We all kind of know what inflation is. Expenses go up, purchasing power goes down, and asset prices in general increase.

• But how do those dynamics affect healthcare provider organizations?
• How do healthcare services businesses stave off intense expense margin pressures while also increasing top-line revenue in a high inflation environment where costs increase by 8%, but reimbursement from payors lags?

Let’s dive in.

Inflation background

Inflation happens when the purchasing power of a dollar falls over time. Normal inflation (at least, normal in my past life’s consulting financial excel models) for all goods hovers between 2-3% annually, which accounts for labor salary escalators, increase in food prices, and other demand related effects.

Because of current world events, supply shortages, red hot demand from high government spending, and vastly low interest rates, the economy is on fire.

As a result, inflation is skyrocketing.

• Prior to seasonal adjustment, general inflation rose about 8.0% according to the Bureau of Labor Statistics.

In general, most healthcare providers cringe at the smallest change in expenses. So when expenses increase by 8.0% AND they’re experiencing a labor shortage, this change is a pretty big deal.

Inflation in Healthcare always Lags

Oddly though, the BLS report only showed modest inflation for medical services of 2.4%, which is actually in-line or close to historical norms for healthcare inflation. At least thru the first part of the year.

Just take a look at how this tracks as compared to yearly CMS market basket increases:

Source: CMS and BLS

How can that be? Because healthcare always lags behind other industries.

You have to think about healthcare industry dynamics. When are prices, market basket updates, and premiums set for the following year?

• That’s right – a little after halfway through the year, meaning providers, CMS, and insurers were kind of flying blind around escalators for 2023 when thinking about inflation.

For context, CMS issues its finalized ruling for fee for service providers and hospitals around the August timeframe. And employer plan prices are locked in / negotiated closer to the end of the year, before anyone really had hard data on what was happening to prices behind the scenes.

• Because providers lock in their contracts with Medicare, state Medicaid plans, and commercial plans, healthcare isn’t really experiencing ANY topline inflation this year in revenue or prices – just their normal, run of the mill reimbursement escalators that typically sit between 2%-3%.

So, Providers literally cannot charge higher prices, because those rates are locked in for the year, or even multiple years if the insurance contract was a multi-year negotiated in 2021.

• I’m actually shocked that these contracts don’t have some sort of inflation or ‘extraordinary events’ clause where providers rand insurers must renegotiate given a certain event outside of a certain standard deviation and whatnot. If anyone knows of a contract that contains such clauses, feel free to give me a shout.

TL;DR. MAJOR topline headwinds for healthcare services this year.

• Insurance rates for HC providers are locked in at 2-3%. Medicare sequestration is on the horizon, and other public health emergency provisions will soon end (20% hospital rate bump for COVID cases, compensation for uninsured patients, etc.)

Recent CMS updates aren’t helping either. For 2023, CMS proposed a 2.7% basket rate increase for hospice and a 2.8% increase for inpatient rehab facilities.

Meanwhile MedPAC is going crazy by proposing 5% reimbursement cuts for certain providers. In THIS economy?! How can providers possibly expect to keep up? CMS better hope that this inflation is largely transitory and will phase out by the end of the year because if not…providers are going to struggle.

Expense Inflation Kills Provider Margins

Okay great, so consumers and employers aren’t going to experience exorbitantly higher prices this year. We’re a year off from that. That doesn’t mean provider margins won’t suffer.

There are still inflation dynamics at play on the expense side, which is going to kill provider margins this year while rates are locked in.

Even health systems, which have huge scale and purchasing power, should expect to see a 1.0% – 3.0% margin decline in 2022 stemming from expense headwinds according to McKinsey.

Kaufman Hall February Hospital Flash Report

Here are just a few ways expense are rising this year, most present in labor and supplies growth:

• Labor shortages. 33% of nurses are apparently planning to leave their current position. Turnover is costly as hell, so hospitals will be focused on retaining staff through signing bonuses and other initiatives. Treat ya people right.
• Labor salary escalators. The clinical and support staff that DO stay will be requesting some major salary escalators next year. Just ask my wife, who’s a speech therapist and wants to secure that bag.
• Drugs & Medical supply escalators. Yeah, you think drug & equipment distributors are gonna accept lower margins? Nah, they’re passing on the cost to providers to maintain their already-low margins. Not to mention the supply chain challenges hospitals are facing in general – almost all hospitals in the U.S. reported facing procurement issues.
• G&A escalators. You can bet your bottom dollar that professional firms aren’t cutting margins either. Hourly rates from lawyers, consultants, and other professionals will reflect the full 8% (or higher) increase. Any travel costs, insurance expenses, utility bills, and more will reflect higher expenses.

Source: Gist Healthcare

How Providers are combating inflation

So, how can providers stave off margin decay?

They’re going to have to LEAN UP, run ops more efficiently, boost productivity, and reconfigure their supplies purchasing.

Streamline Ops. Health systems will continue to collaborate (almost out of necessity) to share resources. We’ve already seen in the past certain systems partnering on data exchange and generic drug shortages (Civica Rx) among other partnerships. Now, a coalition of hospitals is forming a staffing partnership called Evolve. UPMC even created its own internal staffing agency.

Boost Productivity. Given shortages, providers have the opportunity to replace existing processes with tech enabled solutions (ambient documentation like Augmedix, scheduling services like Phreesia) to free up clinical time and save $$$.

• In a way, these challenges might be a blessing in disguise – as support staff & personnel quit, providers may be forced to pursue tech-enabled options to cover the gaps, which may in turn reduce some administrative spend in healthcare overall.

Supplies Savings. Providers will likely have to streamline and centralize purchasing decisions, take a hard look at their group purchasing organizations and purchasing power, and figure out the best way to plan for future procedure needs in order to prioritize what’s most important for them. I mean, there’s really only so much you can do in this bucket.

Conclusion

We’re going to see EXACTLY how inflationary pressures and rising costs play out over the next couple of years.

• Will inflation last? If so, these pressures will continue, premiums will rise, and everyone is gonna get hit hard
• If inflation resets back to 2-3%, we’re good. Valuation analysts everwhere can jump for joy as short-term inflationery margin pressures are normalized out of Adjusted EBITDA.

Hopefully the Fed can get it under control quickly so that employers and consumers aren’t hit with constant annual spikes in healthcare premiums and providers aren’t constantly looking over their shoulders, cringing at the next expense hike from suppliers and travel staffing agencies.

Bottom line. The operators who can’t handle inflation and are no longer getting bailed out by relief dollars will struggle. Others will continue consolidate to have better purchasing power on the bottom end and more negotiating leverage on rates. Survive and thrive.

Resources:

Consumer prices are rising fast, and healthcare isn’t far behind – McKinsey (Link)

Rethinking the Post-COVID Supply Chain – Gist Healthcare (Link)

The post Why Inflation Destroys Provider Margins appeared first on The Healthy Muse.

On March 29, UnitedHealthcare’s Optum announced its acquisition of LHC Group for $170/share. The transaction values LHC at about $6.4 billion including debt.

I know we all joke about working for UnitedHealthcare one day, but it’s terrifying when you think about their sheer scale. Even scarier when you look at Optum’s growth:

• Optum Revenue in 2012: $29.4 billion
• Optum Revenue in 2021: $155.6 billion. Like. What.

LHC Group is an important acquisition for Optum. Payors are continuing to morph into ‘payviders’ and UHG / Optum has a huge competitive advantage given its 60k aligned physician base. Acquiring LHC Group accelerates this payvider trend but also allows UHG to catch up to Humana, who now owns all of Kindred, in the post-acute sphere.

Meanwhile, Optum is deploying its grand vision of integrated care delivery right before our eyes. It’s happening whether you like it or not.

Even though I provided a first-impressions breakdown on Twitter related to the deal, I had to break this deal down into more detail and give you guys my thoughts on why the LHC acquisition is so significant.

Let’s dive in.

Investment and Deal Thesis.

LHC Group is well-positioned on a few fronts in the fast-growing home health sector:

• They’re partnered with 435 health systems, giving Optum access to hundreds of hospital joint ventures.
• Home health and at-home care is a MUCH more desirable care setting for Medicare beneficiaries. Comfort and patient experience is a huge factor.
• Of all post-acute care settings, home health is the most cost-effective. Home health costs way less than skilled nursing. Lower costs = lower medical loss ratio for United. By keeping patients out of SNFs and hospitals, these programs could disrupt facility-based care delivery in the coming years.
• From a demographics standpoint, home health benefits from an aging baby boomer population. Medicare will cover 79 million people by 2030 a major secular trend for healthcare. I’m sure you’re all WELL aware of that!
• PDGM and other headwinds for smaller agencies will run out of relief funding, resulting in consolidation. This consolidation will benefit larger home health platforms.

In summary, LHC Group is a great operator in a high-growth industry: Home Health.

First…some context on the Home Health Market.

Given increased patient desire to stay in the home for care, growing virtual care options from digital health players, the aging and growing Medicare population, the increasing negative stigma around nursing homes from COVID, and enhanced alternative payment models like the Hospital-at-Home (HaH) program, PACE, and other at-home care models, home health is just getting started.

• McKinsey estimates that $265 BILLION worth of care services conducted in clinics will shift to the home by 2025. That’s a four-fold increase over current home health care spending. Home health spending could double by 2030.

Fragmentation. LHC and other home health providers are benefiting from a fragmented market. Tuck-in acquisitions of smaller agencies are commonplace these days.

As of 2022, the top 5 providers account for about 21% of the total home health market share. This statistic indicates the significant opportunity for continued roll-up of the sector.

• Private equity has noticed this trend, too. Major PE players have entered both the home health and hospice markets to create platforms in the spaces. One recent splashy deal that comes to mind for me was Advent International’s acquisition of AccentCare in 2019.

Notable Deals in Home Health & Hospice

Home health has been one of the hottest M&A markets in healthcare services, both among large and small deals:

• The Ensign Group spun off its home health operations into the Pennant Group in about a $1 billion deal in late 2019.
• AccentCare merged with Seasons Hospice in November 2020.
• Humana purchased Kindred at Home for around $5.7 billion in August 2021 (for the remaining 60%) along with Curo Health Services in July 2018 for $1.4 billion.
• Optum purchased Landmark Health for around $3.5 billion (more on that below) in February 2021.
• Amedisys acquired Contessa Health – a major hospital-at-home provider – for $250 million in June 2021. When Amedisys made this purchase, they claimed it expanded their total addressable market from $44 billion to $73 billion. Do the math there, and that’s how big of an opportunity hospital-at-home could be! More on that below.
• HCA purchased 80% of Brookdale’s home health assets in a $400 million deal in July 2021.
• Encompass announced plans to spin off its home health assets into its own publicly-traded company. The post-acute firm rebranded the segment to Enhabit in Q1 of this year.

Not mentioned above is the plethora of home health, hospice, and home care deals taking place behind the scenes among private equity players, health systems, and publicly-traded operators alike.

It’s a great time to sell a home health and hospice agency, but it’s also a highly opportunistic time for larger operators to continue to roll up the space. Sector M&A activity is only going to accelerate from this point as platform players gobble up assets.

Background on LHC Group. Why Them?

LHC Group is one of the biggest home health agencies in the US. After its founding in 1994, LHC Group’s business grew from a single home health agency into a $6.4 billion enterprise. The firm operates in 37 states through an impressive portfolio of assets across the spectrum that Optum can now take advantage of:

• 557 Home health agencies
• 170 Hospice locations
• 136 Home care locations
• 12 LTACHs
• The most underrated asset…30,000 trained clinical employees. During a labor shortage, Optum is creating a pipeline to out-compete all other healthcare service providers on staffing and talent.

At the last check, LHC Group holds about 4-5% of national market share. That’s good enough to be the third largest national home health provider behind Amedisys and Kindred. Since its inception, LHC has grown through tuck-in acquisitions, JV partnerships, and organic market share retention from solid execution.

In 2017, LHC Group merged with fellow public home health operator Almost Family in a $2.4 billion deal at 14x EBITDA.

• For context, LHC sold to United this month for 2.4x forward revenue and around a 21.4x forward EBITDA.

More recently, LHC purchased 47 locations from Brookdale as part of the planned divestitures included in the HCA-Brookdale $400 million deal.

Yes, multiples in home health are FROTHY but justified given the coming growth. Home health & hospice boast the highest EBITDA multiples in healthcare. Of course, that excludes the slight nonsense going on in digital health.

While LHC has succeeded in its M&A strategy, its ability to integrate and operate those assets has resulted in even more success.

LHC’s Strategy and Secret Sauce.

As mentioned, LHC prioritizes partnerships with hospitals and health systems when approaching markets. These partnerships vastly increase LHC’s chances of market viability and success.

By partnering with hospitals in local markets, LHC locks in large market referral sources from affiliated facilities and leverages that captive volume to out-compete other market players. The partnership doesn’t reimbursement hurt rates, either – even though most home health recipients are on Medicare.

• As of March 2022, LHC held partnerships with 435 hospitals and health systems, receiving referrals for services from 3,600 hospitals across their geographical footprint.

The strategy results in a healthy bottom line. Last year, LHC generated about $2.2 billion in revenue and $216 million in EBITDA (10%ish margin).

Before the acquisition, LHC guided to $2.5 billion and $280 million in EBITDA (margin expansion to 11.2%). The firm is well-positioned and capitalized for growth. Given home health’s capital-light model, LHC holds a solid balance sheet slated to overcome short-term labor and inflation challenges.

• On labor issues, LHC has noted that employee turnover is well below home health industry averages, which speaks volumes (literally) about its operational excellence. More staff = more census = more cash monaaay.

I’m somewhat surprised they sold to United for a low premium (~8%) given their bullish rhetoric around short-term challenges. When discussed on the deal call, though, Optum mentioned that the initial share price premium was around 25% prior to LHC’s recent surge in pricing. Overall, LHC’s share price has suffered since July 2021. Side note – did someone know something starting in January?

Fishy.

How Optum can unleash LHC Group.

So, we’ve established that home health, home care, hospice, and other post-acute services that LHC Group offers have a growing place in healthcare in the coming years. LHC Group was already doing a great job executing its growth-through-JVs strategy from a long-term perspective.

Optum and UHG can unlock value one step further by integrating LHC’s post-acute services into Optum’s continuum of care. That continuum includes an impressive portfolio of acquired post-acute assets. In the past few years, Optum has invested HEAVILY in its at-home care programs by launching a slew of new services and aggressively acquiring key players in the home and virtual care sector:

• Launched Optum HouseCall (1.6 million visits in 2020);
• Acquired Landmark Health in 2021 for around $3.5 billion, which is a direct contracting entity and is involved in hospital-at-home and other value-based programs;
• Acquired naviHealth, a post-acute management services and care navigation platform, in an alleged $1 billion + deal;
• Launched a virtual first plan in October 2021 called NavigateNOW;
• Acquired AbleTo for just south of $500 million, a virtual therapy provider

Aside from the post-acute vertical, UHG acquiring key assets in adjacent markets as well. Some recent, notable deals:

• Bought Change Healthcare for ~$13 billion (assuming the deal goes through pending antitrust investigation. It might not given recent rhetoric, but the burden of proof is on the government)
• Rumors of the Refresh Mental Health deal for likely $1 billion+
• And now the acquisition of LHC Group for $6 billion+

Coupled with the above acquisitions, UnitedHealthcare has repeatedly echoed positive sentiment for Optum. Optum is, after all, United’s primary vehicle for growth in the coming years.

More specifically, United has grown more and more bullish on the expansion of home health services. Just take a look at UHG‘s CEO Andrew Witty touching on Optum’s bullish thesis for at-home care during United’s Q4 2021 earnings call. We should have been paying attention!

“I’ve been super impressed with the development, not just in the clinic, but also through the at-home programs, where we’re able to continue to make sure folks are looked after properly. And actually, particularly as we’ve gone through the pandemic environment, people’s preference to have care delivered in the home has become clearer and clearer.” – Andrew Witty, UHG CEO, Q4 Earnings Call

When interviewed for deal comments after the LHC Group acquisition announcement, Wyatt Decker, the CEO of Optum, doubled down on Andrew Witty’s comments, touting the demand for at-home care.

“This trend has really only just begun, of how much care can truly be delivered in the home…We can give care in the home, which is a lower-cost setting…than nursing homes or more advanced care facilities.”

Through Optum, UHG can keep patients out of costly facility-based care settings like SNFs, IRFs, and even hospitals. This care coordination allows UHG to better manage medical costs long-term. UnitedHealthcare can and will continue to offer competitive insurance plans and services by leveraging Optum’s 60k physicians and 2k sites coupled with these new post-acute and new virtual care assets. Pretty powerful synergy, if you ask me.

In addition to the above assets at Optum’s disposal for post-acute strategy, LHC also announced a huge partnership with SCP Health in mid-2021 to vastly increase SNF@ Home and HaH programs nationwide. The partnership combined LHC’s home health workforce with SCP’s 7,500 clinicians to create a widespread Advanced Care at Home program.

• Optum can leverage LHC’s existing hospital partners to scale hospital-at-home and skilled-nursing-at-home programs – value-based care programs that are just beginning to ripen. If effective, the giant could disrupt these traditionally facility-based services significantly. Take a look at LHC’s existing HaH and SaH model.

If LHC can deploy the above footprint with SCP’s 7,500 clinicians, just think how LHC Group and Optum can scale Advanced Care @ Home with 60,000+ physicians and other clinicians.

• Starting to get it? Strategies like these are how Optum will realize incredible deal synergy from this acquisition – if executed successfully.

This is just the beginning of home-based care initiatives. Other emerging home care segments include home infusions, home-based dialysis, and primary home care – all of which are future avenues of growth for Optum.

Home Health is favored positively in Congress.

Multiple legislative packages increasingly favor at-home care and new value-based programs in the home health sector. Here are just a few programs and bills that signal strongly in favor of future growth for home health:

Choose Home Care Act of 2021: The bill was introduced in Congress late last year and would allow Medicare beneficiaries to be given the option to choose to recover at home rather than in a setting like a skilled nursing facility (Factsheet)

Public Health Emergency Provisions: The PHE created a lot of positive externalities for at-home care. Currently, the PHE will expire on April 16 but will likely be extended for another 90 days, which would maintain the following provisions for post-acute care specifically:

• Medicare sequestration suspension (AKA, better reimbursement that might be permanently delayed)
• Relaxed admission rules and delayed site-neutral payment implementation for LTACHs
• Interestingly, the PHE and associated relief dollars from the CARES Act kept struggling agencies afloat during the pandemic when they otherwise would have gone out of business or sold. CARES Act relief payments, accelerated payments from Medicare, and paycheck protection program loans helped bolster small agency balance sheets during the volume dry spell.

HaH and SNF@H: Hospital and Skilled Nursing At-Home programs are receiving bipartisan support in Congress and will likely get extended another two years with widespread health system backing through the Hospital Inpatient Modernization Act or similar legislation.

• Skilled nursing may soon be on the hook for reimbursement cuts from Medicare, which would result in a double whammy for home health.

Home Health CMS Reimbursement: For 2022, CMS instituted a basket rate increase of 2.5% and no cuts; I would expect even higher basket rates for 2023 and likely an adjustment to the wage rate calculation to account for inflation trends.

• The 2022 final rule will expand the Home Health Value Based Payment demonstration from 9 states to all 50 (!!!)

PDGM: The Patient-Driven Groupings Model, AKA, PDGM, was supposed to shake up the home health industry during its implementation in 2020. Here’s what PDGM changed and why smaller operators will struggle post-’Rona:

• PDGM created a 30 day payment period and based those payments on how patients were classified into 432 distinct payment groups. These payment groups are further broken down into 5 dimensions of care, including referral source, period timing, clinical conditions, functional status, and comorbidities.
• What YOU need to know about PDGM is that the payments are no longer based on volumes, or the number of in-person therapy visits provided. Previously, the prospective payment system would INCREASE payments as the number of therapy visits for that patient increased. But no longer.
• Along with the decoupling from visit volumes, home health agencies can no longer request advanced payments (RAP) from Medicare (AKA, “pay us upfront and we’ll figure out the differences in payment later”). Before CMS phased this out, providers could receive 50-60% of total payments upfront by submitting an RAP. RAPs were replaced by Notices of Admissions (NOAs) starting in 2022.
• So now, instead of receiving that large upfront payment, home health agencies get nothing, which hamstrings cash flow quite a bit. As we say in business school, Cash is King.

As a result of current inflation headwinds, labor shortages, and cash flow changes, I’m expecting smaller home health agencies to struggle post-’Rona. These dynamics will cause them to sell to bigger players…kind of similar to how independent physicians sold to health systems and private equity given operational struggles during the pandemic.

Before the pandemic, the sentiment regarding PDGM heading into the major changes was that the program would cause unprecedented levels of consolidation, echoing my thoughts above:

“Combined with the two 30-day payment periods under PDGM, the elimination of the RAP should lead to more consolidation in the industry than we’ve experienced in the last 2 decades. It will hit cash flows hard for the smaller agencies; but for the larger agencies, such as LHC, we would expect minimal impact.” Keith Myers, Co-Founder, Chairman & CEO, LHC Group Q3 2019 Earnings Call

“We believe PDGM has the potential to accelerate an industry consolidation unlike any we’ve seen in recent memory. We will be ready” Keith Myers, Co-Founder, Chairman & CEO, LHC Group Q3 2019 Earnings Call

In summary, we haven’t seen these effects yet on smaller home health operators because of the easy money public health emergency policies. But eventually, we’ll find out if Keith was right. I bet he is.

Conclusion

There are WAY too many positive dynamics at play in favor of LHC Group’s portfolio of assets for you to ignore Optum’s acquisition:

• Regulations are supporting home-based initiatives, and reimbursement is stable. Lawmaker scrutiny is mounting on SNFs, providing further discharge opportunities and advancement for home health.
• LHC has a history of operational success in home health and is the missing link among Optum’s various post-acute and at-home initiatives. Optum needed this acquisition to keep up with Humana and others pursuing similar post-acute strategies.
• Home health is highly fragmented and PDGM creates headaches for smaller agencies, which will allow Optum to pounce on opportunistic M&A in the space.
• Along with its huge physician base, Optum can leverage LHC’s health system partnerships to drastically expand Advanced Care at Home programs combined with recent acquisitions of Landmark and naviHealth.
• By keeping patients out of SNFs and hospitals, these programs could severely disrupt facility-based care delivery in the coming years through the home.

Final thoughts on antitrust…You could argue that there are antitrust concerns related to this transaction given that UHG is essentially creating a vertical monopoly, and I get that.

