination coverage among adolescents statewide increased from 2018 to 2020 but varied substantially by county, according to a New York State Health Foundation report released Wednesday. In 2020, 24.5% of 13 year olds had received both shots of the HPV vaccine series, compared with 20.1% of 13 year olds in 2018. The Lower Hudson and Long Island regions had the lowest rates of HPV vaccination in 2020, as well as the lowest rates for other pediatric vaccinations, the report found.

NEWSLETTER UPDATE: In the coming weeks, the “Who’s News” portion of “At a Glance” will transition to a paid product. “Who’s News” is a daily update of career transitions in the local health care industry. For more information on submitting a listing, please reach out to Debora Stein at [email protected]

CONTACT US: Have a tip about news happening in the local health care industry? Want to provide feedback about our coverage? Contact the Health Pulse team at [email protected]

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