a Better Bubble™

Aggregator

Nevada Governor Candidates Are Debating a ProPublica Investigation — but Not Always Accurately

2 years 8 months ago

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up for Dispatches, a newsletter that spotlights wrongdoing around the country, to receive our stories in your inbox every week.

A politically connected COVID-19-testing company with a stunningly high error rate in Nevada has become a key issue in the state’s closely fought governor’s race.

In May, a ProPublica investigation detailed how Gov. Steve Sisolak’s administration fast-tracked the license for Northshore Clinical Labs, a company with ties to a family that has donated nearly $50,000 to his political campaigns since 2011, including $40,000 to his gubernatorial races. The investigation also revealed that the company missed 96% of COVID-19 cases in a sample of 51 PCR tests from the University of Nevada Reno campus, used questionable billing practices and had widespread problems with the testing it provided to five government agencies. The article also noted how the lab was allowed to continue operating in the state despite repeated warnings from public health scientists.

Now, as Sisolak, a Democrat, seeks a second term, he is fending off relentless Republican attacks labeling him “corrupt” and pointing out that he failed to notify the public of the problematic tests. His opponent, Clark County Sheriff Joe Lombardo, as well as the Republican Governors Association and an independent political action committee, have spent millions of dollars on mailers and television, radio and digital ads hyping the issue. Lombardo’s Republican allies in the Legislature have unsuccessfully asked for audits and investigations into Northshore’s dealings. And the two candidates for governor spent nearly 10 minutes arguing the issue this month in their only debate.

“Gov. Sisolak covered up a public health crisis for five months,” Lombardo’s spokesperson, Elizabeth Ray, said. “Sisolak knew about this crisis back in January, and he failed to alert the public. His inaction in this ‘pay-to-plague’ scandal could have cost Nevadans their lives.”

In response, Sisolak’s campaign has accused Republicans of exaggerating the nature of the testing problems and the governor’s role in it.

“Joe Lombardo and national Republicans have spent tens of millions of dollars spreading lies, misconstruing the truth and misleading Nevadans,” Molly Forgey, Sisolak’s campaign spokesperson, said. “Plain and simple: Republicans are desperate. Lombardo doesn’t have any real plans or vision so instead, he’s scraping the bottom of the barrel in an attempt to shift the narrative away from his pattern of corruption and his out-of-touch stances.”

Shortly after ProPublica published its investigation, a government spokesperson for the Sisolak administration said his office was exploring legal avenues to hold the company accountable for botched testing services that put its customers’ health at risk. This week, however, the spokesperson confirmed the administration has yet to take action beyond assisting federal investigators looking into Northshore’s practices.

“I don’t have many updates for you,” spokesperson Meghin Delaney said.

Northshore and its representatives have consistently declined to comment on ProPublica’s reporting.

As the debate has raged, both sides have bent the facts in making their cases to the voters. According to ProPublica’s extensive reporting on the issue, which included a review of more than 3,000 pages of internal emails, here is what both sides have gotten wrong.

Misleading: “Steve Sisolak’s administration fast-tracked a contract for a shady company tied to a campaign donor.” — A Republican Governors Association ad

Among Republicans’ most repeated errors is the claim that Sisolak handed a state contract to the testing company. In some cases, Republicans have accused Sisolak of giving Northshore a $165 million contract.

In reality, the state did not sign a contract with Northshore, nor did it pay the company $165 million. That figure is the total amount of money the company, which says it operated in more than 20 states at the height of the pandemic, billed the federal government for COVID-19 tests it said it provided to people with no health insurance.

The Sisolak administration, however, did let Northshore jump ahead of other companies waiting for inspections so it could more quickly obtain its state laboratory license.

Northshore had contracted with brothers Gregory and Angelo Palivos to build clientele and manage its operations in Nevada. Their parents, Peter and Vicky Palivos, have donated heavily to Sisolak’s campaign and are personal friends of the governor’s. The Palivos brothers worked with an influential lobbyist who used his ties to the administration to help Northshore with its state laboratory license.

After the lobbyist emailed Sisolak’s chief of staff, the head of the licensing bureau urged the health inspectors to move up Northshore’s inspection.

“I want to let you know how frustrating it is to have my staff schedule their inspections only to have labs use previous directors to influence or pressure us into having businesses that they represent, jump ahead of others that are patiently waiting for their inspections,” the state’s lead inspector wrote to his boss in an email obtained by ProPublica.

In a written statement earlier this year, a spokesperson for the Palivos brothers said they were unaware of Northshore’s problems when they were hired to manage its Nevada operations. The spokesperson said they were driven by their desire to help Nevada in the middle of a testing crisis and that they relied on Northshore “for standard operating procedures, licensing, compliance, test supplies, molecular lab work, reporting of test results, and billing.” She also said the Palivos brothers pushed the company to fix the problems with its tests before the state became involved.