• I would argue that the deal is a win for most parties involved, including patients, health systems, and keeping patients out of costlier care settings while receiving effective treatment at home. If Optum doesn’t abuse its position (which is a big if, mind you), I have no problem with the increasing vertical integration in healthcare.

Down the line, I would not be surprised whatsoever if regulators forced United and Optum to split.

But for now, watch out for this scaled healthcare titan.

Thanks to Jared Dashevsky, Brett Dashevsky, Troy Castle, and Brandon W for taking a quick read through of this breakdown!

Resources:

LHC Group’s most recent investor presentation. (LHC Investor Relations)

From facility to home: How healthcare could shift by 2025 (McKinsey)

Home Health Business: Market Dynamics & Future Opportunity (VMG Health)

CARES Act Impact on Home Health Agencies (VMG Health)

More about the Hospital at Home program (Healthcare Huddle)

Optum factsheet from UnitedHealthcare (UHG Investor Relations)

LHC-Optum proxy SEC 8-k filing on the acquisition. (LHC Investor Relations)

The post What UnitedHealthcare’s $6.4 billion LHC Group Acquisition Means for the Future of Home Health. appeared first on The Healthy Muse.

I have a keen interest in following the public healthcare markets, and specifically public digital health companies given the slew of IPOs and SPACs in the space over the last couple of years.

Since the number of publicly traded digital health firms is ever growing, I’m proud to announce the launch of the Healthy Muse Health Tech Index (“HTI”) to follow the sector in a more interactive manner.

• The index will track an equally-weighted portfolio of public digital health firms across a range of services and subsectors.

Because I love healthcare, I’ll be comparing this portfolio’s performance against (1) the S&P 500 and (2) more specifically, the S&P 500 broad healthcare index.

• I’m planning to provide weekly updates on the index’s performance in the market update section of the Healthy Muse newsletter. This section will also include news, headlines, and trends related to the index’s holdings. Subscribe to follow along here!

Constituents of the Healthy Muse Health Tech Index.

As mentioned previously, holdings in the HTI will be limited to public digital health companies. There will also be some overlap with services and medical device companies – sue me.

• Keep in mind that these companies are subject to change as firms get acquired and new businesses enter the public markets.

Follow this link to the current (and near term future) list of public digital health constituents as of June 21, 2021:

• Link to current Health Tech Index Holdings.

I’m excited to track this portfolio of public digital health companies and will be interested to see how each firm performs over time!

Any questions or comments? Feel free to reach out to me on Twitter.

The post tracking the latest public digital health companies appeared first on The Healthy Muse.

Digital health firms that IPO’d in 2020.

One Medical: The health tech primary care platform backed by Google went public in January. (Link)

Ardent: Interestingly, privately-owned hospital operator Ardent Health Services called off its IPO plans in January. I can’t help but think the firm would have benefitted from such frothy market conditions, but of course hindsite is 2020, and I’m not a hospital operator. (Link)

Accolade: The firm associated with helping employers navigate health benefits, debuted on the public markets in early July. (Link)

GoodRx: Debuted to much success in late September, popping as high as $57 per share in its initial day of trading. Interestingly, since the Amazon Pharmacy announcement, GoodRx has traded down to $43. (Link)

GoHealth: The tech enabled insurance enrollment platform raised more than $913 million in its IPO in mid-July. (Link)

Oak Street Health: Went public in early August to – as expected – much success. The firm raised more than three times what it intended as the IPO market stayed red-hot in the back half of the year. (Link)

Outset Medical: successfully debuted on the public markets in late September. The portable dialysis firm is looking to capitalize on the recently finalized end-stage renal disease payment model that encourages at-home dialysis treatment.

SOC Telemed: As a part of another SPAC deal, SOC Telemed joined the public markets early November under the ticker $TLMD, valued initially at $720 million. The firm provides telemedicine and other tech services to hospitals in almost every state and is taking advantage of the boom in remote health care.

Amwell: skyrocketed in its IPO in late September. That same week, Teladoc hit Amwell with several intellectual property accusations, claiming that Amwell infringed on several of Teladoc’s patents.

Multiplan: Churchill Capital’s SPAC took Multiplan, a healthcare solutions provider that partners with managed care companies, public at an $11 billion valuation. (Link)

Hims & Hers: Is expected to go public via SPAC with Oaktree Acquisition Corp. The unicorn will hold a value of about $1.6 billion when the deal closes. (Link)

Clover Health: The health-tech managed care firm was acquired by Social Capital Hedosophia Holdings Corp III in October, valuing Clover at about $3.7 billion initially. (Link). Read this analysis of the Clover SPAC.

Other recently announced digital health IPOs.

Eargo: The hearing aids tech co. raised $141 million in its IPO in mid October. (Link)

UpHealth and Cloudbreak: In healthcare’s latest SPAC deal, UpHealth and Cloudbreak are merging with blank-check company GigCapital2 to become the latest digital health conglomerate unicorn on the public markets. The new combination is a fascinating PROFITABLE play into telemedicine, patient care management, medical interpretation, prescription drugs, and more. (Ticker: $UPH).

CareMax Medical Group and IMC Medical Group: Healthcare SPAC Deerfield is merging with the two in order to bring the firms to the public markets. The combination will create what I imagine to be similar to Oak Street Health – medical clinics for seniors under value-based contracts. (Link)

What to expect for digital health IPOs in 2021.

With frothy market valuations and the forced shift to virtual and digital health in 2020, we saw a number of digital health IPOs – and IPOs in general – along with the emergence of special purpose acquisition companies (SPACs) which also helped a few healthcare firms hit the public markets. Expect the same to continue in 2021.

On deck for 2021: Telehealth player MDLive, Highly touted unicorn Oscar Health, and more. The health tech IPO boom goes on! (Link)

In one of the most anticipated health tech moves, Oscar Health confidentially filed for IPO a week after raising $140 million in a pre-IPO funding round in late December 2020.

• As other digital health unicorns continue to raise money at astronomical valuations in the billions of dollars, expect other big digital health names to follow suit toward the IPO/SPAC play.

Thanks for reading.

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About the Healthy Muse.

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The post The 12 Digital Health Companies that IPO’d in 2020. appeared first on The Healthy Muse.

While there aren’t a ton of quality health care newsletter writers (there need to be more), the ones currently available are must-reads if you’re interested in the health care industry.

• My primary goal in writing the Healthy Muse and in highlighting quality health care writers is to get more people involved in the health care conversation. I want people to learn more about what’s going on in health care, to be informed voters, and to be advocates for themselves when it comes to their own personal health care.
• Almost 100% of the content that these writers produce end up in the Healthy Muse newsletter’s Top Reads section. They’re that good.

If you know of any more health care newsletter deep divers that should be listed in this post or the Healthy Muse’s healthcare newsletter directory, please feel free to reach out.

Here are my picks for the 5 best health care newsletter deep divers. Instant-subscribes, in my honest opinion.

The 5 Best Health Care Newsletter Deep Divers

• Nikhil Krishnan’s Out-of-Pocket
• Steve H’s Case Load
• Nikita Singareddy’s Waiting Room
• Kevin Wang’s Measure Twice, Once Cut
• The Health Care Blog, by Matthew Holt & others

#1. Out-Of-Pocket

Nikhil Krishnan does an excellent job of breaking down the U.S. health care system in a funny and witty way. Chock full of memes and conversational content, every edition leaves readers with thoughtful insights in an approachable and friendly guise.

• Click here to subscribe to Out-of-Pocket.

#2. Case Load

Take a deep dive into the Case Load by Steve H, where you’ll learn more about health care and the business strategy taking place behind the scenes. Case Load breaks down health care business models and the value chains that companies participate in. Business models that Steve has broken down include GoodRx, health insurance value chains, and more.

• Click here to subscribe to the Case Load.

#3. Waiting Room

Written by Nikita Singareddy, Waiting Room is a blog breaks down the broken incentives present in our health care industry. The newsletter does a great job of explaining complex things in healthcare that you probably didn’t even know existed.

• Click here to subscribe to the Waiting Room.

#4. Measure Twice, Cut Once

Measure Twice, Cut Once by Kevin Wang takes a deeper dive into the quality metrics present in health care and breaks down value-based arrangements, along with general thoughts about our health care system.

• Click here to subscribe to Measure Twice, Cut Once.

#5. The Health Care Blog

THCB covers everything healthcare. The site gets plenty of reputable guest bloggers. Although the website is a formatting cluster bomb, the newsletter content is top notch and covers interesting health care trends and reads you might not have considered otherwise.

• Click here to subscribe to the Health Care Blog.

Thanks for reading! If you’re still looking for more healthcare newsletters, please check out our free healthcare newsletter directory. The directory gives our top 5 picks over a broad array of healthcare subjects, including policy, aggregators, digital health, and more.

Additionally, please consider subscribing to our own newsletter, Healthy Muse Healthcare News.

About the Healthy Muse.

Save yourself some time by subscribing to our all-in-one newsletter. Subscribers get the first edition – every Monday night.

The Healthy Muse was created to educate people on the healthcare system. It’s a once-weekly e-mail updating you on all the major news, broader trends, big stories, and policy updates. Learn more about our vision here.

The post The 5 Best Health Care Newsletter Deep Divers appeared first on The Healthy Muse.

As far as surprise billing legislation goes, there are two popular front runners in Congress: Benchmarking – which is also referred to as “Rate-Setting” and Arbitration.

• In this article, we’ll try to explain the differences between benchmarking vs. arbitration.

What even is Arbitration?

Arbitration would settle payment disputes for out of network emergency bills by asking a third party to decide what payment a provider should receive.

• Arbitration would allow providers to negotiate for more favorable rates and argue their side. In contrast, arbitration would also allow for insurers to request lower payment rates.
• It works like this: Say that you went to the emergency room for something serious (hopefully not, but bear with me), but a provider that saw you at the hospital was out of network with your insurance provider.
• Rather than bill you at the out of network rate, the provider and your insurer would negotiate through this third party arbitration process and leave you out of it altogether.

Providers prefer arbitration. The American Hospital Association recently released a statement in favor of an arbitration clause. In the statement, the AHA arguing that any “rate-setting” measures taken by Congress would give insurers more leverage over providers. AKA, no benchmarking PLZ.

• They go on to say that this policy would remove any incentive for insurers to contract with providers in the first place (since Congress would now be arbitrarily setting reimbursement rates).

Okay, so what about Benchmarking?

Unsurprisingly, in direct contrast to providers, insurers want Congress to cap surprise billing payments at some agreed-upon rate. This policy is called “Benchmarking.”

How benchmarking works: Say that you went to the emergency room AGAIN for something serious (sheesh, pull yourself together). The provider is, again, out of network with your insurance.

Rather than bill you at the providers’ out of network rate, the insurer would pay the provider at some sort of already agreed-upon “regional” reimbursement rate for the out of network service you received.

• So if you got some pain meds from an out of network doc, the insurance company would pay the provider at the median reimbursement rate for the region (or something similar – you get the idea).

Whether that payment rate is at a fixed percentage of Medicare (e.g., “we’ll give physicians/hospitals 200% what Medicare pays for the out-of-network portion of the bill”) or the median in-network rate adjusted for region, it would be a bigger win for insurers to get Benchmarking through Congress.

A big part of healthcare is negotiating contracts between payors and providers. It’s a constant tug of war.

• Providers feel as if any sort of benchmarking, rate setting measure would strip them of their power to negotiate for what they consider to be fair reimbursement.

Everyone wants to see patients protected from out of network bills. But we’re still struggling a bit to get to the finish line.

Thanks for reading.

Follow me on Twitter.

Save yourself some time by subscribing to our all-in-one newsletter. Subscribers get the first edition – every Monday night.

About the Healthy Muse.

The Healthy Muse was created to educate people on the healthcare system. It’s one weekly e-mail updating you on all the major election news, broader trends, big stories, and policy updates. Learn more about our vision here.

Get smarter and sign up below today.

The post Surprise Billing: Benchmarking vs. Arbitration appeared first on The Healthy Muse.

We at the Healthy Muse despise healthcare jargon. The phrases and healthcare election buzzwords that the industry comes up with make us want to gag.

But, alas, if you want to get up to speed for the 2020 presidential election in November, you’re going to hear these words — a lot:

Affordable Care Act / The ACA / Obamacare 

These are all the same thing. The ACA was the most recent broad healthcare reform, enacted by Barack Obama in 2010. It gave individuals greater access to health insurance by expanding government funding for Medicaid. Obamacare allows people to buy health insurance plans from the government, and low-income individuals can qualify for reduced, subsidized rates.

• Read more about specific ACA policies and more in-depth analysis here.

Medicare for All 

A Democratic health policy that would remove the current private medical health insurance model and put everyone on a government-run health insurance plan. It’s funded by higher taxes but would replace your employer’s health insurance plans, including all deductibles, co-pays, and out of pocket costs.

• Read more about it here.

Single Payer 

The entirety of healthcare is covered under one payer, whether that payer is Medicare or managed by a private company. Note that Medicare for All is a TYPE of a single-payer system.

Public Option

Think of it as an employer health insurance plan run by the government that anyone can buy into.

• Read more about it here.

Medicare vs. Medicare Advantage

Medicare is an entitlement program — a federally run health insurance plan — that everyone pays taxes for. Once individuals reach the age of 65, they qualify for Medicare.

• Medicare Advantage is a type of Medicare plan run by private insurers. Individuals can opt into these plans to get expanded benefits not included in just ‘original’ Medicare. Medicare Advantage plans are growing like crazy with the Baby Boomer influx.

Medicaid

• Medicaid is a social welfare program that was expanded by Obamacare in 2010. It’s a federal and state program that provides health coverage for certain people with limited income and assets.

Pre-Existing Conditions 

If you have diabetes or had a stroke or whatever the condition may be, then you have a “pre-existing condition.” Prior to Obamacare in 2010, people with pre-existing conditions had to pay more for health insurance coverage. When Obamacare was instituted, health plans could no longer charge higher premiums to those with pre-existing conditions.

• Nowadays, it’s extreme political taboo and very unpopular to discuss taking away the protections given to those with pre-existing conditions.

Repeal and Replace 

• Back in 2017, Trump and Republican Congressional representatives attempted to repeal Obamacare in an effort to replace it with a conservative healthcare plan. It didn’t gain enough traction. However, the ideas within the proposal are still popular with Trump and Republicans to form a new healthcare reform plan.

Medicaid Work Requirements

• Another proposal where proof of work must be given in order to be covered under Medicaid.

Surprise Medical Billing, or just Surprise Billing

Surprise Billing occurs when a patient receives a much larger-than-expected medical bill from services and treatments received while at the ER. 

• The most important thing to remember when it comes to surprise billing is that a hospital can be in-network on a patient’s insurance plan, but the physician might not necessarily be covered.

If the physician practice is out of network with the patient’s insurance, they can bill much higher out-of-network rates that the patient is completely responsible for.

This unfortunate fact happens because hospitals generally contract with physician groups, who then contract SEPARATELY with insurance plans. That’s why patients generally receive two bills whenever they go to the ER. Physicians can opt-out of any insurance plan if they don’t like the negotiated rate that the insurance plan is offering.

• Patients grow confused — “Wait,” they thought. “I thought my insurance covered an emergency room visit?” Well, yes, Karen — your insurance might cover the facility (hospital) portion of the bill, but the emergency physician treating you (who is separately contracted and probably works in an emergency physician practice) might not be covered at all. Which would put YOU on the hook for 100% of that out of network bill. Yikes.

So, in summary, patients receive 2 bills for an ER visit — one from the hospital, called the “facility” bill. Then, one from the physician, called the “professional” bill. The physician bill can be out-of-network, even though your insurance covers the hospital bill.

• Surprise billing is so contentious because patients in a medical emergency can’t exactly choose which hospital they can go to. Obviously, they’re going to go to the closest one. And if the ER physicians at that hospital are out of network with your insurance? Well, you’re SOL.

Surprise Billing: Benchmarking vs. Arbitration 

Who wants what in surprise billing? what are the proposed solutions? Each of the candidates has varying solutions. All of the solutions boil down to one of two proposals centered around benchmarking and arbitration, while some are a hybrid of the two approaches.

• Arbitration would settle payment disputes for out of network emergency bills by asking a third party to decide what payment a provider should receive. Arbitration would allow providers to negotiate for favorable rates and argue their side.
• Unsurprisingly, in direct contrast to providers, health insurers want Congress to cap surprise billing payments at some agreed-upon rate — this is called “Benchmarking.”

Social Determinants of Health 

Could we have picked a stuffier term for this? Essentially, what this means is that there are other ‘social’ aspects to your livelihood that ‘determine’ how healthy you are — diet/access to nutrition, neighborhood, income, etc.

• Learn more about them here.

Prescription Drug Importation

Since other developed countries like Canada pay less for drugs, the thought here is that the U.S. would allow patients or drug distributors to purchase prescription drugs from other pre-approved countries (that meet the right safety requirements) and import them into the U.S. for much cheaper than what they would pay for them in the U.S itself.

• Read more: 10 FAQs on drug importation.

Direct Drug Price Negotiation

Democrats, in particular, want the government to be able to directly negotiate with drug companies on how much they can charge for their drugs.

The government, through the Department of Health and Human Services (HHS), would negotiate on behalf of both public (Medicare, Medicaid) and private (your employer-based health insurance plans) to determine prices that drug companies can charge for your prescriptions AND how much drug companies can raise prices in the future.

Generally speaking, Democrats want to tie drug pricing inflation to the standard U.S. inflation rate — which is pretty low right now.

Read more:

• A brief history of Medicare drug price negotiation.
• The Congressional Budget Office stated that providing broad negotiating authority by itself would likely have a negligible effect on federal spending.
• (OPINION): Direct government negotiations on price would not save the government money.
• (OPINION): Remedy for high drug costs: let Medicare negotiate.

Interoperability 

 It’s a horrible way to say that you want all electronic health records systems to be able to play nice with each other.

• For instance, if your primary care physician is on one electronic health records system, but your gastroenterologist is on another, the two systems can’t communicate with each other to transfer your data.
• Many current policy proposals — on both the right and left — want ALL electronic health records systems to be able to send data to each other. It’s a major-minor issue in healthcare right now.

Thanks for reading. Hopefully, you’re up to speed on all of the healthcare election buzzwords and you’re prepared to be an educated voter.

Save yourself some time by subscribing to our all-in-one newsletter. Subscribers get the first edition – every Monday night.

About the Healthy Muse.

The Healthy Muse was created to educate people on the healthcare system. It’s one weekly e-mail updating you on all the major election news, broader trends, big stories, and policy updates. Learn more about our vision here.

Get smarter and sign up below today.

The post 11 Healthcare Election Buzzwords to Know appeared first on The Healthy Muse.

It’s no secret that Walmart is trying to lower its costs in the healthcare industry.

We already know that Walmart is getting more selective with which providers they allow their employees to see.

In 2019 alone, Walmart piloted several programs designed to lower healthcare costs for its employees:

• Walmart gives workers financial incentives to use higher-quality doctors.
• The retail giant partnered with Amedisys in 2019, one of the largest (and still growing) home health and hospice players, to expand access to home health across the nation.
• Sam’s Club is also offering a pilot program to its members to offer discounts on certain routine care items in the form of bundled services.
• Finally, starting in 2020, Walmart piloted a telehealth program partnering with UnitedHealth and Doctors on Demand. The program allows employees in 3 states to use telehealth for a $4 copay.

Walmart Health primes itself to enter primary care.

In direct competition with the likes of CVS and other direct to consumer primary care-type offerings, Wal-Mart recently decided to make an even more serious push into healthcare by opening up primary care clinics.

Its first clinic site opened in Georgia and looks to offer quite a decent selection of offerings for consumers, including dental, optical, audiology, and other entry-point services for…you guessed it…everyday low prices!

The pilot now has expanded to 2 sites in Georgia, and further expansion is on the way after Walmart’s first two clinics were found performing above expectations.

• In fact, the number of patients coming through the doors is “substantially higher” than what Walmart’s thought would happen.

Some really intriguing things about the Walmart clinics:

• Clinics have separate entrances from the main supercenter.
• They’re run by physicians.
• They involve little to no paperwork – a lot of appointments don’t involve insurance at all (although they do accept it), and scheduling/billing has been outsourced.
• They provide medical, dental, and eye care, along with x-rays and other routine diagnostic services.
• They disclose transparent pricing – the patient knows exactly how much everything will cost.

It remains to be seen what Walmart’s grand business and profitability strategy is with these clinics. But – according to the article – Walmart is pricing these services at less than half as much as they would cost in a traditional setting.

Walmart might be counting on these super-low priced healthcare services as a loss leader to drive traffic to its stores – namely, to fill prescriptions and run other errands.

My main thoughts:

• Will Walmart’s clinics be priced low enough to make a significant impact/disruption of the primary care industry? Or will the clinics simply be another healthcare option in the sea of retail health?
• When hundreds of patients come through those clinic doors each day, how will quality be affected?
• How will Walmart’s strategy affect the margins of other primary care players – urgent cares centers, physician practices, etc?
• Could Walmart solve – or, at the very least, alleviate – shortages in rural areas?

The bottom line.

We might only ever see the Amazon’s, Google’s, One Medical’s, and Teladoc’s of the world in the news headlines, but we can’t forget about the traditional heavyweight giant.

Walmart is about to make some seriously impactful moves into healthcare if this program expands nationwide. Keep an eye on the retail giant as a potentially huge future player in primary care.

Thanks for reading.

Save yourself some time by subscribing to our all-in-one newsletter. Subscribers get the first edition – every Monday night.

About the Healthy Muse.

The Healthy Muse was created to educate people on the healthcare system. It’s one weekly e-mail updating you on all the major election news, broader trends, big stories, and policy updates. Learn more about our vision here.

Get smarter and sign up below today.

The post Meet the Company ready to disrupt Primary Care: Walmart Health appeared first on The Healthy Muse.

But our healthcare system is so complex. How can I possibly even begin to understand the issues?

Don’t worry — that’s what this handy guide is for. I’ll be breaking down the major stuff that you need to know. 

If you don’t want to read the guide, you can head over to our 2020 Healthcare Election HUB anytime – we have some pretty neat graphics that break the issues down easily.

Here’s the layout of your 2020 healthcare election guide:

• Healthcare vocabulary you need to know
• The 3 main healthcare issues to know in the 2020 election
• What each candidate wants to do about the 3 main issues (costs, drug pricing, and surprise billing)
• Helpful resources to learn more

For anyone interested in learning more about a particular topic, I’ll be linking plenty of helpful resources throughout. You can also learn more about healthcare here in our weekly newsletter.

One quick caveat: this 2020 healthcare election guide doesn’t cover any of the costs associated with each of the plans. (It’s pretty difficult to estimate costs, anyway.)

Let’s get started!

