The U.S. birth rate is slowing, but overall children’s healthcare spending continues to rise. In response, pediatricians across the country are focusing efforts on cost reduction and quality improvement. Clinically integrated networks are gaining traction as a supplement to Accountable Care Organizations (ACOs) — like Ohio-based Partners for Kids ACO and Children’s Hospital of Philadelphia ACO with Aetna — and may play a key role in affording care for indigent families under President Trump’s conservative healthcare reform. Billions of dollars’ worth of construction projects are also on the radar as children’s healthcare providers look to increase their competitive clout via enhanced and expanded access to care.


Here are some recent developments in the pediatric industry:

  • President Trump’s conservative health policies could be detrimental for families with children. On average, children make up half of national enrollment in Medicaid and CHIP programs. In FY 2016, more than 37 million children were enrolled in Medicaid, a slight increase from the year before. President Trump’s proposed block grant structure for Medicaid — one that caps state funding based on current spending levels and authorizes state spending discretion — could reduce the amount of available Medicaid funding in the future, thereby decreasing the number of children eligible for cost assistance. The CHIP program, provided by states to supplement Medicaid for families above the Medicaid threshold, also faces millions of dollars in budget cuts via a lowered eligibility cap and terminated increase in federal matching funds.


  • Clinically integrated networks are rising in popularity among independent and employed physicians and affiliated hospitals. Pediatric-focused CINs are relative newcomers but could transform the way pediatrics are delivered. Phoenix Children’s Care Network launched in 2013 as the nation’s first pediatric CIN. More than 1,200 participating physicians track their performance against 13 primary-care and 34 specialist metrics developed in-house. In exchange for improved quality metrics, physicians earn shared savings from payers via risk-based contracts. Since the formation of PCCN, several other pediatric CINs have developed, including the Children’s Care Network in Georgia (launched in 2015 with more than 1,000 providers), the Children’s Health Network in Nebraska (rooted as a physician-hospital organization with more than 350 providers), and the Children’s Hospital Los Angeles Health Network (launched in 2017 with more than 100 providers). Over time, network engagement in risk-based contracting is likely to play an integral role in reducing state Medicaid costs, which could, in turn, soften the blow of conservative healthcare reform under President Trump.


  • Pediatric facilities and services are expanding. Children’s Healthcare of Atlanta is gearing up to build a $1 billion+ pediatric hospital in northeast Atlanta, while Le Bonheur Children’s Hospital in Memphis, Tennessee (the same market that opened the world’s first proton therapy center exclusively for children) is planning a $55 million expansion to help ease patient flow at one of the busiest emergency rooms in the country. Overall, utilization of emergency rooms by pediatric patients is likely to rise as a potential multibillion-dollar reduction in Medicaid funding pries indigent families away from costly pediatricians and their care-coordinated medical homes. In turn, we are likely to see increased efforts by convenient care operators, including retail clinics and telemedicine companies, to attract pediatric patients for low-acuity conditions, despite criticism from concerned groups like the American Academy of Pediatrics. In addition, children’s hospitals around the nation are likely to expand their footprints into wealthier pockets of cities via walk-in clinics/urgent care centers to improve their uninsured/insured patient mix. On that note, Houston Texas Children’s Hospital plans to open its first pediatric urgent-care facility in 2018, while Monroe Carrell Jr. Children’s Hospital in Nashville, Tennessee, has opened several after-hours children’s clinics in recent years, particularly in more affluent parts of town like Brentwood and Mt. Juliet.


Follow @mlavoneDRG for convenient care trends and developments.


To hear more on the evolving healthcare environment, attend our upcoming Webinar on June 27, titled “The Politics of U.S. Healthcare – Exchanges in the Trump Era.” Registration is available here (


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