Sisolak has repeatedly said he had no conversations about Northshore with Palivos family members. The Palivos brothers also said they never spoke with the governor about their testing business.

“This guy — on my life, on my mother, my children, my wife’s life — never asked me about this testing company,” Sisolak said during the Oct. 2 gubernatorial debate, referring to Peter Palivos. “Never talked to me. Never sent me an email. Never made a phone call. Never sent me a text. Never did anything. They followed the procedures. That’s what happened.”

The Palivos family’s political donations didn’t stop amid the Northshore debacle. On Jan. 17, three days after the state scheduled its investigation into complaints about Northshore’s operations, a limited liability company operated by Peter and Vicky Palivos donated $10,000 to Sisolak’s campaign.

Incorrect: “Now, Sisolak is under federal investigation.” — Better Nevada PAC ad

Both the Lombardo campaign and the Better Nevada PAC, which said it has spent more than $1 million on ads about Northshore, have claimed Sisolak is being investigated by the federal government.

ProPublica confirmed that the Inspector General’s Office of the U.S. Department of Health and Human Services expanded its investigation into Northshore to Nevada after the initial story ran in May. An email from the OIG investigator did not indicate that Sisolak or his administration were under investigation.

“Myself and other law enforcement agencies have had a case opened regarding Northshore Clinical Lab for quite some time,” wrote Special Agent Peter Theiler, who is based in Chicago. “After reading the ProPublica article on Northshore Clinical Lab regarding Nevada patients, we are interested in obtaining records related to testing for COVID-19 for Northshore Clinical Lab rapid test results and PCR test results for Nevada.”

Spokespeople for both Lombardo’s campaign and the Better Nevada PAC point to the Sisolak administration’s comments about the OIG investigation as evidence Sisolak himself is under investigation.

But that’s not supported by public records. The OIG has declined to comment on the investigation.

Incorrect: “As soon as we found out, their license was revoked.” — Sisolak during his Oct. 2 debate with Lombardo

The state never revoked Northshore’s license. Instead, it tried working with the company to bring it into compliance before ultimately closing the license at the company’s request.

Delaney declined to address this inaccuracy when ProPublica asked about it. His campaign spokesperson also did not explain the inaccuracy.

That’s not to say Sisolak’s administration ignored the problem. The Nevada Bureau of Health Care Quality and Compliance immediately began investigating after the Washoe County Health District filed a complaint detailing errors with the company’s PCR tests.

Northshore had been conducting both rapid and PCR tests. In “several hundred”cases, the rapid test came back positive, but the PCR test came back negative, according to a Jan. 10 email from Washoe County Health District’s epidemiology manager. At state and local health officials’ urging, Northshore voluntarily stopped using PCR tests. However, state officials allowed the company to continue conducting rapid tests across the state despite it not having the proper licensing to do that.

In their investigation, state inspectors noted deficiencies with Northshore’s operations and were working with the company to correct them. During that process, Northshore abruptly announced it was pulling out of the state and asked for its license to be closed.

State officials closed the license but also reported their findings to Centers for Medicare and Medicaid Services, the State Board of Nursing and the company itself.

Incorrect: “We were cooperating in a federal investigation.” — Sisolak during the debate

During the debate, moderator Jon Ralston asked Sisolak why he never alerted the public to the problems with Northshore’s tests when he became aware of them in January 2022.

“We were cooperating in a federal investigation into the company, which we’re still cooperating with,” Sisolak answered.

According to documents obtained by ProPublica, however, the federal investigation into Northshore didn’t include its Nevada operations until May, after the ProPublica story ran.

The governor may have misspoken. (Delaney and Forgey also refused to address this inaccuracy.) At the time, Nevada health officials had launched a state investigation into the reported testing inaccuracies and told local media they could not comment on the ongoing investigation.

Sisolak’s answer drew an attack from Lombardo, who said the governor had owed the public a warning for their personal safety.

“You should have, front-facing as the leader of this state, said, ‘Hey, if you took this test, come in and get another test because we have determined they are all false, or the percentage of them, the majority of them were false,’” Lombardo said during the debate.

Do You Have a Tip for ProPublica? Help Us Do Journalism.

by Anjeanette Damon

How Effective Is the Government’s Campaign Against Hospital Mergers?

2 years 8 months ago

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up to receive our biggest stories as soon as they’re published.

In recent months, federal antitrust regulators have notched some notable achievements, blocking four hospital mergers. Those actions follow the announcement of a major change in antitrust philosophy, embodied by President Joe Biden’s executive order last year aimed at promoting competition. That order criticized hospital consolidation for the ways in which it has left “many areas, particularly rural communities, with inadequate or more expensive healthcare options.”