Vocabulary Lesson: Healthcare Election Lingo to Know

So I actually hate healthcare jargon. The phrases and buzzwords that the industry comes up with make me want to gag. But, alas, you’re going to hear these words — a lot:

Affordable Care Act / The ACA / Obamacare 

These are all the same thing. The ACA was the most recent broad healthcare reform, enacted by Barack Obama in 2010. It gave individuals greater access to health insurance by expanding government funding for Medicaid. Obamacare allows people to buy health insurance plans from the government, and low-income individuals can qualify for reduced, subsidized rates.

• Read more about specific ACA policies and more in-depth analysis here.

Medicare for All 

A Democratic health policy that would remove the current private medical health insurance model and put everyone on a government-run health insurance plan. It’s funded by higher taxes but would replace your employer’s health insurance plans, including all deductibles, co-pays, and out of pocket costs.

• Read more about it here.

Single Payer 

The entirety of healthcare is covered under one payer, whether that payer is Medicare or managed by a private company. Note that Medicare for All is a TYPE of a single-payer system.

Public Option

Think of it as an employer health insurance plan run by the government that anyone can buy into.

• Read more about it here.

Medicare vs. Medicare Advantage

Medicare is an entitlement program — a federally run health insurance plan — that everyone pays taxes for. Once individuals reach the age of 65, they qualify for Medicare.

• Medicare Advantage is a type of Medicare plan run by private insurers. Individuals can opt into these plans to get expanded benefits not included in just ‘original’ Medicare. Medicare Advantage plans are growing like crazy with the Baby Boomer influx.

Medicaid

• Medicaid is a social welfare program that was expanded by Obamacare in 2010. It’s a federal and state program that provides health coverage for certain people with limited income and assets.

Pre-Existing Conditions 

If you have diabetes or had a stroke or whatever the condition may be, then you have a “pre-existing condition.” Prior to Obamacare in 2010, people with pre-existing conditions had to pay more for health insurance coverage. When Obamacare was instituted, health plans could no longer charge higher premiums to those with pre-existing conditions.

• Nowadays, it’s extreme political taboo and very unpopular to discuss taking away the protections given to those with pre-existing conditions.

Repeal and Replace 

• Back in 2017, Trump and Republican Congressional representatives attempted to repeal Obamacare in an effort to replace it with a conservative healthcare plan. It didn’t gain enough traction. However, the ideas within the proposal are still popular with Trump and Republicans to form a new healthcare reform plan.

Medicaid Work Requirements

• Another proposal where proof of work must be given in order to be covered under Medicaid.

Surprise Medical Billing, or just Surprise Billing

Surprise Billing occurs when a patient receives a much larger-than-expected medical bill from services and treatments received while at the ER. 

• The most important thing to remember when it comes to surprise billing is that a hospital can be in-network on a patient’s insurance plan, but the physician might not necessarily be covered.

If the physician practice is out of network with the patient’s insurance, they can bill much higher out-of-network rates that the patient is completely responsible for.

This unfortunate fact happens because hospitals generally contract with physician groups, who then contract SEPARATELY with insurance plans. That’s why patients generally receive two bills whenever they go to the ER. Physicians can opt-out of any insurance plan if they don’t like the negotiated rate that the insurance plan is offering.

• Patients grow confused — “Wait,” they thought. “I thought my insurance covered an emergency room visit?” Well, yes, Karen — your insurance might cover the facility (hospital) portion of the bill, but the emergency physician treating you (who is separately contracted and probably works in an emergency physician practice) might not be covered at all. Which would put YOU on the hook for 100% of that out of network bill. Yikes.

So, in summary, patients receive 2 bills for an ER visit — one from the hospital, called the “facility” bill. Then, one from the physician, called the “professional” bill. The physician bill can be out-of-network, even though your insurance covers the hospital bill.

• Surprise billing is so contentious because patients in a medical emergency can’t exactly choose which hospital they can go to. Obviously, they’re going to go to the closest one. And if the ER physicians at that hospital are out of network with your insurance? Well, you’re SOL.

Surprise Billing: Benchmarking vs. Arbitration 

Who wants what in surprise billing? what are the proposed solutions? Each of the candidates has varying solutions. All of the solutions boil down to one of two proposals centered around benchmarking and arbitration, while some are a hybrid of the two approaches.

• Arbitration would settle payment disputes for out of network emergency bills by asking a third party to decide what payment a provider should receive. Arbitration would allow providers to negotiate for favorable rates and argue their side.
• Unsurprisingly, in direct contrast to providers, health insurers want Congress to cap surprise billing payments at some agreed-upon rate — this is called “Benchmarking.”

Social Determinants of Health 

Could we have picked a stuffier term for this? Essentially, what this means is that there are other ‘social’ aspects to your livelihood that ‘determine’ how healthy you are — diet/access to nutrition, neighborhood, income, etc.

• Learn more about them here.

Prescription Drug Importation

Since other developed countries like Canada pay less for drugs, the thought here is that the U.S. would allow patients or drug distributors to purchase prescription drugs from other pre-approved countries (that meet the right safety requirements) and import them into the U.S. for much cheaper than what they would pay for them in the U.S itself.

• Read more: 10 FAQs on drug importation.

Direct Drug Price Negotiation

Democrats, in particular, want the government to be able to directly negotiate with drug companies on how much they can charge for their drugs.

The government, through the Department of Health and Human Services (HHS), would negotiate on behalf of both public (Medicare, Medicaid) and private (your employer-based health insurance plans) to determine prices that drug companies can charge for your prescriptions AND how much drug companies can raise prices in the future.

Generally speaking, Democrats want to tie drug pricing inflation to the standard U.S. inflation rate — which is pretty low right now.

Read more:

• A brief history of Medicare drug price negotiation.
• The Congressional Budget Office stated that providing broad negotiating authority by itself would likely have a negligible effect on federal spending.
• (OPINION): Direct government negotiations on price would not save the government money.
• (OPINION): Remedy for high drug costs: let Medicare negotiate.

Interoperability 

 It’s a horrible way to say that you want all electronic health records systems to be able to play nice with each other.

• For instance, if your primary care physician is on one electronic health records system, but your gastroenterologist is on another, the two systems can’t communicate with each other to transfer your data.
• Many current policy proposals — on both the right and left — want ALL electronic health records systems to be able to send data to each other. It’s a major-minor issue in healthcare right now.

On to the Issues: The 3 Main Healthcare Issues.

#1. Healthcare spending reform.

• The U.S. spends much more than other developed countries on its healthcare system. In fact, healthcare costs are one of the top reasons for bankruptcy for Americans. Many officials want to change that.
• Learn more about the healthcare cost issue here.

#2. Prescription drug pricing.

• Lowering prescription out of pocket costs has been an extremely popular topic lately. In Congress, getting to the finish line on a bill has been…pretty difficult.
• Learn more about the drug pricing issue here.

#3. Surprise medical billing.

• As previously mentioned, patients who visit the ER or hospital will sometimes receive high-cost medical bills from providers who were out of their insurance plan’s network. Multiple bill proposals are floating around Congress, and all of the candidates have plans surrounding the issue.
• Learn more about the surprise billing issue here.

General Healthcare Plans by Candidate

Now that we’ve covered the main issues and policy lingo, let’s get into what each candidate wants from the U.S. healthcare system. Here’s what each candidate generally wants at a high level. You’ll find that most of the more moderate candidates (Bloomberg, Buttigieg, Biden) tend to share similar healthcare policies. 

We’ll start with the incumbent:

Donald Trump

• Repeal and replace Obamacare (details currently fuzzy). Provide more oversight for Medicaid state programs. Give states more healthcare spending flexibility in the form of Medicaid block grants. Increase price transparency for patients and what they’re spending for healthcare procedures.

Bernie Sanders

• Fully-fledged Medicare for All. Completely replace the private health insurance system that predominantly runs through employer-sponsored benefit programs. Increase taxes, but no copays, deductibles, or any other insurance network problems. Expand coverage to include vision, dental, and others.

Pete Buttigieg

• Medicare for All who want it, meaning instituting a Public Option. Expand the ACA. End surprise billing and cap out of network bill totals. Make mental health coverage easier. Reduce healthcare admin costs and create an all-payer claims database to create better data-driven health outcomes. Put more regulatory scrutiny on healthcare mergers.

Mike Bloomberg

• Institute a public option along with expanding the ACA. Only allow one patent per drug to reduce costs. Increase rural healthcare funding and make rural hospitals more financially viable. Cap surprise medical bills and eliminate anything being ‘out of network.’ Use CMS to directly negotiate with drug companies on pricing.

Joe Biden

• Institute a public option along with expanding the ACA. Provide a middle-class premium tax credit. End surprise billing. Keep healthcare providers from consolidating market power. Use CMS to directly negotiate with drug companies on pricing. Implement a wide variety of other drug regulation to combat rising costs.

Elizabeth Warren

• Medicare for All, but a slower transition to it. First, implement a public option. Use the government to manufacture drugs where there are shortages. Use CMS to directly negotiate with drug companies on pricing. Increased funding for rural healthcare providers. Prioritize mental health.

Broad Healthcare Reform Plans

Many believe that healthcare costs in the U.S. are getting out of hand, approaching 20% of GDP. 

Most Democratic candidates think that adding more government health insurance options will help ease the healthcare cost burden for both patients and employers. 

Here’s what each candidate wants to implement:

Donald Trump

• Repeal and Replace Obamacare.

Bernie Sanders

• Medicare for All that fully replaces private insurance.

Pete Buttigieg

• Public Option that competes with private insurance plans.

Mike Bloomberg

• Public Option that competes with private insurance plans.

Joe Biden

• Public Option that competes with private insurance plans.

Elizabeth Warren

• Medicare for All that fully replaces private insurance, but implement a public option first.

Drug Pricing Proposals

What each candidate is thinking on rising prescription drug prices.

Donald Trump

• Have the U.S. pay similarly to what other developed countries pay for drugs (“International Drug Pricing Index”). 
• Import drugs from other countries (hello, Canada). Speed up FDA approval of generic drugs to increase supply. Increase drug pricing transparency.

Bernie Sanders

• Use Medicare to directly negotiate with drug companies. Allow drug importation from lower-cost countries like Canada. 
• Use an International Drug Pricing index comprised of other developed countries to determine how much Medicare for All should pay for drugs. 
• Cap patient drug spending at $200 per year.

Pete Buttigieg

• Limit drug out of pocket spending to max $250/month. 
• Cap Medicare part D monthly drug costs at $200/month. Make generic drugs free for Medicare, Medicaid, and the Public Option. 
• Allow the federal government to directly negotiate with drug companies on how much they should pay. 
• Cap drug price inflation. Penalize non-compliant drug companies.

Mike Bloomberg

• Allow the federal government to directly negotiate with drug companies on how much they should pay. 
• Cap Medicare part D costs at $2,000/year. Only allow one patent per drug, no exceptions. 
• Eliminate all drug company payments to pharmacy benefit managers. 
• Have the federal government charge royalty payments for drugs developed by public tax dollars.

Joe Biden

• Allow the federal government to directly negotiate with drug companies on how much they should pay. 
• Limit launch prices for drugs that face no competition and peg prices to an international drug pricing model. 
• Cap drug price inflation to the standard U.S. inflation rate. 
• Allow drug importation. 
• Improve the supply of generic drugs.

Elizabeth Warren

• Allow the federal government to directly negotiate with drug companies on how much they should pay. 
• Use HHS to address generic drug shortages and high drug prices by manufacturing drugs. 
• Introduce tighter patent regulation. 
• Allow drug importation from other countries.

Fixing Surprise Medical Billing

The last major policy issue we’re going to cover.

Donald Trump

• Whatever gets through Congress, I’ll probably sign.

Bernie Sanders

• Under Medicare for All, everything is in network. Therefore, no surprise medical bills. 
• To go one step further — eliminate all medical debt, estimated at $81 billion. Remove medical debt from bankruptcy court.

Pete Buttigieg

• If a facility is in network under your healthcare plan, then require all of the services provided in that facility to be served at in-network rates as well. 
• Put a cap on what out of network providers can charge patients.

Mike Bloomberg

• Ban surprise medical bills by capping all out of network services at 200% of Medicare’s typical payment. 
• Require providers and insurance companies to arbitrate out of network payment amounts, leaving the patient out of it.

Joe Biden

• Prevent providers from charging out-of-network rates for true emergencies, when a patient has no choice over which provider cares for them.

Elizabeth Warren

• Under Medicare for All, everything is in-network. Therefore, no surprise medical bills. 
• But before Medicare for All, cap out of network healthcare services received at the lower cost of A) the median in-network payment rate for that procedure in that region, or 2) 125% of Medicare’s payment rate.

More helpful healthcare election resources.

I really want to encourage you to stay in the conversation, especially as the election approaches (and even beyond the election — crazy, I know). Here are some additional great resources for you to look through.

Candidate Healthcare plans:

• Donald Trump | Bernie Sanders | Pete Buttigieg | Mike Bloomberg | Joe Biden | Elizabeth Warren

Other Resources:

• Politico’s 2020 Election Guide
• Kaiser Foundation Healthcare Polls

Sign up for the newsletter

Finally, I wanted to let you know that wecover all of the top healthcare stories — election news, policy, business, digital health, and more — in one weekly e-mail newsletter. 

• If you’re so inclined and want more informative, easy content, you can sign up here.

Thanks for reading! Good luck out there voting.

-Blake

The post Your Easy 2020 Healthcare Election Guide appeared first on The Healthy Muse.

Epic, one of the largest electronic health record firms, is NOT at all a fan of HHS’ recently proposed health data sharing rules (read about the proposed ruling here).

• In an interesting development, Epic’s CEO urged its health system partners in an e-mail to oppose the ruling. On Friday, January 24, Epic told Politico that it may sue HHS over the ruling, calling the proposal “deeply flawed.”

Stuff about the ruling you should know

The HHS proposed ruling is designed to provide clearer guidance on how patient health information can be accessed – namely, making it easier for patients to access their own health information.

• Epic thinks that the ruling will hurt patient privacy (since 3rd parties will have an easier time accessing that info) and wants to work with HHS to establish more appropriate guidelines.

The bigger picture

HHS’ wants to make it easier for patients to access their data across health systems – something that Epic probably thinks is a key competitive advantage of theirs.

• Think about it. If all electronic health records systems – or other third parties – could easily access patient data regardless of the IT system any one provider is using, it becomes less important to have Epic – or any particular health records platform – as your system.

Who’s on board

Apple, Microsoft, and the rest of the Big Tech gang are on board with the interoperability proposal and want the policy to go through so that consumers can access their data “without further delay.”

Epic is definitely feeling the heat. They just announced the end of their collaboration with Google (which is probably a future potential competitor).

The interoperability schism between Epic and Big Tech rages on.

On Jan. 27th, the CARIN Alliance, comprised of new entrants like Apple, Google, and the rest of Big Tech, issued a short letter (read it here) to HHS in major support of the data-sharing proposal.

• They think that the newly proposed healthcare data laws would ‘revolutionize the exchange of medical records.’

The bigger picture.

Amidst all of the data privacy concerns as of late, Google and others want better guidance around patient privacy. They want the data-sharing rules to be consistent with other modern data standards.

How would this affect me?

If the HHS’ proposed ruling were to go through as-is, then approved third parties would be able to access your medical records via application programming interfaces, or APIs. APIs would make it much easier for third party software to communicate with your medical records.

• So, in theory, you would be able to access all of your medical records and patient history on your smartphone or anywhere you go to get healthcare. It really might open up healthcare to vast opportunities, with – of course – some privacy concerns.

Read all about it:

• Apple, Cerner call for interoperability rule release ‘without further delay,’ highlighting industry rift (Fierce Healthcare)
• Privacy versus access debate rages on, rekindled by Epic lobbying (Healthcare Dive)
• All kinds of perspectives on the ruling (Beckers)

We’ll see where the interoperability ruling ends up. For now, it seems as if Epic is just delaying the inevitable.

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About the Healthy Muse.

The Healthy Muse was created to educate people on the healthcare system. It’s one weekly e-mail updating you on all the major election news, broader trends, big stories, and policy updates. Learn more about our vision here.

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• 1.28.2020: Coralville, Iowa Source Link
  • Joint venture with University of Iowa Health System
  • 40 bed facility
  • Previously announced in 2019
  • Will open in the 2nd quarter of 2020

• 1.21.2020: Greenville, South Carolina Source Link
  • 40 bed facility
  • Will open in mid 2021

• 1.8.2020: San Angelo, Texas Source Link
  • Joint venture with Shannon Health
  • 40 bed facility
  • Will replace Shannon Health’s current 14-bed rehab unit
  • Will open in spring 2021

• 11.13.2019: Toledo, Ohio Source Link
  • 40 bed facility
  • Will open in late 2020

• 9.9.2019: Katy, Texas Source Link
  • Began operations on September 9, 2019
  • 40 bed facility

• 8.27.2019: Henry County, Georgia Source Link
  • 50 bed facility
  • Will open in the 3rd quarter of 2021

• 8.22.2019: Cumming, Georgia Source Link
  • 50 bed facility
  • Will open in the 4th quarter of 2020

• 7.25.2019: Tampa Bay, Florida Source Link
  • 50 bed facility
  • Will open in the 2nd quarter of 2021

• 11.29.2018: Sioux Falls, South Dakota Source Link
  • 40 bed facility
  • Will open in summer 2020

Why is Encompass opening up all of these inpatient rehabilitation facilities?

To put it simply, they’re betting on the coming surge of baby boomers getting on Medicare. IRFs are a prime way to capitalize on the demographic trend.

We’ll see if Encompass’ IRF strategy comes to fruition – based on recent earnings calls, they plan to build four to six IRFs per year, and the firm is well-positioned to succeed.

Thanks for reading.

Save yourself some time by subscribing to our all-in-one newsletter.

The Healthy Muse was created to educate people on the healthcare system. It’s one weekly e-mail updating you on all the major election news, broader trends, big stories, and policy updates.

Get smarter and sign up below today.

The post Encompass Health’s IRF building spree: 9 Recent Developments appeared first on The Healthy Muse.

As it turns out, superbugs are actually a bigger threat at this point than the CDC previously estimated. According to the agency, superbugs now cause almost 3 million infections and 35,000 deaths a year.

U.S. Healthcare Spending Increased 4.6% in 2018

That’s $3.6 trillion, or 17.7% of GDP.

CMS released its yearly National Health Expenditures report, covering 2018’s spending on healthcare services.

Results are in: Healthcare decreased 0.2% as a percentage of overall GDP, but still makes up 17.7% of our economy. That’s probably gonna get bigger too, as the U.S. population ages. CMS estimates that healthcare spending will grow at around 5.5% a year for the next 10 years as the lumpy Baby Boomer population gets on Medicare.

2020: The Evolution and Explosion of Medicare Advantage

Wi(Medicare Advantage Supplemental Coverage)nter is Coming.

Brace yourself for Medicare Advantage explosion in 2020. All of the major payors are gearing up for the year. Cigna is planning its biggest ever MA expansion. UnitedHealth is expanding into 100 more U.S. counties (and you thought they ALREADY were everywhere, didn’t you?).

Supplemental Coverage

Anthem, Aetna, and Humana are in the mix too of course. What’s interesting about the plans going into 2020, though, are the supplemental coverage options that CMS is phasing into Medicare Advantage plans. For instance, Anthem is getting creative with these alternative options, including such services like…pest control. Other offerings might include odd benefits like acupuncture, transportation assistance (shout out Uber and Lyft), and other similar services that could be beneficial to seniors.

Doctors are Shifting to the Left

Political Physicians.

The WSJ took a deep dive this week into physician political leanings. The reporters found that in 2018, about two thirds of political donations from doctors went to Democrats, which is, interestingly, the exact opposite of donations made in 1990.

Why the shift?

Plenty of reasons. The WSJ thinks the shift is being caused by more physician employment by health systems, more female physicians, more physicians in urban areas, and the increasingly leftward shift of educational institutions. It’s probably not helping the overall Republican cause that Trump is somewhat shaky on his healthcare policy – as a reminder, the ACA is still currently in court, and the White House has no known healthcare backup plan (yet).

A trend to keep an eye on.

This policy uncertainty, combined with the above factors, probably explains most of the physicians’ political donations to Dems. If I had to guess (don’t put any money on me – I just lost some in Vegas), I would wager that most physicians are uncomfortable with the current political environment, which is driving the trend. Don’t forget – just last year, the AMA narrowly voted to continue opposing Medicare for All (as opposed to adopting a new “neutral” position on the big-time disruptive healthcare proposal)

Humana Study Suggests that 1 in 4 dollars spent on healthcare is wasted

Wasted.

A JAMA study jointly conducted by Humana and UPMC found that approximately 1 in 4 bucks spent on healthcare – between $760 billion and $935 billion total – is wasted yearly among 6 defined categories:

Failure of care delivery (102.4b – 165.7b),

Failure of care coordination (27.2b – 78.2b),

Overtreatment or low-value care (75.7b – 101.2b),

Pricing failure (230.7b – 240.5b,

Fraud and abuse (58.5b – 83.9b); and

Administrative complexity (265.6b).

While the study cast a wide net for the total cost (essentially +/- $100 billion), the authors urged readers not to focus on the exact figures cited, but rather to discover directionally how much wasteful spending seems to be out there.

How to FIND the answers to the perceived waste is a whole ‘nother can of worms.

Humana weighs in.

In an Op-Ed on CNBC, Humana’s President and CEO emphasized the need to switch to value-based care, calling for an integrated healthcare delivery approach in order to counteract wasteful spending – namely, combining different healthcare delivery systems and services (e.g., pharmacy, home health, primary care) to ensure the best possible care outcome for each patient.

The bigger picture.

The shift from volume-based-care to value-based-care is speeding up, but the definition of what “value-based” reimbursement should include is lagging just a bit behind. Better alignment between payors and providers at different sites of care, more efficient regulation, and cracking down on fraud could go a long way in themselves to lower wasteful healthcare spending.

Amazon joins the trend of paying employees to travel for cancer care

Amazon lets employees travel for cancer care.

As employer health costs continue to rise for its employees, some companies have gotten pretty creative with how they reduce their costs. We’ve covered how Walmart and other large firms are very hands-on with controlling healthcare costs. Now, Amazon is joining the trend of allowing its employees to travel for cancer care (paywall – WSJ).

The partnership with City of Hope.

Whereas Walmart lets workers diagnosed with cancer to seek treatment at the Mayo Clinic, Amazon is partnering with City of Hope hospital in California. The e-commerce giant will cover all of the travel costs for its workers to seek opinions from City of Hope.

It’s a win-win: employees get access to coverage outside of just the local options, and Amazon aims to lower its healthcare costs when its workers receive arguably better, more effective care from a reputable provider.

UnitedHealthcare decides to implement site-neutral payments itself

A push away from hospital based facilities.

Similar to Anthem’s outpatient imaging policy back in 2017, UnitedHealthcare is trying to shift its covered lives to ‘lower cost’ settings by limiting who can receive outpatient surgeries and procedures at a hospital-based facility an “HOPD” (i.e., an outpatient clinic or surgery center that is actually a department of a hospital).

Beginning in November, UNH will cover the costs of a procedure at an HOPD only if it determines that the site of care at the hospital outpatient department was medically necessary.

The bigger picture – site neutral payments.

Earlier this year, HHS’ site neutral payment policy – meaning that hospital outpatient departments and freestanding facilities would be paid the same – was shot down in court. Insurers are always in favor of steering patients to lower cost settings. In this case, freestanding ambulatory surgery centers should be the big winners – and hospitals are getting left out to dry.

The Healthcare Payments Trend.

Another day, another healthcare entrant.

This week, Mastercard launched a suite of services aimed at healthcare specifically.

Mastercard Healthcare Solutions will target typical wasteful areas of healthcare, like fraud, revenue cycle management, IT security, and general waste.

I’m most interested in the revenue cycle management component embedded in Mastercard’s statement. The firm will use ‘predictive analytics’ to make billing easier both for patients, providers, and payors.

But they’re not the only players entering the billing space.

JP Morgan also pushed into healthcare payments by buying InstaMed. Back in May, the banking giant purchased InstaMed for $500 million – its largest acquisition since the financial crisis.

Then, of course, there’s UnitedHealthcare. They bought healthcare payment firm Equian for $3.2 billion in June in more of a strategic alignment (meaning they’ll be able to integrate the service with Optum).

What’s the bigger picture here?

Providers, Patients, and employers all want to get rid of administrative burden in healthcare, and a huge part of that is billing – what patients owe, how much a procedure will cost, how to receive payment – you get the picture.

As the push for price transparency in healthcare continues, providers’ revenue cycle management and billing capabilities will only become MORE important. Which is why, I think, these payments firms are getting snatched up.

Apparently Millennials will get Sicker and Die Sooner than Any Previous Generation.

A study from Blue Cross released this week pointed out what we millennials have known all along: we’re the worst-off generation as far as health concerns go. In fact, we have excessively higher levels for conditions like hypertension, cholesterol, and depression.

The future is…bleak?

If millennials don’t get healthier, their mortality rate could increase by 40% (!!) as compared to Gen X. These statistics could significantly affect economic growth in the U.S. – not to mention the healthcare costs millennials would have to face as they age into poorer health.

Blue Cross Blue Shield’s National Plan(s).

Blue Cross Blue Shield unveiled plans for a national provider network on November 27th. The “Blue high-performance network” will cover 185 million people in 55 markets!

Telemedicine and the $2.1 billion Medicare fraud case

The FBI gets a big win in a huge Medicare Fraud bust.

Under the guise of Operation Brace Yourself (nice name, FBI), the FBI made a major bust in one of the biggest Medicare fraud schemes to date – 24 people were charged in the $2.1 billion heist.

This isn’t GTA.

The ring of 24 decided that they were going to inappropriately bill Medicare for medical equipment that patients didn’t need. As a part of the scheme, the equipment companies told patients to use virtual care to expedite the process and have it billed by Medicare. After scamming Medicare for $20 million a week, the government finally caught on and brought down the hammer.

Two peas in a pod – healthcare and fraud. (I seriously did not mean to rhyme that).

Healthcare and fraud go hand-in-hand, especially with Medicare (search ‘Medicare Fraud’ on Google and let me know how many hits you come back with). Unfortunately, elderly folk are easy targets for scammers. This type of fraud might be a bad side effect of telehealth, since the physicians unknowingly involved in the scam could not physically examine the patients.

Read the NPR Feature story on the increasing number of Medicare Fraud cases here.

The post 11 Trends to watch in Healthcare headed into the 2020s appeared first on The Healthy Muse.

A recent bombshell report released by the Wall Street Journal pulled back the curtain on the highly secret ‘Project Nightingale,’ which is a current partnership between Google and Ascension – one of the largest nonprofit health systems in the U.S.

According to the WSJ, the project began in secret sometime last year when Ascension began sharing its vast patient data – including complete health histories, patient names and dates of birth – with up to 150 Google employees.

The aftermath.

The WSJ report immediately went viral (or, as viral as a healthcare article could get). In an almost immediate response, Google issued a press release the same afternoon detailing its partnership with Ascension, stating that the business relationship is legal within HIPAA confines and has good intentions.

Ascension also released a statement, saying that the goals of the partnership are to improve patient outcomes and data usage.

That’s not stopping the Feds from opening an official probe into the partnership, though.

The 2 Sides of the Google and Ascension Controversy.

After doing a LOT of reading and research on this, there are essentially 2 schools of thought behind the Google and Ascension partnership.

Google and Ascension’s Side:

Google’s work with Ascension and its patient data is allowed by law because Google is defined as an Ascension business partner. Additionally, the data is hosted within an Ascension-owned virtual private space within the Google Cloud platform – separate from Google’s other business functions.

Per the agreement, none of the patient data will be used to sell ads or be monetized.

With Ascension’s help, Google is trying to find solutions to healthcare’s biggest problems. Those problems include common provider headaches like the lack of interoperability between patient medical records, advancing practical uses of artificial intelligence, and developing new technologies to leverage data for the purpose of achieving better clinical outcomes for patients.

In the long run, despite how it looks now, this partnership will be good for healthcare.

The Patient Privacy Side:

The optics surrounding the partnership don’t look good for Google and Ascension. Although the partnership started last year, nothing (beyond one word in Google’s second quarter 2019 earnings call) was mentioned about what was going on behind the scenes.

Ascension employees expressed concern about how the patient data was being shared with Google, yet nothing was addressed. And yet, as soon as the WSJ article was released, Google immediately sent out a press release.

Since Google is allegedly doing the work with Ascension for free, they clearly think that the project has extremely high value.

But no patient or provider was told how their individual, highly sensitive patient data was being used by a company with a not-so-great track record of handling consumer data.

The Washington Post detailed a failed partnership between Google and the NIH, where Google almost publicly posted 100,000 x-rays with patient data

These types of partnerships need more oversight.

Read about the controversy from the whistleblower’s perspective themselves on the Guardian here. It definitely highlights all of the relevant issues.

Maybe Google and Ascension didn’t handle the partnership in a transparent way. But that doesn’t mean they had deviant or malicious intents behind their arrangement.

Patient Privacy backlash.

There’s been plenty of response to the Google-Ascension ongoing story. As is the case with ANY big story, there’s been plenty of news coverage. People – me included – are starting to ask the question: “what’s really going on behind the scenes?”

Read Google’s response to the controversy.

It turns out our health data might not be as secure (WSJ paywall) as we think.

Even consumer-focused DNA test kits might threaten the privacy of children in ways we haven’t even considered.

Finally, IT execs are calling for a HIPAA overhaul. Given today’s current tech environment, most people think that better HIPAA guidelines are long overdue.

Novartis and Microsoft Partner on Artificial Intelligence in Drug Development

An A.I. Innovation Lab.

It doesn’t get more buzz-wordy than that. This week, Novartis (a huge pharma company) and Microsoft (you know what Microsoft is) announced a strategic collaboration to advance artificial intelligence’s role in drug design and creation.

The Deets.

The multi-year partnership will build joint research activities and “A.I. innovation labs” with the hopes of developing personalized therapies specifically focused on macular degeneration (ophthalmology is big $$$), cell and gene therapy (often thought of as the next frontier in drug development), and overall drug design. This alliance is just the latest example of the transforming life sciences industry.

Read the full release here.

One Medical Hires Bankers, Progyny Files for IPO, and an Update on Digital Health IPOs this year.

One Medical hires its bankers, eyes IPO in early 2020.

Yet another “digital” healthcare company has aspirations for the public markets. One Medical, which is essentially a high-tech urgent care platform with about 70 locations, has hired bankers (wimps – go for the direct listing) and is planning an IPO for early 2020. Notably, One Medical’s largest investor is Google, which might earn the company some cred on the ‘ole Street.

A Tech company, or just a healthcare services company with a splash of tech?

They’re gonna need every morsel of that credibility for public investors to look past a company that seemingly just operates as a primary care platform. It will be interesting to see what the company includes in its initial prospectus and roadshow to win institutional investors before any IPO – especially since primary care services typically command lower profit margins and subsequent low multiples.

Progyny, a fertility benefits company, files to go public.

In other IPO news, Progyny, which manages fertility type benefits at companies, just filed to go public. Fertility has been a hot market for private investment, so it’s interesting timing for a fertility player to exit to the public markets. The fertility firm claims to give employees better pregnancy outcomes as compared to the fertility industry’s average pregnancy rates.

Read Progyny’s S-1 Prospectus here.

Digital Health IPO performance woes.

One Medical and Progyny might face a tough time in the public markets given the current slaughter happening to IPOs. Livongo, Health Catalyst, Change Healthcare, Phreesia, Peloton, and SmileDirectClub all went public earlier this year. All but one are down over 10% as of this writing. Most of that might be due to overall volatility in the markets, but the optimal time to IPO – especially for digital health companies – may well be in the past.

Attack of the Drones: UPS Unveils Medical Drone Delivery Platform with Key Partners already Lined Up

Parcel Wars: Attack of the…wait for it…Drones.

UPS has been pretttttty busy this month. Earlier in October, UPS received approval to operate drones commercially – the first approval ever in the U.S. Now, in this week’s futuristic story, UPS announced its plans to deliver supplies and other things via ~DRONE~. Yeah, that means giant 4-rotor mechanisms flying in the sky to your local community hospital. Keep your curtains closed.

Okay, not quite to that level yet – but UPS does have major partnerships lined up with big-time players, including CVS, Kaiser Permanente, AmerisourceBergen, and others. The drones will carry things like prescriptions, medical supplies and instruments, and pharmaceuticals to hospitals and customers’ homes.

Remember the March pilot program?

UPS had a pilot program running with its first partner, WakeMed Health, earlier this year (yeah, I definitely reported on that story when it came out – see, I really do keep you guys in the loop!).

That program apparently went really well – cutting delivery time for lab samples from 19 to 3 minutes – so it only makes sense for UPS to expand the program further and diversify that revenue stream.

Uber integrates with Cerner to allow patients to have easier transportation to appointments

Give the driver 5 stars. Millennials don’t tip, though (allegedly).

Last week, Uber Health and Cerner, the largest (I think?) electronic health records company announced their plans to integrate in order to give patients easier access to their appointments.

How it works.

It’s actually pretty cool and a neat partnership. Providers using Cerner will be able to schedule an Uber directly from Cerner’s portal for their patients. Once that happens, the Uber driver will receive that patient’s info so that they don’t pick up the wrong person.

The bigger picture.

People miss appointments all the time for a host of reasons, but now it looks like it’s going to be easier for those with transportation struggles to make their appointments and hopefully receive better care because of it.

Amazon’s Voice-to-Text Transcription Service

In one of the less-sexy but completely-essential health tech products announced this week, Amazon unveiled a software called Transcribe Medical. The software will (hopefully) free up a ton of doctor time by transcribing doctor notes accurately. As we’ve all heard, administrative tasks and electronic health records are a huge cause of burnout among physicians, and this product addresses that. Kudos, Amazon.

Competitive Nature.

Interestingly, Amazon is only making this software available to clients who use Amazon Web Services. You think Bezos is blind to competition? The bigger picture here is Amazon trying to snag those lucrative cloud deals with large health systems by making a compelling product.

Kroger & Best Buy Each Expand their Healthcare Initiatives

Kroger expands new health care initiative – Kroger 360care

Grocery chain Kroger has launched a healthcare initiative that allows hospitals to use its stores to expand care offerings to patients, according to the Cincinnati Business Courier. The grocery chain appears to be targeting a similar healthcare strategy to Walmart: helping patients to access lower-cost healthcare.

Best Buy’s Home Care Plans.

In other news, Best Buy is continuing its push into the digital health space. Did you know they’ve already invested $1 billion in healthcare ventures? They’re targeting the geriatric (senior) market through easy to use medical devices and mobile equipment. It’s a pretty unique play that fits nicely into their already-lucrative Geek Squad offering.

Apple designs a hospital.

Take a look inside Apple’s innovative new hospital re-design with Stanford Health. The focus is on the small details here – using robots for bedside manner, and A.I. to predict trouble.

What’s new with the Amazon-Berkshire-JP Morgan venture, Haven?

Piloting new healthcare programs.

After laying low for a while, Haven has taken the scene once again. This time around, the Amazon/Berkshire/JP Morgan venture is piloting a variety of health plans for certain employees among the three companies. The plans involve heavy access to primary care and looks like a host of other generous healthcare features in the plans.

Read more about the pilot program here.

Digital Assistant Notable Lands a Huge Deal with CommonSpirit Health

Digital assistants not named Alexa are making headway into physician clinics. The latest assistant, named Notable, just inked a MAJOR deal with CommonSpirit Health, the newly merged nonprofit giant formerly known as Dignity and Catholic Health Initiatives.

The Big Picture.

The tech world seems to think that digital assistants, particularly voice-to-text capabilities for transcribing electronic health records, has a big future in healthcare. With Alexa and the British NHS, Notable and CommonSpirit, and Suki with Ascension, it looks like the digital assistant land grab is just getting started. Hopefully, the digital assistants lead to less administrative time and less physician burnout.

Thanks for reading.

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The Healthy Muse was created to educate people on the healthcare system. It’s one weekly e-mail updating you on all the major election news, broader trends, big stories, and policy updates.

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The post 12 Big Health Technology and Innovation Stories in Q4 2019 appeared first on The Healthy Muse.

On November 11, KKR made a formal bid to buy out Walgreens, confirming earlier reports of the rumored deal. The buyout would be the largest-ever public-to-private transaction, valued at about $73 billion as things stand today. Walgreens shares rose more than 5% on the news.

Some are questioning whether KKR can even raise enough funding to cover that value, but if I had to guess, I’d say they know what they’re doing. Recent rumors have suggested that these talks have fizzled out somewhat. Stay tuned.

UnityPoint and Sanford Systems Call Off $11 Billion Planned Merger

Out in the midwest, UnityPoint’s board of directors pretty concretely rejected (WSJ) its proposed merger with Sanford health.

The combination would have created a 76-hospital giant with operations across 26 states and $11 billion in operating revenue, executives said in June.

The cancelled merger joins the trend of called-off health system transactions – Baylor and Memorial Hermann in Texas, and then Ascension and Providence St. Joe’s up north.

Novartis buys cholesterol meds.

Novartis, a $225 billion Swiss pharmaceutical company, is buying Medicines Company for about $10 billion, or $85 a share. What’s so special about the Medicines Company? They’re in the process of developing a cholesterol drug with tech called RNA interference.

Since the heart disease market is huge (cholesterol alone is expected to reach a $17.7 billion market by 2024), Novartis probably wants to get ahead of the new tech and combine the cholesterol drug with its own heart failure drug, Entresto.

Keep in mind that this deal comes on the heels of a landmark heart disease study released last week, which indicated that invasive surgery (AKA stents) is no more effective than drugs at treating heart disease.

Hooters Shifts into…Drug Development with Sonnet BioTherapeutics Merger

Hooters and Cancer Drugs.

Major props if you saw this deal coming. This week, Chanticleer holdings announced their intent to merge with Sonnet BioTherapeutics. You might be asking yourself, “what’s Chanticleer Holdings? Some type of other science-y research company?” and you would be very wrong. Chanticleer Holdings operates restaurants. Know of a restaurant named Hooters? That’s them. They’re planning to have Hooters girls double as lab technicians to create cost synergies for the merger.

Just kidding.

As part of the deal, Chanticleer is completely shifting into assisting Sonnet with its cancer drug development. Chanticleer is planning to spin off its restaurant holdings into a new public company. Markets seem to be big fans of the move – the Chanticleer stock shot up about 40% on the news.

Biotech and cancer drug development must be a pretty lucrative space if even Hooters is getting into it.

Google makes a play to acquire Fitbit and challenge Apple’s smartwatch dominance

A Bid for Fitbit.

Reuters reported that Google is making a bid to buy out Fitbit. It looks like the tech giant is trying to get into the wearables space, which has pretty much been dominated by the Apple Watch in recent years.

Despite creating its own watch software, I was surprised to learn that Google actually hasn’t developed its own watch yet. In order to accelerate any wearable’s time to market, Google is trying to sidestep any product startup and branding costs by simply buying Fitbit instead. Fitbit is probably happy about the news too, considering that their sales have been pretty weak lately.

The bigger picture: wearables, wellness, and improving health outcomes.

Even though wearables and their data haven’t really made any push into providing meaningful clinical data for providers, Google’s competitive bid for Fitbit just goes to show that they think there’s a big potential market here. As data tracking gets better and wearables tech improves, I wouldn’t be surprised to see significant progress with wearables and the intersection of wellness and preventive care.

Amazon Acquires Health Navigator

Amazon Care is taking shape.

In its first healthcare-related purchase since PillPack a year ago, Amazon acquired a company called Health Navigator this week. The company more or less tells employees where they should go seek care based on the symptoms that they have (i.e., do you have a nail in your foot? You should probably go to the ER!) among having other virtual care functions.

Employees Only.

Keep in mind that most of these big companies are piloting these healthcare initiatives mainly through employee-only programs (Walmart, Apple Clinics, now Amazon).

With these types of acquisitions, Amazon and others are first trying to save money on healthcare for their employees. They want to provide (hopefully) a better, more comprehensive health benefit to stay competitive in the recruiting market.

Then, if these pilot programs are successful with their employees, maybe they’ll find profitable ways to expand the services to us, too.

KKR’s Take-Private Offer for Quorum

Quorum Health, one of the five publicly traded hospital companies, received an offer letter this week from KKR, a private equity firm known for take-private buyouts.

The Terms.

KKR offered Quorum a $1.00 per share offer, which might even be generous considering the operator is down 79.0% on the year. Quorum management said they’d take the letter into consideration along with everything else, including their ginormous debt load.

The Bigger Picture: private equity is all over healthcare. Recent buyouts include Athenahealth, Kindred, Envision, and others. Even Walgreens had a take-private offer just a few weeks ago. All of these deals were priced in the billions of dollars.

OTHER M&A: Merck, a large biotech firm, is acquiring ArQule, a drug developer specializing in cancer treatments, for $2.7 billion. Biotech M&A is red hot hot HOT.

Starboard Value invests in CVS

A highly reputable activist investing firm called Starboard Value took a stake in CVS today, the WSJ reports.

The firm has a knack for improving operations with investments ranging across industries, including Macy’s and Papa John’s.

Starboard wants to sell Mednax

Starboard Value, a popular activist investment firm, wants Mednax to consider a company sale (WSJ paywall). Since Starboard owns a significant chunk of Mednax, they have a decent bit of power to try and make a sale happen.

It’s pretty clear why Starboard wants to pursue a sale strategy. If you had invested $100 in Mednax this year, you’d be down to $83. That’s AFTER this news broke, where the stock jumped 11% over the past 5 days. Recently, Mednax has been making efforts to refocus on its core physician business. Earlier this year, the firm sold its revenue cycle management business, MedData. Mednax is also working to improve its organizational structure.

Right now, the dialogue between Mednax and Starboard appears friendly, but things could turn ugly if Starboard doesn’t get what they want.

UnitedHealthcare buys Embattled Specialty Pharmacy, Diplomat for $300 Million

UnitedHealthcare’s 4-step guide to buying a specialty pharmacy:

• Compete with the pharmacy
• Undercut their business and disrupt their referral patterns
• See their operations and stock price tumble
• Buy them out at a discount.

Partners Acquires EyeCare Partners for $2.2 Billion

In a transaction valued at $2.2 billion, Partners Group, a private equity investment firm, is buying EyeCare Partners, which is one of the largest providers of eye services in the U.S.

Why this matters.

This transaction marks one of the first investment exits made by a private equity firm in the physician practice space.

• FFL Partners originally bought EyeCare Partners back in 2015, meaning its investment horizon was only 4 years.
• Over that 4 years, EyeCare Partners expanded to 453 locations in 2019 from 63 locations back in 2015. According to the WSJ, Its revenue grew an average of 65% per year over that same timeframe.
  • EyeCare Partners was then sold for a very high price relative to its current earnings.
  • If private equity can achieve returns on investment like this, they’re going to stick around healthcare for a while. And new entrants will come chasing those same returns.

Read more about the transaction: Here’s the source link from Partners and here’s the writeup from the WSJ.

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The post 11 Notable Healthcare Mergers & Acquisitions from Q4 2019 appeared first on The Healthy Muse.

Biz Hits

Google Cloud and Meditech are collaborating to build an electronic health records platform to be held exclusively in the cloud. Read about the partnership here.

Amid a push for growth, for-profit hospital operator Steward Health reported a $592 million operating loss.

The Pennant Group, a home health and hospice operator, just spun off from its parent company, the Ensign Group. Read about the announcement and its plans here.

UPS is expanding its previously announced medical drone delivery service nationwide.

SmileDirectClub is getting shorted. Big-time.

State Hits

In Philadelphia, a judge ruled that supervised injection sites does not violate federal law

Other Hits

Doctors Limit What To Tell Patients About Their DNA Test. Should They?

When Masculinity Turns ‘Toxic’: A Gender Profile Of Mass Shootings

Walmart pulls Zantac from shelves, joining CVS, Walgreens

Other drugmakers are looking to participate in Purdue Pharma’s bankruptcy in an attempt to settle opioid lawsuits.

Speaking of opioids, a doctor was sentenced to 40 years in prison for illegally prescribing them in Virginia.

My favorite reads this week

The 10-year sentence for Amber Guyger triggers chants of protest — and a hug of forgiveness

Quick Hits 10.14.2019

Biz Hits

The fines keep rolling in for Johnson & Johnson – a jury just ordered the pharma giant to pay an $8 billion fine related to a drug that caused a man (who took the drug as a child) to grow larger breasts later in life. The WSJ has a history (more of a laundry list) of all of JnJ’s massive fines over the years.

Similarly to last week’s announcement with Novartis, Microsoft and AstraZeneca join forces on artificial intelligence for healthcare.

Read more about the Google-Meditech electronic health record partnership. Why Meditech’s transition to Google Cloud is the ‘beginning of a bigger movement:’ CEO Howard Messing.

McGuire Woods Private Equity in Healthcare – an Updated Review of Selected Niche Investment Areas.