Suddenly, antitrust regulators seem to have swagger. News articles have described the Federal Trade Commission, whose job is to stop anti-competitive behavior, as being “unleashed” under its aggressive new chief, Lina Khan. Republicans have responded with complaints of “radical” policies. An FTC official told Kaiser Health News, “We are feeling invigorated and looking to fulfill the executive order’s call to be aggressive on antitrust enforcement.”

What can be gleaned about hospital consolidation 15 months after Biden’s executive order? An examination of the cases the FTC has taken on — and those it hasn’t — suggests that so far the rhetoric has been more muscular than the reality. The agency initiated three challenges of hospital mergers during this period (the fourth example noted above was initiated during the Trump administration) and allowed 54 to proceed without taking public action. By contrast, the FTC challenged a total of three hospital mergers over the four years of the Trump administration, while permitting 375 to go through unchallenged.

One reason the numbers haven’t risen further is an impediment that is rarely mentioned outside of antitrust circles: The FTC’s guidelines focus exclusively on challenging mergers of hospitals within a single geographic region, not when a major player in one region buys up a hospital in a different one. And those so-called cross-market deals make up an increasing portion of hospital mergers.

Not only does the FTC face that obstacle, it’s short on the money and staffing it would take to duke it out over big-time cross-market mergers. “Our resource constraints overhang every enforcement decision,” Holly Vedova, director of the FTC’s Bureau of Competition, told us in a statement. “It’s not possible to quantify the number of additional mergers that we could challenge, but there’s little doubt that being able to invest more resources in our investigations would bolster our enforcement.”

Let’s start with a quick review of the quarter century of hospital consolidation that brought us to today. There were 1,887 hospital mergers announced from 1998 through the end of last year, according to the American Hospital Association and health care consultants Kaufman Hall. Absent those mergers, we’d have about 8,000 hospitals in the U.S. rather than the 6,093 that the AHA says we had at the end of last year.

Over the years, the FTC has generally attempted to block about 1% of those mergers, which made it a very small sandbag in the path of a fast-moving flood of deals. (Those sympathetic to the FTC point out that, due to its limited resources, the agency attempts to select winnable cases whose prominence or importance will send a message to the hospital industry and discourage similar transactions.) The agency isn’t notified about all hospital mergers, only those with a value of more than $101 million, a number that gets adjusted every year for the size of the economy. These days the number of mergers is slowing down, Kaufman Hall said, but the size of deals is increasing.

Fewer hospitals means less competition for patients. And as they teach you in Market Economics 101, fewer competitors generally results in higher prices. Lots and lots of studies have been conducted of mergers and pricing, which aren’t published until years after mergers are completed because it takes so long to do the analyses. They show that, in general, having fewer hospitals competing for business makes prices higher than they would otherwise be.

Health care consolidation is the “No. 1 driver of health care spending inflation,” according to professor David Dranove of Northwestern University’s Kellogg School of Management, co-author of “Big Med: Megaproviders and the High Cost of Health Care in America.”

Unlike things like higher gasoline prices or rising food costs, the cost of hospital consolidations isn’t obvious, and usually isn’t paid by people directly. Rather, employers who pick up some or most of the cost of their workers’ medical insurance, either directly or through payments they make to health insurance companies, pass on those costs indirectly by giving workers less in salary and benefits than they might otherwise get. (Similarly, when it comes to government health insurance plans such as Medicare, Medicaid and various state and local programs, the cost of hospital mergers is paid indirectly, through higher taxes or bigger government deficits.)

“The more money that is going into benefits, the less money is going to employees,” said Bill Kramer, senior adviser for health policy at Purchaser Business Group on Health, which represents some 40 private employers and public entities that collectively purchase health care for more than 15 million Americans.

Employees’ health care costs are also rising rapidly, a trend expected to continue in 2023. “Workers’ contribution to family health insurance premiums grew 259 percent from 1998 to 2018, while nominal average hourly earnings for production and nonsupervisory workers grew by only 68 percent,” according to a 2020 paper by economist Martin Gaynor, a professor at Carnegie Mellon University and a founder of the Health Care Cost Institute.

This brings us to today’s FTC. Over the past year or so, the agency blocked two mergers involving the two biggest hospital companies in New Jersey, both of which had been vacuuming up hospitals in the state since they were created by mergers in 2016. One involved a deal for Hackensack Meridian Health to buy Englewood Health, which was announced in 2019 and prompted an FTC suit in late 2020, in the waning days of the Trump administration. The FTC prevailed in both U.S. District Court and the U.S. Court of Appeals, leading the hospitals to officially raise the white flag in June.