The new UnitedHealthcare app now gives millions of plan participants on-demand access to virtual visits.

MedNax announced the sale of its MedData business to Frazier Healthcare this week for $250 million in cash, and a contingent $50 million. The transaction is expected to close in the 4th quarter.

Here are 10 healthcare deals from Fierce Healthcare that made headlines this year.

CommonSpirit reported $600 million operating loss in fiscal 2019 on $21 billion in revenue, mostly related to transitional costs related to its merger.

The giant is expected to realize $2 billion in cost savings and is targeting a “normal” EBITDA margin of 8.0%.

Livongo scored a huge win with the Federal Employees Health Benefit Program – a contract for a population of approximately 5.3 million beneficiaries. The stock jumped 18% on the news. Good reason, too – the contract is the company’s largest agreement to-date.

Amazon’s Textract is now HIPAA-eligible as the tech giant expands its own AI portfolio.

Keytruda is set to become the world’s top-selling drug. Here’s a report of all the top-selling drugs.

The contract between Cigna and Mission Health is in jeopardy. HCA purchased Mission Health in early 2019.

State Hits

Colorado just became the latest state to propose running a public health care option through private insurers. It’s expected to launch in 2022. Colorado intends to “set” rates between 175% and 225% of what Medicare currently pays. Providers aren’t big fans of “rate-setting.”

Michigan wants to save $40 million by cutting PBMs out of Medicaid.

The Ohio Senate passed a bill this week to allow patients to learn hospital costs in advance.

D.C. may approve one of the highest soda taxes in the country.

The Sutter Health antitrust lawsuit began this week in California. The 24-hospital health system is accused of monopolistic practices.

Other Hits

With looming recession fears, Private equity firms are turning to smaller deals after a string of big deals collapses.

STD rates hit a record high in 2018.

Quick Hits 10.21.2019

Biz Hits

UnitedHealth announced earnings this week, and beat analyst revenue and earnings estimates for Q3 (what’s new).

Following in Nobilis Health’s footsteps, Diversicare Healthcare Services was delisted from the NASDAQ today.

Sutter Health in California agreed to a settlement this week before its antitrust lawsuit began

Walgreens announced a partnership with Centene and RxRadvance this week to increase transparency through a cloud-based PBM platform.

Meet the doctors who have licenses in all 50 states to treat patients in remote areas. #Telemedicine

Read the letter that private equity managing directors sent to Congress re: Surprise Billing

Fitbit announced a partnership with Bristol-Myers-Squibb and Pfizer to accelerate the detection and diagnosis of atrial fibrillation.

Hospital M&A isn’t slowing down – it’s slightly above last year’s pace, according to Kaufman Hall

Ancestry is taking on 23andme by rolling out its own genetic health test services.

State Hits

The infamous California bill to end excessive dialysis profits became law this week.

California’s new drug transparency laws just revealed a steep rise in wholesale drug prices.

Here’s a state by state update on Medicaid policy changes from Kaiser.

Major Blue health insurers BCBS North Carolina and Cambia are dropping plans to combine after the BCBS CEO resigned.

Other Hits

Poor People Are Still Sicker Than The Rich In Germany, Despite Universal Health Care

From 46Brooklyn: drug price increases may have slowed, but new analysis shows that drug LAUNCH prices are increasing.

My favorite reads this week

Enes Kanter: I will not be silenced over Turkey

Inside the shutdown of the world’s largest child sex abuse website

ProPublica found over 700 doctors who were paid more than a million dollars by drug and medical device companies.

Quick Hits 10.28.2019

Biz Hits

Opioids Update: Last week, we touched on the ~$50 billion opioid settlement. Reuters reported this week that talks have resumed between 4 states and the drug firms. The two sides are targeting a $48 billion settlement, but not all states are fans of the agreement since it might not get split up fairly

Hospital Profitability: Health system operating margins were up in 2018, but are still below the highs seen in 2015. Read the interesting whitepaper from Navigant here. A notable insight: smaller health systems were more profitable than larger health systems.

CVS CEO Interview: Healthcare Dive had a nice chat with CVS CEO Larry Merlo, which gave some insights into how the business views Amazon, its integration with Aetna, and more.

Teladoc Expands Services: Looks like Teladoc is trying to differentiate itself from other telemedicine ventures. This week, Teladoc launched a service called Teladoc Medical Experts. The service is meant to cover a broader range of medical conditions and diagnoses than the typical virtual care operator currently provides.

Livongo Partners with Telehealth: Speaking of telehealth, Livongo is continuing its partnership spree by teaming up with MDLIVE and Doctor on Demand, giving their members access to behavioral health and then eventually diabetes and hypertension offerings.

State Hits

From Politico – why North Carolina might be the most innovative state on healthcare in America.

The New York Health Act – which would establish single payer in New York – is drawing crowds. Read more about it here (paywall – WSJ)

Other Hits

Alphabet CFO Ruth Porat opens up about her bouts with cancer and Google’s work in early disease detection

Read an interesting essay from the WSJ about the link between aging and epigenetics

Medically necessary, or cruel? A thought-provoking article on the highly contentious issue of surgery on intersex babies.

An update on Skilled Nursing Facility values – surprisingly, SNF values are holding steady despite the reimbursement troubles facing the post-acute industry

Quick Hits 11.4.2019

Biz Hits

Stryker’s big purchase: Stryker is purchasing Wright Medical for $4 billion, with a total enterprise value of $5.4 billion.

AI Deals continue: Read about an interesting AI deal between UT Health, Virtusa, Cardinal Health, and Amazon Web Services.

UTHealth, Virtusa, Cardinal Health, and AWS Use AI and Machine Learning to Advance Medical Research

UHS ambulatory expansion: UHS is looking to expand its ambulatory network and just inked a deal to build out nationwide network of ASCs by partnering with Regent Surgical Health

Community Health’s 3rd Quarter Falls Short: Despite reporting strong same-store growth, hospital operator Community Health fell short of expectations in its Q3 earnings report. Its stock sold off 17% as a result. They’re also continuing their hospital fire sale by selling 3 more hospitals to Bon Secours Mercy Health. With the transaction, CHS will exit the Virginia market.

Teladoc’s Q3 Surge: Teladoc showed off some major growth in Q3, increasing its paid membership by 55%

Another digital health acquisition for United: UnitedHealth’s Optum just bought patient monitoring startup Vivify Health:

State Hits

California Wild Fire majorly affecting hospitals: One California hospital had to choose between saving its vaccines, or losing its electronic health records. 

Drug Price Fixing Win for Illinois: Illinois to Get $248 Million From Drugmakers in Case-Closing Deal

Medicaid Block Grants Update: Tennessee’s Medicaid block grant push is getting some major pushBACK. Second that for Indiana, too.

$10 billion Medicaid contract shake-up in Texas: This week, the Texas Medicaid program chose Aetna, Centene, and UnitedHealthcare to cover various regional Medicaid contracts. The big losers? Molina (these guys lost the most here), Anthem, and Cigna. It’s a potential flip of $10 billion in premium revenues.

Louisiana’s toxic waste problem

Arisa health forms in Arkansas: Four big Arkansas behavioral health providers planned a merger this week to become Arisa Health.

Other Hits

A rough flu season is predicted — but it’s an opportunity for some

Opinion Piece from the WSJ: The biotech cures keep coming, if politicians don’t get in the way.

My favorite reads this week

They notified the wrong family.

Microsoft and its Autism Hiring Program

Quick Hits 11.11.2019

Biz Hits

Pennant’s home health debut: The Pennant group, a new smaller home health company that spun off recently, debuted on the stock market last week.

Walgreens going private? The retail giant is considering a sale to private equity.

Johnson & Johnson’s Baby Powder woes: J&J announced a voluntary recall of a ‘single batch’ of its baby powder this week. Ironically, Reuters reported that J&J’s own legal expert, whom they have used to testify that their baby powder is safe, was working for the FDA in testing random baby powder samples and found trace levels of asbestos in J&J’s own baby powder.

Earnings roundup:

Tenet’s volume surge: Tenet posted its 3rd consecutive quarter of volume growth.

U.S. Physical Therapy’s bad quarter: U.S. Physical Therapy tanked after its 3rd quarter amid looming PDGM headwinds. Like I said, physical therapy is getting shafted.

Medical Facilities cuts its unsustainable dividend: Medical Facilities cut its dividend to fund growth through acquisitions and faced the unfortunate wrath of income investors – they were down 27% after their quarterly conference call.

Quorum faces major struggles: Quorum Health cut guidance in Q3 and saw its stock fall 37%. The hospital operator is facing declining revenues, growth, and revenue cycle issues.

Hospital September performance: Here’s Kaufman Hall’s hospital flash report for September – it was kind of a mixed bag performance-wise. Would you guys be interested in a resources page where I aggregate/link out to all of these types of reports on one page? I’m thinking about it…

2 updates on Google Health:

They’re focusing a lot of efforts on health and its core business, online search.

They’re partnering with an AI voice startup, Suki.

State Hits

Private equity: Does private equity have a role in driving up healthcare prices?

California’s disapproved merger: In a really interesting development, California just rejected the St. Joseph-Adventist merger. Keep an eye on that development because it might point to a larger trend of states studying health system deals more closely.

Georgia’s Limited Medicaid Expansion: After Utah tried to ‘partially’ expand Medicaid earlier this year, Georgia is trying to pull the same stunt by proposing a limited Medicaid expansion.

Montana’s seasonal workers: What about seasonal workers when it comes to Medicaid work requirements? That’s the issue Montana is facing.

New York’s idiotic surprise billing arbitration: As one of the states trying to find a solution to surprise billing, New York tried out 3rd party arbitration between providers and insurers to determine reimbursement for out of network ER bills. The catch? New York legislation wrote the bill so that arbitrators would use 80% of the CHARGED rate as the starting/reference point. As you can imagine, this is getting…expensive. Quick.

Other Hits

Hope for cystic fibrosis: A new innovative cystic fibrosis therapy shows promising results.

HDHP trend reversal? High deductible health plans might be losing appeal as employers try to expand benefits to attract workers.

A working value based care model: I personally think that Intermountain Healthcare in Utah is doing a lot of interesting and innovative things in healthcare. Here’s a report from them on ways they think value based care can be implemented in an effective and tasteful way.

Generic Drug lawsuits: A quick update on the generic drug price fixing lawsuits going on in the news lately:

In the 44 state case going on, generic drug-makers just received a tight deadline by judge’s order. She wants to get the civil case going QUICK.

The companies face a lawsuit brought by 44 states that alleges industry-wide coordination to inflate prices, divvy up markets, and block competition. Potentially huge damages are at stake for the generic drug industry.

In other news, Humana is making its own headway into generic drug price fixing by suing 37 drug making companies for overcharging for commonly used drugs. They think that the companies secretly met and purposefully schemed to fix prices higher.

Read the entire 610 page complaint here. Keep in mind that Humana filed a similar complaint last year.

Maybe generic drugs shouldn’t be super cheap?

My favorite reads this week

Blue light isn’t the main cause of eye fatigue and sleep loss.

Ray Dalio’s latest: The world has gone mad and the system is broken.

Quick Hits 11.18.2019

Biz Hits

Rebranding: Providence St. Joseph is rebranding in 2020 to just ‘Providence’

All the Apple health news: Apple unveiled its medical research app this week. In a promising start to proving its clinical efficacy, Apple announced that its heart study had concluded and drew over 400,000 enrollees, which is an unprecedented amount of people for any clinical study. In other news, Apple’s electronic health records are now available to all 9 million military veterans. Don’t forget that the Department of Veterans Affairs is the largest integrated healthcare system in the nation.

CVS Success: CVS is finding early success with its HealthHUB strategy.

State Hits

Merger review: In North Carolina, the FTC is vetting the strategic partnership agreement previously made between Wake Forest Baptist Health and Atrium Health. The FTC is basically trying to figure out what differentiates the agreement made from an actual merger.

Other Hits

Kaiser Permanente’ CEO Bernard Tyson sadly unexpectedly passed away this week.

A timeline of the ACA, from the beginning, to the previous court challenges, to the current challenge.

A Florida judge might have just set a dangerous precedent regarding our DNA profile and privacy.

As more services move to the home, is senior housing facing (WSJ-paywall) stunting growth?

Here are the top 10 largest home health providers.

Quick Hits 11.25.2019

Biz Hits

Warby Parker is launching its own line of contact lenses.

Walmart’s telehealth pilot program will partner with UnitedHealth and Doctors on Demand, allowing Walmart employees in 3 states to use telehealth for a $4 copay. The pilot launches Jan. 1.

Procter & Gamble’s Do-it-yourself healthcare biz (WSJ).

State Hits

Colorado officials have finalized their proposal for a public health insurance option. Here’s what we still don’t know about it.

Tennessee just became the first state to seek a Medicaid “Block Grant” in the amount of $7.9 billion from the federal gov.

Other Hits

Health systems are issuing debt like crazy to take advantage of historically low interest rates.

S&P notes 7 key trends to watch in 2020 – it’s gonna be an election year, and healthcare is taking center stage.

Beckers did us the favor of summarizing the latest financial updates from some big name nonprofit and for profit health systems. Axios also has a great healthcare revenue and earnings spreadsheet, too.

Humana saved $3.5 billion through value-based care arrangements on its Medicare Advantage plans.

Quick Hits 12.2.2019

Interested in healthcare social media influencers?

Birth rates in the U.S. fell for the 4th year in a row

A kidney went to the wrong transplant patient. (Don’t worry, the original patient got another one. I already checked.)

We’re seeing the earliest flu season in 10 years.

Former Outcome Health Executives were Charged in a $1 Billion fraud scheme.

UnitedHealthcare is opening Medicare Services Centers in certain Walgreens Stores.

Cigna has cash to blow.

The Great American Eye-Exam Scam

Quick Hits 12.9.2019

Biz Hits

UnitedHealth’s Profit Center: Optum, UnitedHealthcare’s physician and ambulatory services wing, will provide over half of its profits in 2020.

PDGM Latest: Where PDGM’s Therapy Changes Will Hit Hardest

Centene-Wellcare Tie-Up: Centene sells Illinois plans to CVS in the next step for its purchase of WellCare. In fact, all states have now approved the deal.

State Hits

South Dakota: The Physician shortage is becoming mission-critical.

California: Anthem Blue Cross gets in trouble more often than other insurers

Other Hits

Opioid Consequences: The Class of 2000 ‘Could Have Been Anything’ until Opioids Hit

Next-Gen: How the Next Generation of Mobile Computing Is Already Changing the Face of Health Care

Healthcare Leaders: Forbes released its 30-under-30 this week. Here are all the healthcare leaders included.

Also from Forbes: Predictions for healthcare disruptions and innovations in 2020

Living Dead: Doctors ‘reanimated’ a heart for a first-of-its-kind transplant in the U.S. this week

Dementia: Step aside, biomarkers. Look to the bank account for early signs of dementia

China’s CRISPR babies: Read exclusive excerpts from the unseen original research

Artificial Intelligence: Unpacking the Black Box in Artificial Intelligence for Medicine

Quick Hits 12.16.2019

Biz Hits

Cigna (WSJ): Is shopping its non-medical health insurance unit that could be valued at $6 billion.

Civica Rx: The nonprofit generic drug-maker for hospitals to cover shortages is expanding its drug lineup to 8 by the end of the year.

3M is getting out of the drug delivery biz for $650 million

Lawyer Up: 23andMe is getting sued by a former business partner and fertility start-up Celmatix

Centene: Has been quietly lobbying to allow partial state Medicaid expansion.

Included in the Formulary: Express Scripts is adding new treatments to its recommended formulary to aid digital health innovation.

Home Health: The stories that shaped 2019.

Tenet: is exiting the Memphis market by selling two of its hospitals to Methodist Le Bonheur

State Hits

Kentucky’s Abortion Law: The Supreme Court declined from taking the Kentucky abortion ultrasound law.

In Texas: The extraordinary danger of being pregnant and uninsured.

Massachusetts: Blue Cross of Massachusetts is integrating its health plan with PillPack – Amazon’s online pharmacy service

To California: Planned Parenthood is opening up clinics inside LA high schools

Other Hits

Suicide Prevention: The FCC unanimously approved a new number for the Suicide Prevention Hotline: 988

An Inspiration: The champion behind the ALS Ice Bucket Challenge, Pete Frates, passed away December 9th.

Op-ed (WSJ): Former FDA head Scott Gottlieb thinks drug price controls will stifle innovation.

CRISPR: The startling secret of an invincible virus.

NFL Fraud: 10 former NFL players have been accused of defrauding the NFL’s healthcare program.

Millennials: Trust tech giants more than health systems.

Six CEOs and No Operating Room (WSJ): The Impossible Job of Fixing the Indian Health Service.

Health and Wellness: The definitive superfood ranking. The winner? Blueberries.

Quick Hits 12.25.2019

Biz Hits

Novartis: dumps its asthma drug program phase 3 failures.

Humana: is acquiring Enclara Healthcare, one of the nation’s largest hospice pharmacy and benefit management providers.

Cigna: Uses Artificial Intelligence to see if patients are taking medications.

Lawsuits everywhere: CVS, opioid makers, TeamHealth, and Illumina are all facing serious legal action.

Quorum Health: Is selling a hospital for $1.00. This is not a typo.

Monopoly Money: The FTC wants to block DNA sequencer Illumina’s acquisition of PacBio and called the company a monopolist.

State Hits

New Jersey Merger: 11-hospital system RWJBarnabas and St. Peter’s University are exploring a merger.

In Milwaukee: Ascension St. Joe’s has ‘trust issues’ to work through with its community.

Other Hits

Prescription Drugs (NY Times): The hidden drug epidemic among older people

Vaping: Damages lungs, but isn’t as bad as smoking.

Bizarre: The weirdest medical cases of 2019.

Ten People: Nature’s ten people who mattered in science in 2019.

Pop Culture: Ever wondered which medical TV shows are the most accurate?

Health Insurance: What happens when a health plan has no limits? An acupuncturist earns $677 a session.

Fraud: KHN argues that legal medical billing would be considered fraud in most other sectors.

Overwhelming Obesity: Almost half the U.S. population will be considered obese by 2040.

Play the Lottery? (WSJ) Drawing criticism from a wide range of patient advocates, Novartis is introducing a lottery-based system to give away its $2.1 million drug for free.

Thought-Provoking Editorials

Letter to the editor: Nurse practitioners are not ‘mid-level’ providers (Beckers)

What would happen if the ACA went away? (KHN)

Why Big Tech Companies Won’t Solve Healthcare’s Biggest Challenges

Why digital health has been such a disappointment, and how to change that

Thanks for reading.

Save yourself some time by subscribing to our all-in-one newsletter.

The Healthy Muse was created to educate people on the healthcare system. It’s one weekly e-mail updating you on all the major election news, broader trends, big stories, and policy updates.

Get smarter and sign up below today.

The post 100+ Healthcare Quick Hits to Read from Q4 2019 appeared first on The Healthy Muse.

Providers Lose Out in Latest Bipartisan Surprise Billing Draft

What’s New: Bipartisan leaders in Congress in both the House and Senate drafted a bill to combat surprise billing.

Details of the Surprise Billing Bill: Benchmarking vs. Arbitration Differences

The new bill is an altered version of older proposals. For bills under $750, insurers would pay providers at least the median in-network rates for that region.

• You might have seen reporters call this the “benchmark rate” method.

For bills over $750, insurers and providers will negotiate through a third party – called the “arbitration” method.

Who Wants What: Benchmarking vs. Arbitration

Providers oppose the benchmarking part of the deal. They think the bill will lower reimbursement by giving them less room for negotiation (it will).

Insurers oppose arbitration because their negotiating leverage for larger costs goes out of their hands. So, since nobody’s happy, the bill is probably closing in on the right solution.

• You should know: New York tried 3rd party arbitration to combat surprise billing in 2015. The catch? The bill guided arbitrators to use use the 80th percentile of billed charges as the starting point.

Here’s the problem with that: charges are generally made up numbers and do not correlate to actual reimbursement. Providers charge a certain amount for healthcare services but receive lower reimbursement from insurance/patients. As a result, providers ended up receiving higher payments in New York.

• If Congress pegs the arbitration to a high level of charges like New York did, insurers could lose out big time. But it’s important to note that the national bill is different because it includes benchmarked rates.

Conclusion.

• Who loses: Providers
• Who’s in the middle: Insurers
• Who wins: Patients

Keep in mind that this bill, while bipartisan, still has a long way to go – especially since a House panel just introduced a rival proposal. But these same solutions have been floating around Congress for a while now.

• Go Deeper From Bloomberg: Patients and insurers are the big winners in the latest surprise medical bill deal.

The post Surprise Billing Latest: Benchmarking vs. Arbitration appeared first on The Healthy Muse.

Managed-care stocks (AKA, health insurance companies) were up big today on the news that Congress has plans to repeal both the health insurance tax and Cadillac tax as a part of the latest spending bill.

In fact, health insurers outperformed most of the market over the past month or so. Why? Because public support for Medicare for All is dwindling.

To illustrate this fact, Elizabeth Warren – now a frontrunner for the Democratic nomination – moderated her rhetoric on healthcare policy proposal as seen in her 100-day presidential roadmap.

Similarly to Biden and Buttigieg, Warren wants to create a public option first. Then, she’ll focus efforts on Medicare for All legislation.

Bernie is really the only candidate left who supports an immediate jump to Medicare for All after Andrew Yang came out in support of a step-wise approach.

Back to private health insurance.

So, as I see it, the tax repeals covered with moderating rhetoric surrounding Medicare for All can only be good news for managed care companies. After all, who do you think is going to manage any public health insurance option? Private insurance companies.

You might be surprised to learn that they already manage a third of Medicare (AKA Medicare Advantage) and two-thirds of state Medicaid programs.

So, let’s recap:

• Private insurance companies aren’t going anywhere anytime soon;
• Private insurance won big-time with the repeal of two health insurance based taxes; and
• Democratic healthcare policy proposals have moderated over time – away from Medicare for All.

It will be interesting to see how these facts play out as election 2020 comes closer.

The post Private Insurance is Winning over Medicare for All. Here’s Why. appeared first on The Healthy Muse.

The main highlights: Total U.S. healthcare spending increased to $3.6 trillion, up from about $3.5 trillion last year.

Here’s the breakdown for U.S. healthcare spending by provider type in 2018:

• Hospitals: $1.2 trillion
• Physician Services: $965 billion
• Administration, Investment, Other: $574 billion
• Prescription Drugs: $335 billion
• Health, Residential, and Personal Care: $192 billion
• Nursing Care Facilities: $169 billion
• Home Health: $102 billion
• Medical Products: $66 billion
• Durable Medical Equipment: $55 billion

And here’s how U.S. healthcare spending by provider type has trended since 2000:

Source: CMS

U.S. Healthcare Spending Increased by 4.6% in 2018. Why?

• Results are in: Healthcare decreased 0.2% as a percentage of overall GDP, but still makes up 17.7% of our economy. That’s probably gonna get bigger too, as the U.S. population ages.
• CMS estimates that U.S. healthcare spending will grow at around 5.5% a year for the next 10 years as the lumpy Baby Boomer population gets on Medicare.

It seems like there’s a new ‘healthcare spending’ story every week while those involved attempt to figure out why the U.S. healthcare spending is higher compared to other developed countries.

Here’s a big reason why U.S. healthcare spending is high.

Every single healthcare operator in the U.S. is trying to make a margin. Even nonprofits.

That fact extends across the continuum of care – durable medical goods producers, physician services, hospitals, drug-makers, medical device companies, drug manufacturers – you name it – they’re all trying to entice investors and maximize shareholder value. Public or private. 

• So what happens when everyone tries to make money and drive growth for their part of the industry while demand stays relatively constant? A number of things. They raise prices. They create competitive advantages. They enter into exclusive arrangements with other companies. And they try to keep regulation on their side or stay in front of it. All of which more than likely contribute to higher U.S. healthcare spending.

Just like regular corporations, healthcare companies pursue their own strategies in order to maximize their benefit.

That, in and of itself, is not evil. It’s not necessarily good, either. But it DOES fit within the current economic system within the U.S.

Do you see the problem?

The healthcare cost issue is multi-faceted.

It’s not just one player or one part of the industry. The U.S. healthcare spending problem is widespread. You can’t just pin the blame on one thing.

• Take drug spending as an example. If you just looked at the above graphic about prescription drugs, a common person would probably conclude that drugs weren’t a big part of the healthcare spending pie. “So why is there so much attention around drug pricing right now?” you might wonder.

In reality, a large amount of drug spend is lumped into hospital and physician spending. Oncology treatments and other types of highly specialized drug therapies, in the billions of dollars, are included in these categories. But then hospitals and physician services get the outward appearance of making up an outsized portion of spending.

You can see how the cost problem gets hairy pretty quickly for policymakers as they try to hone in on the U.S. healthcare spending issue.

The post Where did all of the U.S. Healthcare Spending go in 2018? appeared first on The Healthy Muse.

A bombshell report released by the Wall Street Journal Monday pulled back the curtain on the highly secret ‘Project Nightingale,’ which is a current partnership between Google and Ascension – one of the largest nonprofit health systems in the U.S.

According to the WSJ, the project began in secret sometime last year when Ascension began sharing its vast patient data – including complete health histories, patient names and dates of birth – with up to 150 Google employees.

The aftermath.

The WSJ report immediately went viral (or, as viral as a healthcare article could get).

In an almost immediate response, Google issued a press release the same afternoon detailing its partnership with Ascension, stating that the business relationship is legal within HIPAA confines and has good intentions.

Ascension also released a statement, saying that the goals of the partnership are to improve patient outcomes and data usage.

That’s not stopping the Feds from opening an official probe into the partnership, though.

The 2 Sides of the Google and Ascension Controversy.

After doing a LOT of reading and research on this, there are essentially 2 schools of thought behind the Google and Ascension partnership.

Here’s what it boils down to.

Google and Ascension’s Side:

Google’s work with Ascension and its patient data is allowed by law because Google is defined as an Ascension business partner.

Additionally, the data is hosted within an Ascension-owned virtual private space within the Google Cloud platform – separate from Google’s other business functions.

Per the agreement, none of the patient data will be used to sell ads or be monetized.

With Ascension’s help, Google is trying to find solutions to healthcare’s biggest problems.

Those problems include common provider headaches like the lack of interoperability between patient medical records, advancing practical uses of artificial intelligence, and developing new technologies to leverage data for the purpose of achieving better clinical outcomes for patients.

In the long run, despite how it looks now, this partnership will be good for healthcare.

The Patient Privacy Side:

The optics surrounding the partnership could not be worse for Google and Ascension.

Although the partnership started last year, nothing (beyond one word in Google’s second-quarter 2019 earnings call) was mentioned about what was going on behind the scenes.

Ascension employees expressed concern about how the patient data was being shared with Google, yet nothing was addressed.

And yet, as soon as the WSJ article was released, Google immediately sent out a press release as soon as possible, covering its tracks.

Since Google is doing the work with Ascension for free, they clearly think that the project has an extremely high value.

But no patient or provider was told how their individual, highly sensitive patient data was being used by a company with a not-so-great track record of handling consumer data.

These types of partnerships need more oversight.

Read about the controversy from the whistleblower’s perspective themselves on the Guardian here. It’s definitely worthy of your time.

The conclusion.

Both sides have an argument here. Maybe Google and Ascension didn’t handle the partnership in a transparent way.

But that doesn’t mean they had deviant or malicious intents behind their arrangement.

The most apparent thing, though, is that these partnerships in the future will need to revolve around transparency about what’s being done with patient data.

What do you think? Join our community by subscribing to our once-weekly newsletter, containing all of the top healthcare news across 40+ sources.

The post Google and Ascension: The 2 Sides to the Patient Privacy Controversy appeared first on The Healthy Muse.

Further Consolidation is all but guaranteed.

Just as we’ve seen before, reimbursement cuts will lead to HEAVY consolidation in these industries.

Larger operators that aren’t as affected by reimbursement pressures will have a field day in snatching up struggling operators, which will lead to major home health and physical therapy consolidation.

Big home health players will keep winning.

The growth potential for larger operators through M&A will be unprecedented as industries like home health and physical therapy consolidate.

Just look at the stock prices of public home health operators – their valuations are arguably through the roof, with trading multiples several times higher than the industry average.

PT gets the short end of the stick: CMS all but guarantees Physical Therapy Consolidation.

Physical therapists are especially upset with the latest ruling. Just look at their subreddit. In addition, the APTA, the physical therapy trade organization, sent out this telling statement:

“APTA is extremely disappointed that the physician fee schedule final rule will cut physical therapist payment in 2021, with no rationale or response from CMS to thousands of letters opposing the cuts. These cuts are a dire threat to patient access and safe alternatives to pain.

CMS did listen to reason on the PTA modifier policy, adopting all of APTA’s recommended changes, which makes their inaction and lack of explanation on flawed payment cuts all the more confusing.”

The post Home Health and Physical Therapy Consolidation is Coming after CMS 2020 Final Rule appeared first on The Healthy Muse.

I’m a big fan of healthcare e-mail newsletters, especially top-notch quality ones.

One of the biggest ways we find healthcare stories to curate for the weekly Healthy Muse is through informative, news-based healthcare newsletters.

I really don’t really think you can go wrong with any of the ones listed below, but I’ve tried ranking them by my personal enjoyment level.

Trust me – I’ve subscribed to them all. These are the best healthcare newsletters around.

The 10 Best Healthcare Newsletters:

• The Healthy Muse
• Axios Vitals
• Healthcare Dive
• Stat Health’s Morning Rounds and Daily Recap
• Kaiser Health News’ Morning Briefing
• ModernHealthcare’s Daily Dose
• Global Health Advisor’s Daily Note
• FierceHealthcare
• MedCity News
• Beckers Hospital Review

Note: If you’re reading this in 2020 and beyond, check out our brand new healthcare newsletter directory, which provides our readers with our favorite and best healthcare newsletters updated in real-time.

To our knowledge, this directory is the only one in existence and we only include top-notch, quality content.

• Click here to check out the healthcare newsletter directory.

1. Best Aggregator/Curator Healthcare Newsletter for Healthcare News: The Healthy Muse

Description: The Healthy Muse is the best healthcare newsletter for comprehensive, all-in-one healthcare content. It rounds up the latest stories from reputable healthcare sources (including all of the sources in this list) and provides the biggest healthcare stories from the week in just 5 minutes.

The newsletter includes the latest policy developments, notable trends, interesting innovations, and pretty much everything else.

It’s basically the Skimm, but for healthcare – meaning you get everything you need to know in one quick, easy read.

• Frequency: Once Weekly: Monday nights

• Link to sign up

2. Best Healthcare Newsletter for News Overall: Axios Vitals

Description: Kicking off our list of the best healthcare newsletters HAS to be Axios Vitals. Vitals provides the latest developments on the politics and business of healthcare. It’s clear and concise.

The writers do an excellent job of breaking down what the various issues in healthcare mean to us, and how things are constantly changing.

This is my personal favorite and pick for the overall best healthcare newsletter.

• Frequency: Daily – every weekday morning (early)

• Link to sign up

3. Healthcare Dive

Description: As one of the best healthcare newsletters for content and cost (free), Healthcare Dive’s newsletter provides readers with their latest articles on a host of hot healthcare topics each day.

I particularly like the bottom section of each newsletter, which includes a “What We’re Reading” section.

This section will usually include about 3-4 external links to other interesting healthcare content not necessarily covered by Healthcare Dive.

• Frequency: Daily, late morning

• Link to sign up

4. Stat Morning Rounds and Daily Recap

Description: Stat News provides a summary of the day’s news in its Morning Rounds.

In the afternoon, Stat sends out its Daily Recap, covering the latest healthcare developments happening each day. Stat News does a great job of covering healthcare and medicine news.

I’ve found that they’re one of the best healthcare newsletters for covering biotech and drug-related developments.

Another good one I really like from Stat is relatively new – called Stat Health Tech, the newsletter covers the intersection of technology and innovation in healthcare.

• Frequency: Daily, early morning

• Link to sign up

5. KHN Morning Briefing & KHN Weekly Summary

Description: Kaiser Health News publishes a variety of newsletters and other email alerts to keep readers updated on pretty much everything happening in national and state health policy discourse.

Their daily First Edition and Morning Briefing emails give you a look at all the important news of the day.

There’s a host of other newsletters you can sign up for on their site, too – including the latest original research, Medicare and Medicaid trends, and plenty of others.

I personally am signed up for the KHN Morning Briefing and Brianna Labuskes’ Friday Breeze. A quick warning, though – the Morning Briefing can be a bit overwhelming, since the newsletter sends you about 30 links to various articles per day.

In terms of research, health policy, and state-level trends, the Morning Briefing is one of the best healthcare newsletters.

• Frequency: Daily, early morning

• Link to sign up

6. ModernHealthcare

Description: I would say ModernHealthcare’s newsletter, the Daily Dose, is pretty similar to Healthcare Dive’s.

Each morning, the Daily Dose provides readers with an update on the latest healthcare developments, linking articles written by the ModernHealthcare site.

ModernHealthcare’s writers take a deeper dive into issues and hone in on more specific trends in a more thorough manner. I should note, though – their website has a soft paywall, meaning you have to be a paying subscriber after viewing ~3 articles.

The good news is that the Daily Dose is free. You just need to pick and choose which articles are worth it. In conclusion, the Daily Dose is one of the best healthcare newsletters for deep dives into specific healthcare issues.

• Frequency: Daily (it IS called the DAILY Dose, after all), every morning

• Sign up for the Daily Dose and other ModernHealthcare newsletters here

7. Global Health Advisors Daily Note

Description: Global Healthcare Advisors publishes a Daily Note healthcare newsletter that aggregates M&A activity, notable developments, regulatory changes, and conferences that they deem to be of interest to their partners.

It’s a quick afternoon read and an easy way to keep your finger on the pulse of the healthcare space.

I’ve found that this healthcare newsletter is especially good for seeing what healthcare conferences are coming up, reading about the latest private equity and public market M&A activity is in the healthcare space, and keeping up with the latest notable developments in healthcare.

It’s definitely geared for more of a healthcare business professional as opposed to the general population, just as an FYI.

The Daily Note is one of the best healthcare newsletters for healthcare professionals who work in M&A and private equity.

• Frequency: Daily (in case you didn’t get that from the title), early afternoon publish time

• Link to sign up

8. FierceHealthcare

Description: Similar to ModernHealthcare and Healthcare Dive, Fierce Healthcare provides free healthcare newsletters on a variety of topics.

For the most part, they’re focused on healthcare news specifically in business and policy.

Akin to Healthcare Dive, it’s one of the best healthcare newsletters for all-around news.

• Frequency: Daily or weekly – depending on which newsletter you pick.

• Link to sign up

9. MedCityNews

Description: In its healthcare newsletters, MedCity News focuses on the business of innovation in healthcare, providing readers with news on startups, innovations, and other interesting trends. They have loads of good content!

Similarly to Healthcare Dive and Fierce Healthcare, MedCity is one of the best healthcare newsletters for all-around news.

• Frequency: Daily

• Link to sign up

10. Beckers Hospital Review

Description: Through their “e-weekly” healthcare newsletters, Beckers provides healthcare news segmented in every imaginable way.

As long as you look close enough, you won’t miss any notable healthcare development. Sometimes, the newsletters can get a slightly spammy since all they do is provide links with not much context beyond the article’s title.

In fact, I’ve found that their newsletters repeat the same linked articles from day to day. Another slight annoyance from Beckers involves the self-promotional nature of the newsletters.

Without fail, in every newsletter you’ll find a large chunk in the middle promoting one of their upcoming webinars or speaker series.

I’m not saying this is a bad thing – I’m just trying to prepare you for what to expect. Still, Beckers is one of the best healthcare newsletters for finding breaking issues and giving a perspective to both providers and business professionals working in healthcare.

• Frequency: Daily, late morning

• Sign up for their E-Weeklies Here

The post The 10 Best Healthcare Newsletters appeared first on The Healthy Muse.

Yet another “digital” healthcare company has aspirations for the public markets. One Medical, which is essentially a high-tech urgent care platform with about 70 locations, has hired bankers (wimps – go for the direct listing) and is planning an IPO for early 2020.

Notably, One Medical’s largest investor is Google, which might earn the company some cred on the ‘ole Street.

A Tech company, or just a healthcare services company with a splash of tech?

One Medical will need every morsel of that credibility for public investors to look past a company that seemingly just operates as a primary care platform.

It will be interesting to see what the company includes in its initial prospectus and roadshow to win institutional investors before any IPO – especially since primary care services typically command lower profit margins and subsequent low multiples.

Yet another digital health company. Progyny, a fertility benefits company, files to go public.

In other IPO news, Progyny, which manages fertility type benefits at companies, just filed to go public. Fertility has been a hot market for private investment, so it’s interesting timing for a fertility player to exit to the public markets.

The fertility firm claims to give employees better pregnancy outcomes as compared to the fertility industry’s average pregnancy rates.

• Read Progyny’s S-1 Prospectus here.

Digital Health IPO performance woes.

One Medical and Progyny might face a tough time in the public markets given the current slaughter happening to IPOs.

Livongo, Health Catalyst, Change Healthcare, Phreesia, Peloton, and SmileDirectClub all went public earlier this year.

And all but one are down over 10% as of this writing. Most of that might be due to overall volatility in the markets, but the optimal time to IPO – especially for digital health companies – may well be in the past.

Subscribe to our newsletter for more updates like this.

The post 4 Updates on Digital Health IPO Performance in 2019 appeared first on The Healthy Muse.

1. Sanford and UnityPoint combine to create a huge Midwest system

A 26-state giant.

This week, Sanford and UnityPoint announced their intentions to merge into a sprawling Midwest nonprofit giant. With the combined entity, the two health systems will boast 76 hospitals across 26 states, $11 billion in operating revenue, and significant heavyweight players in several markets (hello, North & South Dakota, Illinois, and Iowa) on their way to becoming one of the biggest 15 nonprofit health systems in the country.

Keep ’em coming.

The deal between the two Midwest giants is yet another example of hospital and nonprofit consolidation in healthcare. Both systems plan to merge for strategic reasons, including improving operational efficiencies by leveraging strengths from each side. For instance, per the WSJ article, Sanford’s research operations strong, while UnityPoint controls several medical schools throughout the region.

2. AbbVie buys Allergan for $63 billion

Not quite to Celgene’s level, but close.

AbbVie is buying fellow biotech giant Allergan in a $63 billion deal, just a smooth $11 billion below Bristol Myers Squibb’s $74 billion bid for Celgene. Allergan’s main claim to fame is Botox (heard of it?). Some investors are skeptical of the deal, since Botox, Allergan’s best selling drug, is expected to see increased competition once its patent protections are up.

Biotech Boom.

It’s been a good year for biotech M&A (and their investment bankers for that matter, probably). Deal volume has already blown past $200 billion for the year, and Big Pharma has plenty of cash to spend for the rest of 2019.

3. Digital Health IPOs Livongo, Change Healthcare, Phreesia, and Health Catalyst hit the market

A red hot IPO market.

A notable number of health-tech type startups are springing up in the IPO market:

Late last week, Change Healthcare ($CHNG), a revenue cycle management firm debuted on the trading floor and is up around 10% as of this writing.

Livongo is planning to go public soon, and describes itself as a chronic disease manager – helping to reduce costs by assisting patients with chronic diseases. The firm is aiming for a $2 – $2.5 billion valuation and is expected to work with the Apple Watch and other wearable devices. Here are some interesting insights from the company’s S-1 fililng.

Health Catalyst, a provider of healthcare data analytics and services, likewise aims to trade publicly and filed confidentially in April. We don’t know much about it, other than the fact that it’s trying to raise $200 million in the offering.

Phreesia, a patient intake and monitoring software company, is looking to raise $125 million in its IPO. The healthtech firm specializes in making the patient intake process easier for all parties (remember those lengthy check-in and check-out times?). It looks like Phreesia dabbles in payment processing too, which is a somewhat hot area right now. Of the startups listed above, this one sounds the most intriguing to me.

4. Dems debate healthcare

As I’m sure we’re all aware, the Democratic debate kicked off this past week with not one, but TWO nights of candidates grandstanding for attention.

From the healthcare side, candidates easily agreed on the need for drug pricing reform, but an interesting divide emerged from those who supported Medicare for All type policies versus those who supported a more moderate approach to healthcare reform.

Elizabeth Warren and Bernie Sanders (of course) quickly threw weight behind the Medicare for All cause. Kamala Harris seemed to do so as well, but then retraced her steps post-debate after saying she mis-interpreted the question.

Read more about the different healthcare policies and statements made during the debate here.

5. Quick Hits – UPMC and Highmark agree to a 10 year contract, a Netflix style model for Louisiana healthcare, Lyft as a Medicaid provider, and more.

State Hits:

• After a decade-long scuffle, UPMC and Highmark agreed to a 10-year contract.
• CMS approved Louisiana’s Netflix style model for hep C drugs on its Medicaid program.
• San Fran just banned the sale of e-cigs. Don’t worry, though – cigarettes are still on the shelves.

Biz Hits:

• Another casualty of price transparency – Civica Rx is running into trouble with bundled payments.
• PE firm Centerbridge is in exclusive talks to buy small managed care player Magellan Health for around $1.6 billion. Initially, UnitedHealth and Anthem were thought to be one of the winners.
• MedNax terminated its President, Joseph Calabro, as part of its restructuring plan
• Providence St. Joseph Health is acquiring an Epic consulting firm (no, not an EPIC firm, a firm that specializes in the Epic E H R platform)
• Lyft is now considered a provider for Arizona’s state Medicaid program. That means a lot of folks on Medicaid now have access to non-emergency rides to get to their doctors’ appointments.
• Apple continues its steady expansion into health care by selling a consumer-focused diabetes monitor in stores

Policy/Other Hits:

• Big Tech gets in trouble with healthcare privacy laws.
• Nonprofit hospitals are getting a bad rap lately. The latest is Methodist Le Bonheur, which apparently owns its own collections agency and sues its low-income patients.

6. What you missed since the last Healthy Muse

-An executive order that could transform the kidney and dialysis industry.

-CVS is trying to break into the dialysis industry with an at-home machine.

-Trump lost big to Big Pharma as the courts strike down forced drug price TV ads disclosure.

-The ACA is probably headed back to the Supreme Court – for a 3rd time. Here’s what happened previously.

–Drug Rebates are living on – for the time being.

-And the Primary Care shortage probably isn’t going anywhere.

7. Digital Health IPOs Rock Wall Street

Big ROI.

How are all of the recent digital health IPOs faring? Let’s take a peek:

–Livongo surged 48% from its $28.00 offering price.

–Health Catalyst boomed 59% from its $26.00 offering price.

–Phreesia is up 46% over its $18.00 offering price.

–Change Healthcare is up just a meager 11% over its $13.00 offering price.

Needless to say, the digital health IPO wave that just hit was…pretty successful for the companies taking place. Considering that digital health was previously in a 3-year drought without an IPO, I’d call that a pretty good run. And you could argue that the market in general is in an IPO frenzy as companies rush to raise money before any recession hits.

Digital health IPOs – an emerging trend?

The IPO success could pave the way for future digital health IPOs, too – like 23andme or SmileDirectClub – as private investors get more friendly with exit strategies through the public markets.

8. How to get rid of your obscenely high medical bill

Contact a reporter.

Seriously – a man received 14 weeks of dialysis at an out of network clinic and was charged over half a million dollars, which, ironically, is more than the cost of a kidney transplant (as KHN points out). KHN picked up the story, and – lo and behold – Fresenius then decided to reclassify the treatments as ‘in network.’ Seriously, what a relief.

Still, these types of headline-grabbing stories pop up all the time in the news. “Man receives $60k surgery bill,” or “Insurer won’t cover treatment for child’s life-threatening disease.” Almost without fail, the company involved reverses course and provides relief to the families involved.

9. Tenet Spins Off Conifer and the Desert Healthcare Network play

Spun off to the masses.

After trying to sell its revenue cycle management arm, Conifer Health Solutions, Tenet is now looking to spin off its subsidiary to the public markets, creating a separately traded public company. Tenet’s stock shot up on the news, since Conifer is pretty profitable (23% margins on adjusted EBITDA) and investors want a piece of the Conifer pie. That demand could signify the hot market for healthcare data and payment management software.

Interestingly, CommonSpirit Health owns a small stake in Conifer, which is something I didn’t know before this story broke. The transaction is supposed to take place by the second quarter of 2021, so still a decent ways away. Tenet wants to make sure that the spin-off transitions well and is tax-free for all parties involved.

In other Tenet news…

The hospital operator is looking to make a large investment in their Desert Health Network by offering to purchase Desert Regional Medical Center in Palm Springs for $320 – $380 million.

10. Policy Corner, week of July 29 – Capping Medicare part D payments? Congress’ fall agenda, and the Dems’ drug pricing bill preview

Welcome to the newest addition to the Healthy Muse – the Policy Corner! From now on, you can find everything on healthcare policy in this section. Let me know if you absolutely abhor this change and I can reverse course. Also, I’m bad with coming up with fun names, but that’s why I’m not in marketing.