The second deal was for the state’s other Big Two hospital chain, RWJBarnabas Health, to acquire St. Peter’s University Hospital of New Brunswick. In that case, the filing of an administrative complaint by the FTC in June was enough to get the hospitals to drop their merger plans.

The FTC prevailed in the Hackensack Meridian case by proving to the courts’ satisfaction that a merger with Englewood would raise costs for patients in New Jersey’s Bergen County. However, some key numbers — such as projections by an outside expert hired by the FTC — were blacked out in the publicly available documents, and remain so even after the proposed merger was dropped, because they’re still considered proprietary. (The FTC’s other prominent victories in 2022 include blocking the merger of the two largest hospital systems in Rhode Island and getting HCA Healthcare to abandon its plans to take over Utah’s Steward Health Care System after the FTC went to court.)

The FTC’s successes in the Hackensack Meridian and Barnabas cases are examples of a strategic change in the FTC’s approach to hospital deals. After losing every anti-hospital merger case that it brought in the 1990s, the FTC improved the quality of its market analysis and has since run up an excellent record — six wins against just one loss since 2020 — in the relative handful of cases that it brings. The analysis concentrates on competition within what are defined as geographic markets, such as Bergen County (where Englewood is located and where Hackensack Meridian has significant market share) and Middlesex County (where St. Peter’s is based and Barnabas is a big player).

While the FTC appears to have gotten better at winning local antitrust cases like those two in New Jersey, its reach is severely limited when it comes to so-called cross-market mergers, marriages between entities that do not directly compete in the same geographic or product market.

The number of cross-market mergers has been increasing. Over the past decade, more than half of all hospital mergers have occurred across geographic markets, according to University of California Hastings College of the Law professor Jaime King, who specializes in health care and competition issues. None have been challenged in federal court.

Despite the rise in cross-market mergers and emerging data that suggests that they contribute to rising prices, the FTC’s formal guidelines on hospital mergers haven’t been updated since 2010. The FTC guidelines include 34 detailed pages on how to evaluate and challenge an intramarket merger and zero pages on how to evaluate or challenge a cross-market merger. That’s largely because courts tend to support the FTC if it can demonstrate that one local competitor is merging with another local competitor, reducing the number of hospital options and increasing the chances that the acquirer can raise prices.

Consider one merger this year that the FTC allowed to proceed without a word of public objection. In February, two Michigan systems, Beaumont Health and Spectrum Health, combined to create the largest health system and private employer in the state, with 22 hospitals and more than 300 outpatient locations.

“I believe the FTC decided to not intervene in this case because both the Beaumont system and Spectrum system are geographically dispersed from each other,” said Bret Jackson, president of the nonprofit Economic Alliance for Michigan, who said he spoke to the FTC regarding the deal. Jackson sees elevated prices as an inevitable result. “It is still too soon to see the price effects of the merger on health care costs, since both systems are under existing contracts with insurers,” he said. “But never in the history of hospital mergers in the country has a hospital come down in pricing after a merger.” (A spokesperson for Corewell Health, the newly merged entity, said, “We remain focused on quality, affordable care for the communities we serve.”)

Experts like King argue that courts and the FTC should recognize that if one chain buys multiple hospitals in different markets, that chain can also wield significant power to raise prices.

The FTC and its fellow antitrust enforcer, the Department of Justice, have taken some preliminary steps toward retooling their approach. In January, the two agencies began soliciting public input on ways to modernize merger guidelines, specifically for markets that “may fall outside the frameworks under the current approach.” More than 1,900 comments have been submitted to the agencies.

King applauds the FTC for that step and for its recent aggressiveness. But she thinks the agency still has a ways to go before it can effectively combat hospital consolidation. “There’s a need to reevaluate old assumptions about how health care markets are working,” King said. “It’s almost like they’re two decades behind.”

Do You Have a Tip for ProPublica? Help Us Do Journalism.

by Allan Sloan and Carson Kessler

Kwame Building Group Completes Freedom Suits Memorial

2 years 8 months ago
Kwame Building Group (KWAME) has completed the Freedom Suits Memorial to honor enslaved plaintiffs who sued for their freedom. The memorial is located at the Old Courthouse in St. Louis where the Dred Scott Case was tried. KWAME served as the Construction Manager at Risk (CMAR). The Freedom Suits Memorial features a 14-foot bronze statue […]
Dede Hance

Health update

2 years 8 months ago
My M-protein number was up yet again this month: It's not as if my M-protein level is skyrocketing or anything, but it's fairly high and getting steadily higher with my current chemo regime. Here's hoping the folks at City of Hope come through with a spot for the Carvykti CAR-T treatment for me sometime soon. ...continue reading "Health update"
Kevin Drum