Let’s get to the policy, already.

Sheesh. Fine.

This fall will be quite the busy affair for Congress and healthcare policies. Votes are expected on drug pricing bills, surprise billing, and the beefy bipartisan health costs bill since none of them were finalized before recess.

On to the White House.

The Trump admin has been busy with an executive order on drug pricing that would cap Medicare beneficiary payments for drugs.

Meanwhile…

Not to be outdone, the Dems are expecting to release a ‘bombshell’ drug pricing bill in September. The bill might include some component where Medicare directly negotiates with drug-makers on price. Here’s some background on how that might look.

The Cadillac Tax, which taxes high-cost employer-sponsored health insurance plans, is not too popular in Congress. The House recently voted to overwhelmingly repeal the ACA provision.

11. Quick Hits – Robotic surgery reality, Joe Biden’s healthcare policy, and UHS settles criminal probe.

Biz Hits

• Centene is eyeing Medicare Advantage as its next business boon.
• Hospital operator UHS just paid $127 million to settle its criminal probe. Its stock shot up on the news between the settlement and its strong second quarter earnings results.
• Anthem just launched an app that lets patients text with doctors.
• Robotic surgeries might not be what they’re stacked up to be….yet.
• Some drugmaker in India called Strides shredded all of their quality documents right ahead of an FDA inspection.
• How drug middlemen (AKA, PBMs) take back money from pharmacists

State Hits

• Minnesota’s law to improve cost transparency takes effect next month
• [Soft Paywall] Another major Cincinnati doctor group is looking to expand through a private equity deal

Other Hits

• Interestingly, ground ambulances were left out of the current federal surprise-billing proposals
• What’s Joe Biden’s healthcare policy?
• Is the new PDGM post-acute payment system going to get exploited?

My favorite reads this week:

• Okay listen…this is a 30 minute read minimum…but it is incredible.
• The Battle of Grace Church. What happened when Brooklyn’s oldest nursery school decided to become less old-fashioned? A riot among the one percent.
• This college dropout was bedridden for 11 years. Then he invented a surgery and cured himself

12. Big Tech’s plans for better access to medical information

Making healthcare accessible.

As a part of its ever-ongoing push into healthcare, the various Big Tech firms were in DC this week alongside plenty of other healthcare players at the 2019 Blue Button Developers Conference. At the conference, the coalition, called the CARIN Alliance, formed draft guidelines that will 1) set the standard for sharing medical claims data, and 2) make it easier for patients to access that claims data across healthcare companies.

How it (might) work.

The coalition is taking “Common Payer Consumer Data Sets” and making them easier to operate between platforms in order to make it easier for patients and plans to access the information. Keep in mind – as CNBC pointed out, this data isn’t clinical data, but rather claims data, which is a bit less useful.

All the big health systems and tech companies are playing nice for now, which could lead to some exciting results for consumers down the road.

13. The Remarkable Evolution of Diabetes Treatment

A modern marvel.

With the rising costs of insulin, diabetes has frequently found itself in the news as a hot-button disease for policymakers and journalists alike. A lesser-probed topic is the remarkable transformation that has taken place in diabetes management and monitoring – to the relief of patients.

The transformation of disease management.

The WSJ highlighted some ways that diabetes treatment and monitoring (paywall) is changing – for the better:

Continuous glucose monitors measure the body’s glucose levels constantly and can send results or warnings to multiple smartphones. Insulin pumps can either automatically or manually adjust levels in the body.

Medical device growth.

As the WSJ points out, glucose monitors growth have skyrocketed in the past few years. According to the companies that produce the monitors, the market is huge. It makes sense – this type of product is great for the consumer. Diabetes patients get more autonomy, (much) fewer finger pricks, and better disease control.

A large market, you say?

With the boon of chronic disease management and medical device connectivity, it was only a matter of time until the Big Tech players got involved. All of Alphabet, Amazon, and Apple are developing new tools and services for diabetes management.

14. Amazon’s PillPack runs into trouble with ReMyHealth

Drama in PBM land.

This ordeal is probably as close as we’ll ever get to soap opera levels of drama for PBMs. PillPack is suing a company called Surescripts, which is a company that supports PBMs through “e-prescription,” or a fancy word for electronically transferring patient prescription data between healthcare organizations and pharmacies.

So what’s the beef?

In order to access patient data and prescriptions, Amazon’s PillPack partnered with a firm called ReMyHealth. ReMyHealth would then access the Surescripts database to give PillPack the appropriate patient prescription information.

More speedbumps for PillPack.

Everything was going pretty smoothly for PillPack…until Surescripts suddenly sued ReMyHealth and kicked the firm out of their database, claiming that they were illegally accessing Surescripts’ database and violating their terms by fraudulently handing over patient medication history to PillPack.

According to Surescripts, ReMyHealth apparently mis-represented who they were providing the data to, since the PillPack partner vaguely claimed that the prescription data was meant for “providers caring for patients in hospitals.” Surescripts has stated that the case is being handed over to the FBI. Meanwhile, PillPack sent Surescript a cease-and-desist notice. Yikes.

In other Amazon news…

Amazon and healthcare electronic health records firm Cerner announced a strategic partnership this week. And how do Amazon’s big healthcare plans involve Alexa?

15. Pfizer creates a generic drug giant along with Mylan

A generic merger.

This week, Pfizer announced its plans to spin off its generic drug making unit in order to combine that unit with Mylan, which is also a…generic drug making company.

This thing is gonna be massive. The newly combined company is expected to have about $19 billion in revenue, with Pfizer owning 57% and Mylan owning the other chunk (you do the math).

Some big-name generic drugs that the newly combined company makes includes the short-supplied EpiPen and the anxiety-reducing Xanax (heard of them?). The merger comes as a big sigh of relief to Mylan – the company has been struggling heavily lately.

Read the deal announcement here.

16. Policy Corner, week of 8.5.2019 – Trump’s executive order on pricing transparency, drug importation from Canada, and partial Medicaid expansion in Utah denied.

Get your popcorn ready.

Don’t worry fam, I’m here to sift through all of the policy noise for you. Let’s get after it.

Trump’s executive order on pricing disclosure.

As I’m sure everyone here has heard by now, Trump – through CMS – is trying to mandate hospitals and insurers to publicly disclose their secretly negotiated healthcare prices.

The industry speaks out.

While most legal experts are 50/50 as to whether or not CMS even has that authority, hospital and other healthcare interest groups are already spicing up their rhetoric, blasting the executive order by calling it a “misguided attempt” that fails to give patients the information they actually need (personal aside – do interest groups have some sort of handbook they follow for language to use in these situations? I’m genuinely curious).

Also, forcing the public disclosure of negotiated prices might even be a First Amendment violation of free speech, which would be a pretty wild conclusion to this whole ordeal.

How the executive order would work…if it makes it.

In summary, CMS would require for hospitals to disclose the prices of 300 healthcare services, 70 of which would be selected by CMS (with the rest selected by the individual hospital). The apparent fine for non-compliance would be $300 per day, or about $110,000 annually.

In other Trump news…drug importation.

In an effort to lower prescription drug costs, the Trump administration is mulling over the idea of importing drugs from other countries – namely, Canada, for starters. While this exact policy might not be implemented, the fact that importation from other countries is being considered (for the first time ever, actually) means that they’re pulling out all the stops.

Importing drugs from other countries, where they generally cost quite a bit less, sounds good in theory. But in reality, it might be tough to get other countries onboard with that idea. I’m sure Canada wants drug shortages.

Partial Medicaid expansion in Utah gets denied.

In other news, the Trump admin denied partial expansion of Medicaid in Utah. Something about how only partially expanding Medicaid is illegal.

Finalized payment rulings for hospice and inpatient rehab facilities.

On the CMS end of the policy spectrum, the institution finalized post acute rulings, which will result in payment increases for inpatient rehab facilities, hospice, skilled nursing, & more. Read more about the three proposed 2020 rules  here, too.

17. Quick Hits – Health Insurance Innovations looks for a sale, Private Equity is having no problems raising new funds, Anthem launches a new consumer app, and more.

Biz Hits

• Health Insurance Innovations, Inc. might be selling the company.
• Private equity is having no troubles raising new funds. WCAS’ latest $4.3 billion fund was oversubscribed
• Looks like SmileDirectClub is the next healthcare ‘tech’ company to go public. They’re looking to raise a billy (that’s $1 billion for you common folk).
• Anthem launched a new consumer app – with texting capabilities. TEXTING CAPABILITIES!!
• The generic drug price fixing case just hit a major roadblock.

State Hits

• Trinity Health is challenging non-compete clauses in Michigan
• California gets a $70 million settlement from drugmakers. The state is also trying to fight deals that would delay generic drugs coming to market.
• Colorado is becoming the third state to allow doctors to recommend good ole Mary Jane instead of opioids
• Health-Care Spending Soars (paywall) in New York State

Other Hits

• Data breaches in 2019 are already DOUBLE of how many there were in all of last year
• Are you wondering which places have the most medically inadvisable foods? The Cheesecake Factory and Jimmy John’s are #1 and #2.
• A View From Inside Cigna’s $67 Billion Acquisition Of Express Scripts
• Here’s more of an opinion/commentary article: despite calls to start over, the US Health System covers 90% of people
• The U.S. News just released its 30th Annual 2019-20 Best Hospitals Rankings
• Doctors in the U.S. Use CRISPR Technique to treat a genetic disorder for the first time.
• A Question Rarely Asked: What Would Medicare for All Cover?

My favorite reads this week:

• What people actually say before they die
• Anxiety Looks Different in Men (paywall)

18. Opioid distributors are about to get a BIG TIME fine.

That’s a big fine.

The big distributors of opioids were already expected to be on the hook for a hefty fine stemming from the opioid crisis, but it turns out that the fine is gonna be QUITE a bit more than expected – a range between $10 billion to $45 billion. As you can imagine, the news hammered drug distributors McKesson, Cardinal Health, and Amerisource Bergen, who would be on the hook for the settlement cash.

The companies combined are currently dealing with close to 2,000 lawsuits in 35 states stemming from the nearly 76 billion pain pills that they distributed during a 6 year period (according to the DEA). The prosecutors argued that the drug distributors in particular didn’t respond to signs of opioid abuse, and engaged in shady marketing.

Don’t forget that companies like Purdue Pharma, Teva Pharmaceuticals, and Johnson & Johnson (heard of them?) are also on the hook for the crisis, too.

19. Drug Data Manipulation at the FDA – Novartis hid safety data about Zolgensma, its now-approved $2.1 million drug.

Raising some eyebrows.

Faithful readers of the Healthy Muse might have seen Zolgensma (gesundheit), a drug that treats spinal muscular atrophy in children, making the news in the past few months for its unprecedented $2.1 million price tag. Now, it turns out that the drug’s maker, Novartis, may have manipulated and hidden some of the trial data from the FDA.

High stakes.

While the FDA maintained the drug is still safe and should remain on the market, questions are still arising as to whether or not Novartis knowingly manipulated the data and covered it up. The stakes were high – according to Stat, if the FDA had known about this extra data, the drug’s approval most certainly would have been delayed. Novartis claims they were as transparent as possible. Some members of Congress are pretty upset and want the FDA to take criminal and civil action against Novartis, the most expensive drug in history, and the big, bad pharmaceutical industry.

20. Can the iPhone and Apple Watch detect dementia?

Dementia Detectors.

In this week’s cool health tech story from Healthcare Dive, Apple and Eli Lilly are trying to determine whether the Apple Watch and iPhone can detect dementia in patients through small research studies. Basically, they’re observing whether or not common trends exist among those with dementia/cognitive decline as opposed to healthy individuals.

Some promising results.

As it turns out, preliminary results seemed to indicate that individuals with symptoms of dementia displayed differences in device use as compared to healthy folks, including “slower typing, less regularity in schedules, fewer text messages, and greater reliance on helper apps such as the Clock app.”

Pretty interesting stuff, and could be just the beginning of a deep dive into earlier detection of dementia.

21. CVS’ counter to Amazon Prime subscription – CarePass, complete with free drug delivery

Prime 2.0

Last week, our third story touched on the PillPack – SureScripts fiasco, where traditional PBM heavyweights are taking on Amazon’s attempted entry into the market. Now, CVS is taking on the online retail giant in another way: through a subscription based model similar to Amazon Prime.

Take that, PillPack.

As the traditional drugstore evolves its offerings into a healthcare wellness hub, CVS is offering CarePass – a $48 annual subscription – to customers, which will include free delivery of its drugstore products AND prescription drugs. If that’s not enough for you to consider the service, CVS is also including a monthly $10 coupon, too. I don’t know about you, but I’d say that’s a pretty decent offering.

22. Policy Corner, week of 8.12.2019 – Canadian drug importations and the finalized 2020 inpatient rule from CMS

A new healthcare plan from the Trump administration?

Everyone was wondering what the Trump administration would do if Obamacare is ACTUALLY struck down in court this time. Is there a plan in place for the expected turmoil? As it turns out, the White House might release a plan as soon as September with some interesting elements attached, including efforts to end surprise billing, give states more wiggle room on policies, and more.

In other news, the pharmaceutical industry isn’t a big fan of the whole ‘Canadian drug importation’ plan, and, unsurprisingly, the proposal even managed to rile up Canadians too.

Finally, CMS released its final inpatient rule for 2020. From Beckers, here are 8 things to know.

23. Quick Hits – Walgreens closes 200 stores, Addus HomeCare looks to take advantage of the expected 2020 Medicare Advantage boom, and 30 leaders transforming the future of healthcare.

Biz Hits

• BioScrip, the largest provider of infusion services, announced its merger with Option Care this week
• Walgreens’ struggles continue as the drugstore model flounders – they’re closing about 200 stores globally.
• Addus HomeCare is looking to buy up businesses ahead of the Medicare Advantage 2020 boom.
• How UHS’ Alan Miller Built a Successful Hospital in the Middle of Nowhere

State Hits

• In Texas, a senator questions whether Managed Medicaid is doing its job appropriately after a child is left in foster care to suffer a catastrophic brain injury.

Other Hits

• The next healthcare innovation: the waiting room (Paywall – WSJ)
• From Business Insider: Meet the 30 young leaders who are transforming the future of healthcare and disrupting a $3.5 trillion industry
• Experts: Mental illness not main driver of mass shootings

My favorite reads this week

• On mass shootings and the limits of journalism.
• TL;DR: The Best Finance Books in One Sentence

24. Want cheaper surgery? Go on vacation.

An all-inclusive resor- er…wait – hospital?

Save this wild story down for later. To reduce costs on healthcare, some employers – like Ashley Furniture – have been flying down patients along with physicians to Cancun, Mexico in order to perform surgeries and other procedures.

As KHN reports, one patient flew from Mississippi to meet an orthopedist from Milwaukee to perform a knee replacement surgery, and the patient was paid for it – that’s how much less it was to have the procedure done in an upscale hospital in Mexico rather than in America. Like, literally less than half as much money. Absolutely wild!

Read the whole story here.

25. The latest privacy battle: Patient DNA data?

The latest privacy battleground.

This week, the Wall Street Journal reported (paywall) on recent hospital system and drug-maker partnerships to access patient DNA information. The partnerships are aimed at advancing drug development, or other research-oriented purposes. But they might not be the most forthcoming with patients as to how they’re using patient data.

How it works.

Patients are given a free genetic test that shows them risk of various diseases and vulnerabilities, but they’re not necessarily told how their genetic data might specifically be used by companies for drug development or other commercial purposes.

Keep an eye on this one as genetic sequencing becomes more commonplace.

26. Is employer healthcare spending reaching a breaking point?

Humpty Dumpty sat on a wall….

Healthcare costs have risen for everyone – that’s a given. But because the U.S. healthcare system is set up how it is, employers foot a larger portion of healthcare costs. In an interesting and detailed brief from Axios, it turns out that the system could be close to a breaking point.

As these costs continued to rise for employers, companies shifted more of their healthcare costs to their employees (hello, high deductible health plans).

What does shifting costs to us do?

On top of an already high deductible, patients end up having higher premiums along with more responsibility to pay for their medical bills. Given these set of facts, the rise of out of pocket spending and healthcare inflation could be unsustainable and lead to a crisis.

27. Policy Corner, week of 8.19.2019 – an Obamacare Replacement? Cadillac Tax repeal. And what all of the 2020 candidates have to say on healthcare.

What’s your plan??

Democrats and basically everyone else were asking the Trump admin what the replacement healthcare policy would be if Obamacare were to fail in court in its 3rd victory lap around the Appellate Circuits. Never fear – Trump’s health chief came out and let everyone know this week that officials were actively working on an Obamacare replacement.

Any details yet, or nah.

The plan itself is skimpy on details so far, but we DO know that officials are targeting a September release date, and we would expect the plan to include certain elements like ending surprise billing, giving states more wiggle room on policies, potential drug pricing solutions, and more.

In other Trump news…

The administration just hit the brakes on a law that would have stopped ‘unneeded’ CT and MRI scans, since officials faced some backlash from physicians who thought the policy was disruptive to their practices.

Cadillac Tax repeal.

Finally, it seems pretty likely that the Cadillac Tax, a tax on more ‘generous’ insurance plans, would be repealed this fall. Here’s some background on that.

In the miscellaneous category..

Here’s a pretty handy little tool created by the Healthcare Economist that compares different Democratic candidate health plans at a high level, and here’s the full article.

28. Quick Hits – SmileDirectClub’s S-1, Uber expanding into Medicare, Centene planning ACA expansion, and how to save a Rural Hospital.

Biz Hits

• SmileDirectClub, a direct to consumer “teledentistry” platform, just filed to go public. They lost about $53 million on revenues of about $374 million in the first half of 2019. Their prospectus is pretty interesting if you have the time to read through it.
• Uber just sealed a deal with American Logistics to provide travel services for Medicare plans in its first tangible step into healthcare.
• Centene is expanding its ACA plans into 10 more states.
• Medicare Advantage growth is booming (obviously) but apparently the plans aren’t producing much savings?
• CityMD and Summit Medical Group finalized their merger this week, bringing together an urgent care powerhouse and a huge physician group in the northeast.
• Healthcare has always been seen as a defensive, anti-cyclical investment in the stock market. But have things changed?
• Physicians are being targeted more and more for C-suite positions.

State Hits

• North Carolina just backed off on its plan to switch to ‘reference pricing’ for its state employees.
• $190 or $47,779? Colorado emergency charges vary wildly across state.
• This one was a pretty interesting read. A hospital administrator found creative ways to recruit physicians to his rural hospital, saving its operations.
• SSM Health and Paladina Health are the next in line to unveil a direct to consumer primary care platform.
• A private-equity firm just bought control of GoHealth in a whopping $1.5 billion deal, the largest private equity buyout in Chicago.

Other Hits

• NPR covers an app that’s designed to save new moms’ lives.
• Hospitals are now facing likely DSH payment cuts after appeals court ruling
• UnitedHealth Group’s latest report puts rising healthcare costs primarily on hospitals.
• Doctors say most metrics provided by your Apple Watch, Fitbit aren’t really that helpful to them
• Is there a looming long-term care crisis? Axios takes a deep dive.
• Average marketplace premiums for 2020 are expected to increase at the smallest ever rate – 0.6% – which might come as a reprieve to employers?

My favorite reads this week

• Are We on the Verge of Another 2008 Market Event ? (I’m in the “no” camp)
• How a Scammer Drove a Network of Small-Town Hospitals Into the Ground.

29. Johnson & Johnson Opioid Ruling – a $572 million fine

That’s painful. (get it?…I’ll see myself out)

This afternoon, a judge released the verdict (paywall – WSJ) of the first of many trials determining whether Johnson & Johnson specifically contributed to the Oklahoma opioid crisis. The state of Oklahoma asked for as much as $17 billion in fines from J&J, claiming it would cost that much to recover from the damage done.

While the judge found J&J liable, the fine was set at $572 million, which is about 3% of what Oklahoma asked for. And of course, since the fine for Johnson & Johnson wasn’t as big as expected, the stock shot up around 3% immediately after the news broke. The company will appeal the decision, too.

That’s not all.

This court case is the second of many trials taking place around the U.S: Purdue Pharma settled for $270 million, and Teva Pharmaceuticals settled for $85 million, also in Oklahoma. We’ll probably be seeing some more drug makers coughing up big bucks here before too long.

After all, there are almost 2,000 opioid related lawsuits out there right now, and almost all of them have consolidated around a federal court house in Ohio. Keep an eye on that case, which is slated for October.

30. Cue up the next blockbuster drug deal – Amgen is buying Otezla in $13.4 billy deal

In Monday’s other inflamed news story…

Amgen announced their plans Monday to buy the highly successful, lucrative anti-inflammatory drug Otezla from Celgene for a whopping $13.4 billion deal (keep in mind that Celgene is getting acquired by Bristol-Myers-Squibb).

A Win-Win Deal.

As the WSJ points out, this deal was pretty much a huge win for BMY since the drug maker was required by the FTC to sell Otezla anyway. Amgen is a fan of the deal too, since patents on the blockbuster drug don’t expire until 2028. It’s the latest deal in the usually highly active biotech space, which hasn’t been too active since January of this year.

31. Apple’s Health division faces personnel challenges

Secret’s out.

Tensions are rising inside Apple’s health division personnel. The highly secretive health operation has seen executives departing for other healthcare firms and ventures after growing frustrated with Apple’s progress in disrupting healthcare along with its various healthcare philosophies.

Apparently, while Apple is focusing more on bigger picture, general population health and incremental progress, individuals were hoping to solve more specific problems within healthcare at a quicker pace with more focus. That issue, coupled with more philosophical problems, led to the departure of quite a few employees.

My thoughts..

I’m all for the ambition, but the healthcare industry as a whole moves as slow as molasses to adopt any new technology AS IS. Some practices still transfer data via fax. I’ve even heard of one physician who had no clue what Microsoft Excel was. (FYI – the CNBC article linked above also has some interesting insights into Apple Health’s operations and structure, if you’re into that sort of thing).

In other Apple healthcare news…

The tech giant just announced a strategic partnership between Allscripts and Apple Health Records. According to the release, Allscripts will now let any patient using the platform access their personal healthcare data via iPhone – even if using several providers.

32. Higher temperatures create more health problems

Sticky.

As if you haven’t heard enough about climate change, NPR published an article this week highlighting the negative health effects that come along with rising temperatures. The story details how health problems and mortalities rose drastically during summer heat waves in various cities.

Don’t forget though, that some may stand to gain from rising temperatures. Since diseases spread more easily in higher heat environments, Axios pointed out in January that warming global temperatures could be a huge boon to Big Pharma and drug development/sales to counteract the potentially higher occurrence of diseases if temperatures continue to rise.

33. Healthcare Policy Corner, week of 8.26.2019 – controversial public charge rule takes heat, and Democrats debate healthcare – just not Medicare for All.

Widespread critics are speaking out against the administration’s Public Charge Rule expected to take effect in October.

What’s the Public Charge Rule?

Basically, the administration is looking for more ways to control immigration. As a way to deny people from receiving green cards, the admin created a rule that limits immigrants from receiving public benefits for more than 12 months.

For instance, if said immigrant were to use Medicaid, which is a designated public benefit under the Public Charge Rule, for more than 12 months within a 36 month period, that individual would then be denied a green card.

How does this affect healthcare?

Since Medicaid is listed as one of the public benefits, healthcare providers (including the AHA) and state officials alike have warned the admin, saying that Medicaid enrollees would plummet as a result of the rule.

Lower levels of Medicaid enrollees would lead to higher percentages of un-insured populations, which means providers would potentially be faced with much higher levels of uncompensated care, worse health outcomes in their population, and worse financial outcomes that they and the state would eventually have to pay for, anyway.

As you can imagine, several states are suing and we’ll see where all of this ends up.

In other policy news…

Democratic Senators aren’t fans of Medicare for All policies. Instead, according to Politico, both representatives in battleground states and incumbents alike favor supporting the healthcare rhetoric already floating around: expansion of Medicaid at the state levels, and adding public insurance options to states. But they’re shying away big-time from touting Medicare for All.

34. Quick Hits – Cigna starts scooping up providers, huge state Medicaid contracts in limbo, Wyoming tries to classify air ambulance services as a public utility, and more.

Biz Hits

• Addus Homecare is buying Hospice Partners of America in Birmingham, Alabama for $130 million.
• Private equity firms are looking to buy a stake in a….Philippine hospital system?
• In an interesting development, Cigna is looking to get rid of its group life business and might join the providers purchasing party
• I haven’t seen much reported on either of these, but Centene and Aetna are potentially losing huge Managed Medicaid
• Contracts (like, in the order of $1 billion) in Louisiana and Kansas.

State Hits

• Wyoming is trying to lower air ambulance costs by forcing lower-than-Medicare payments and designating it as a public utility
• Texas’ surprise billing legislation completely left out employer-sponsored (teachers, state employees, etc.) insurance – about 9 million folks
• Florida just re-defined a CRNA’s scope of practice, saying that a CRNA “is an anesthesiologist”
• In other Florida news, non-competes are about to get a lot harder to enforce.
• Hospitals are suing the state of Alaska as the governor sharpens his pencil to sign significant Medicaid cuts into law.
• Here’s a state-by-state breakdown of 113 recent rural hospital closures, from Beckers.
• Should hospitals purchase marketing on local football stadiums? A children’s hospital in Texas did, and Dallas News had some sharp words to say about it.

Other Hits

• A Price Transparency Case Study: patients shop for lower healthcare prices if reference pricing is included
• The CDC just flagged 1 death and 200 cases of lung illnesses in the U.S. tied to VAPING.
• When a rural hospital shuts down, how do people get emergency care?

My favorite reads this week

• How the Invention of Spreadsheet Software Unleashed Wall Street on the World

35. Vaping Related Illnesses are Spiking

The Vaping Epidemic.

The CDC is reporting hundreds of vaping-related illnesses across 29 separate states, which is a huge spike in what most might think is a ‘safer’ practice in vaping. Apparently, most of the incidents are happening because of third party, foreign substances (like THC) somehow making their way into the vapes.

The exponentially increasing number of reports shows us just how far behind vaping regulations are when it comes to preventing these sorts of things. Forget about the shady marketing tactics. Now, real health scares are coming into the picture as a result of the wild-west vaping industry. Look for more potential regulation to hit the main stage soon.

36. Audits for Medicare Advantage, and DOJ Investigations for Providence

CMS wants to audit Medicare Advantage.

Medicare Advantage (AKA more or less Medicare plans managed through big insurance companies) has been a huge boon for the health insurance industry and the main driver of growth on quarterly earnings calls. So it comes as no surprise that the big insurers would strongly oppose any regulation on their biggest growth vehicle.

What’s the looming regulation?

As Axios reported this week, the Centers for Medicare and Medicaid want to audit Medicare Advantage plans to make sure that the plans are not billing Medicare for more services than they ought to be. They’re calling the audits “risk adjustment data validation.”

Insurers Hate This One Thing!

Insurance companies had plenty to say about the pending regulation. Centene even had enough nerve to warn that the regulatory action could cause further market consolidation…

Read the full Axios article here.

37. Wal-Mart’s Healthcare Expansion – starting with primary care clinics

Enter: Wal-Mart Health Clinics.

In direct competition with the likes of CVS and other direct to consumer primary care-type offerings, Wal-Mart has decided to make an even more serious push into healthcare by opening up primary care clinics.

Its pilot store opens in Georgia and looks to offer quite the decent selection of offerings for consumers, including dental, optical, audiology, and other entry-point services for…you guessed it…everyday low prices!

Read more about the offering here.

38. The Wellness Trend

Banking on Wellness.

This week, Peloton filed its S-1 form – they’re expected to IPO later this year. As Nathaniel Meyersohn noted on Twitter, there was a little nugget in their S-1 that noted the wellness trend happening in the U.S. has been a huge boon for the Peloton business. As we all know, Peloton sells overpriced, glorified stationary bikes with a fitness subscription on top of it (and they’re still not profitable…that is beyond me).

But Peloton’s recent success shows the push that wellness has made into society, especially among employers, who are now offering wellness programs that include everything from on-site yoga to stress management (I should note that the jury’s still out as to whether or not these types of programs are effective), to more robust offerings like mental health screenings, tele-health, and women’s health.

Fitbit jumps in to care management.

Don’t stop with just the employers, though – traditional ‘generalized’ medical wearable makers like Fitbit and Apple are jumping in on the trend, too. In fact, the former is looking into piloting a care management program for its users later this year.

39. Policy Corner, week of 9.2.2019 – Trump’s rumored healthcare offering

Obamacare, meet Trump-Care.

Some additional clues about “Trump-Care” emerged this week from an NPR feature. Some components of the plan might include recommendations made in a white paper published by the Department of Labor in 2018. The white paper made note of various reforms like expanding the roles of health savings accounts, heightened anti-trust scrutiny, and (ironically) easing restrictions around Medicare Advantage plans.

Read the full article for more insights into a potential Trump-Care offering. Also, don’t forget that the ACA is still tied up in court and might make it back to the Supreme Court for a third showing.

Be on the lookout for any potential healthcare proposals this month as Uncle Sam ramps back up for the fall.

40. Quick Hits – SmileDirectClub’s IPO, Epic’s Epic plans for its E H R platform, Purdue Pharma’s Opioid Settlement offer, and a Medical Mission Control Center.

Biz Hits

• There’s definitely going to be one big loser if surprise billing legislation passes…Envision and TeamHealth
• Epic is gathering records of 20 million patients for medical research (HIPAA compliant, of course)…
• Per SeekingAlpha, SmileDirectClub (SDC) plans to offer 58,537,000 Class A common shares at $19 – 22 in its IPO. Gross proceeds should be ~$1.2 billion
• Community Health rallied over 30% from Tuesday – Friday of last week after strong insider buying. The hospital operator also just sold 2 more hospitals to AdventHealth in Florida.
• Purdue Pharma just offered a $10 – $12 billion settlement to get rid of all of its opioid lawsuits.
• AdventHealth, GE Healthcare just opened the nation’s largest….medical mission control?

State Hits

• Lawmakers are currently fielding complaints about Aetna’s handling of the Managed Medicaid program in Kansas. Basically, they’re telling Aetna to shape up or SHIP OUT. The Kansas Hospital Association thinks they can shape up.
• Kaiser Health is under pressure in its home state of California – a bill passed the state’s legislature that would require each Kaiser facility to report profits.
• Similarly to Kansas, Louisiana is working on issuing an emergency Medicaid contract as the state holds talks with major Managed Medicaid insurers after a long dispute.

Other Hits

• So…it looks like Medicare just wasted a few hundred million dollars casually by paying for hospice drugs twice – once on Part A and once on Part D.
• According to the CDC, the U.S. is on the verge of losing its measles elimination status. Sheesh.
• And Americans don’t trust insurers with their data.

My favorite reads this week

• In the Straits: An Inmate Turned Millionaire Turned Lone Survivor

41. Battle for the Healthcare Cloud – Big Tech goes to war

Electronic Health Record Battle Royale.

The battle is heating up between Big Tech titans as they compete for health data storage contracts (paywall – WSJ) with big-time health systems. As one of the final frontiers for Amazon, Google, and others, these Cloud contracts could get a foot in the door to work with healthcare folks that could result in long, lucrative relationships that expand beyond just the Cloud.

Recent Cloud deals announced included Google and the Mayo Clinic, Microsoft and Providence St. Joe’s, and plenty of others. Generally, the agreements really are just for storage of healthcare and financial information. But we already know that Big Tech has plans to expand capabilities further, like including electronic health records and finding clinically useful information for trials and other treatments.

Of course, these developments come with a slew of problems – namely, privacy concerns (shout out HIPAA) and security issues (healthcare companies literally get hacked all the time) so…we’ll see where it goes from here.

Tech firms don’t care, though. How mad would shareholders be if they missed out on the market expected to reach $100 billion by 2025?

42. The Sobering Reality of Healthcare Tech?

Is a healthcare tech disruption in sight?

All of this talk about Big Tech has me thinking…how far ARE we from seeing true ‘disruption’ in healthcare?

The answer is….we’re not quite there yet. As Axios reported this week, the healthcare system – and providers in general – have a bit of a ways to go to catch up technologically. We’re moving in the right direction, but patients still don’t really use much tech to actually benefit their health outcomes…yet. And the end result of healthcare innovation might be a bit messier than we think.

Still, there are plenty of positive and incremental takeaways each year. In its annual keynote, Apple announced 3 health studies – actual health studies – that will incorporate its Apple Watch in hearing, women’s health, and heart health (maybe in response to this open letter? And there are plenty of promising medical device and similar startups that could revolutionize methods of treatment.

Bad actors.

Don’t forget that reality always eventually sets in. Investors pouring money into the system might leave thoroughly empty handed. Just look at what happened with Theranos and now, uBiome’s bankruptcy.

43. The good, the bad, and the ugly of hospital mergers

Controversy.

A report published from the AHA this week caused a bit of a stir from everyone, as its findings indicated that hospital mergers resulted in lower healthcare costs, among other assertions.

Opposing viewpoints.

Economists disagreed with the view, saying that mergers resulted in higher costs. Providers argue that mergers may be necessary in order to maintain leverage with insurers, improve operational performance, and provide better population health management.

What do you think? Read the full report here.

44. The Transforming PBM Industry

CVS Deal gets approved.

After a tumultuous 9 month run, a federal judge finally managed to approve the CVS-Aetna deal this week, paving the way for CVS to officially acquire Aetna (even though they’ve been operating as one entity for…almost a year). The approval comes at a time when CVS, traditionally a PBM player, is trying to transform its business model and the healthcare industry – even hiring a former Fitbit exec to lead its consumer health division.

Pharmacy Benefit Management’s evolution?

Ironically enough, though, the first industry to see significant change may be CVS’ core business of pharmacy benefit management. New startups are springing up, aiming for more transparency around the typically-shady PBM practice and a generally more consumer-friendly approach to the business. And don’t forget the heat the industry faced earlier this year from Capitol Hill.

Read for yourself an interview with PBM startup Capsule’s CEO, who talks about the changing industry. And another startup, Capital Rx (what’s with all the C names anyway?) just introduced a new way to price drugs in an itemized format.

45. Healthcare Policy Corner – Week of September 13 – Nancy Pelosi’s rumored drug pricing plan, surprise billing pushback, combating the opioid epidemic, and a new potential FDA head.

The Congress Strikes Back

Here’s a preview of Congress’ fall healthcare agenda:

• Lowering prescription drug prices – potentially allowing Medicare to directly negotiate drug prices with pharmaceutical companies

• Pelosi’s Plan, which includes the above direct negotiation tactic, might actually have bipartisan support

Finding a solution to surprise medical bills

• But as of now, it looks like Congress is facing major pushback from industry leaders on surprise billing – from an extremely well-funded dark money group. We might have to wait a bit for more surprise billing legislation.
• Look for more action at the state level.

Other healthcare things to look out for this fall:

• Unveiling Trump’s healthcare plan (expanding Medicare Advantage, giving states more leeway, etc.)

• Resolving Gun-control disputes

In other policy news, HHS is releasing $1.8 billion to combat the opioid epidemic. And it looks like a top doctor from Texas, Stephen Hahn, is a top candidate to replace Scott Gottlieb as the head of the FDA.

46. Quick Hits – Nobilis Health gets delisted, Addus HomeCare doubles its revenue through acquisition, Michigan bans flavored e-cigs, and more.

Biz Hits

• Nobilis Health, a hospital and ASC operator, is getting de-listed after not reporting any financials since….2017. Oh yeah. They also lost 2 executives in this process.
• Addus Homecare boosted its revenue by purchasing Hospice Partners of America. You can read more about Addus and its acquisition strategy (e.g., acquiring $230 million in revenue in 15 months) in an interesting article here.
• Read an interesting story on how one of Pfizer’s top scientists helped to turn the company around (paywall).

State Hits

• Michigan just became the first state to ban flavored e-cigarettes. A national ban might be coming soon, with Trump signaling support. Let’s ignore cigarettes, though – cool? Cool.
• I thought this was amusing and somewhat sad. A California health official quit after blasting vaccine foes as ‘flat-earthers’

Other Hits

• A Telemedicine CEO pleaded guilty this week in a $424 million Medicare fraud scheme – which I think is the largest fraud scheme to date? According to ProPublica, though, insurers couldn’t care less about fraud.
• Google is now banning ads for ‘untested, deceptive treatments’ – stem cells & gene therapies
• In other bizarre news, some providers are listing MRIs and other types of treatments on….Groupon.

My favorite reads this week

If you’re a fan of McConaughey, I thought this read was hilarious (paywall).

• The Athletic: At Texas, Matthew McConaughey has found the role he was born to play: ‘The M.O.C., baby!’

47. Walmart Health’s partnership with Amedisys, Google Health’s push into AI, Nancy Pelosi’s drug pricing plan, Site Neutral payments shot down, a Pacific Northwest clinically integrated network, and more.

Providers scored a big win when a federal judge scrapped CMS’ Site-Neutral payment policy.

• The judge ruled that HHS doesn’t have the appropriate level of authority to enforce payment policy on hospitals. This ruling was reminiscent of the mandatory television drug ad price disclosure ruling that was also shot down in court earlier this year on a similar principle.

Nancy Pelosi released her plan to bring down drug prices (paywall – WSJ) – namely, the costliest 25 or so drugs would be subject to direct pricing negotiations with the federal government.

• These negotiations would be tied to an international pricing index, and drug-makers would be penalized for not participating. (If you’re so inclined, here’s the bill in its glorious entirety).

The Pharmacy Benefit Management industry continues to get challenged by new players and potential disruptions. The latest contender, Capsule (similar to PillPack), just raised $200 million to take on industry titans like PillPack, CVS, and others.

Walmart Health continues its surge forward. The retail giant just partnered with Amedisys, one of the largest (and still growing) home health and hospice players, to expand access to home health across the nation.

• Sam’s Club is also joining the party by offering a pilot program to its members to offer discounts on certain routine care items (shout out to the Groupon story from a few weeks ago).

Not to be outdone by the old guard Walmart, Google Health just completed its somewhat controversial acquisition of AI-focused DeepMind, which is expected to further enhance its efforts to push into healthcare – including data security, cloud storage, and other important characteristics.

Humana’s CEO David Jones passed away this week. The WSJ highlights his life and Humana’s origins in a memoir.

Washington Medicine, MultiCare, and LifePoint Health just created a huge clinically integrated network covering 14 hospitals, 6,500 providers, and 600 outpatient sites of care in the Pacific Northwest.

48. Amazon Pilots Primary Care Platform for Employees

Another day, another healthcare launch.

This week, Amazon launched Amazon Care for its employees. Basically, Amazon is trying to cut down on healthcare costs (like everyone else), so the company is offering a slew of primary care options – including virtual care and in-home nurse visits. The initiative is piloting in the Seattle area for Amazon’s employees. Don’t tell Whole Foods workers about it, though.

In other Amazon news…more health wearables tech.

Amazon wants to take on the ‘ole AirPods. This week, the e-commerce giant unveiled its wireless Alexa earbuds containing fitness tracking, among other planned gadgets recently announced.

49. Employer-Sponsored health insurance premiums top $20K for the first time

A new car a year…or health insurance?

A recent Kaiser survey showed that employer-sponsored health insurance premiums rose to an average of $20,576 for family coverage. It’s a bit alarming – the annual premium growth rate has been above both inflation and wage growth for quite a while. Employees are increasingly paying a higher out-of-pocket share for healthcare costs. We all know how hard it is to spot a bubble but…are we in a bubble?

As we get closer to any potential breaking point (hopefully none), you’re going to start seeing employers take more extreme measures to lower their costs.

Such cost cutting measures could include direct contracting with primary care physicians, or self-funding insurance plans with insurance coverage for “extreme” emergency spending. Others might opt to cut their labor force.

Employers with larger, concentrated labor market share in local markets will have better leverage to push providers and payors alike for increased transparency and more favorable contracts.

50. 23andMe’s predictable push into drug development

23andMe is moving quickly into the field of drug development, and its first push is a predictable and seemingly natural step for the company – clinical trial recruitment.

23andEveryoneElse.

Based on all of the information us common folk paid to hand right on over to the DNA testing company, 23andMe is partnering with TrialSpark, a more tech-savvy version of a contract research organization, to recommend customers for clinical trials based on those customers’ DNA, demographic or other characteristics.

These DNA testing firms are now sitting on a ton of probably-valuable genetic testing data, and they’re not going to sit idly with that (potentially sensitive) information.

The more specialized data matching processes might actually be really helpful to drug makers and research teams as they work on developing drugs for tricky diseases.

Remote Access.

Here’s the revolutionary part. As Stat notes in its story, 23andMe and TrialSpark might actually solve what has traditionally been a huge barrier for clinical trials – geography. Instead of needing all of the patients for a trial in one location, the partnership is trying to digitize clinical trials. That might mean that patients could walk into their local doctor’s office to report data rather than flying to another facility.

51. Air Ambulance operator Air Methods is planning to cut insurance out and contract directly with employers

Fed up.

After its inability to reach contracted agreements with large payors like Cigna, United, and Aetna, Air Methods – an air ambulance operator (think helicopter care flights) – is cutting the insurance middleman out by attempting to contract directly with employers.

Helicopter care flights are prohibitively expensive as-is, and even more so if that patient is out of network. By contracting directly with employers like Walmart and Tyson Foods, Air Methods might start the trend of cutting out payors and working directly with employers

52. Policy Corner, week of September 30 2019 – Democratic Drug Pricing Proposal will get shot down. The latest on surprise billing.

Since you guys are probably getting enough of the whole impeachment thing in the 5-second revolving door news cycle, let’s take a breath of fresh air into the world of healthcare policy:

• Mitch McConnell is not a fan of Pelosi’s drug pricing proposal. He’s already planning to block the measure, citing socialist pricing controls. Pelosi’s plan might have missed the mark on other drug pricing inputs, anyway.

• Here’s the latest on surprise billing legislation, too.

53. Quick Hits – Peloton’s IPO, Ridesharing surges in Arizona Medicaid program, a merger between Ochsner and Lafayette General in Louisiana, and some notes on Artificial Intelligence.

Biz Hits

• Peloton set its IPO price at $29…and it’s now trading at ~$22.50
• Anthem takes advantage of the Centene-WellCare deal and purchases the divested assets from the merger.
• Heal, a medical house calls startup, acquires Doctors on Call
• Trinity Health may issue $1.7 billion in debt – about 22% of the system’s total long term debt of $6.3 billion, per Modern Healthcare. Notably, around $1.4 billion of the debt is expected to be taxable bonds.
• Uber And Lyft Ride-Sharing Services are growing a footprint in Medicaid. About 15% of rides in Arizona’s Medicaid program were from one of the two.
• OxyContin’s solution to paying for the opioid crisis? Sell more opioids.

State Hits

• In Louisiana, Ochsner and Lafayette General just announced plans to combine into a 33-hospital system in a pretty interesting deal. Along with the merger, the combination is pledging to invest $365 million in community investments/resources in the parishes they serve, including the expansion of key services. Finally, the combined system isn’t planning to make any cuts to labor – in fact, they’re planning to raise minimum pay.

Other Hits

• What’s causing hospital consolidation?
• What a Johns Hopkins surgeon learned from researching US hospital billing practices
• Obesity just exceeded 35% in a record 9 U.S. states.
• A couple of notable stories on AI in healthcare this week:
• Intel’s David Ryan on the past and future of AI in healthcare
• There’s a reason we don’t know much about AI

My favorite reads this week

• A Brutal Murder, a Wearable Witness, and an Unlikely Suspect

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The post The 53 Biggest Healthcare Stories from Q3 2019 appeared first on The Healthy Muse.

Another day, another healthcare launch.

This week, Amazon launched Amazon Care for its employees. Basically, Amazon is trying to cut down on healthcare costs (like everyone else), so the company is offering a slew of primary care options – including virtual care and in-home nurse visits. The initiative is piloting in the Seattle area for Amazon’s employees. Don’t tell Whole Foods workers about it, though.

In other Amazon news…more health wearables tech.

Amazon wants to take on the ‘ole AirPods. This week, the e-commerce giant unveiled its wireless Alexa earbuds containing fitness tracking, among other planned gadgets recently announced.

The post Amazon pilots Amazon Care appeared first on The Healthy Muse.

23andMe is moving quickly into the field of drug development, and its first push is a predictable and seemingly natural step for the company – clinical trial recruitment.

23andMe partners with TrialSpark.

Based on all of the information us common folk paid to hand right on over to the DNA testing company, 23andMe is partnering with TrialSpark, a more tech-savvy version of a contract research organization, to recommend customers for clinical trials based on those customers’ DNA, demographic or other characteristics.

• These DNA testing firms are now sitting on a ton of probably-valuable genetic testing data, and they’re not going to sit idly with that (potentially sensitive) information.

The more specialized data matching processes might actually be really helpful to drug makers and research teams as they work on developing drugs for tricky diseases.

Remote Access.

Here’s the revolutionary part. As Stat notes in its story, 23andMe and TrialSpark might actually solve what has traditionally been a huge barrier for clinical trials – geography.

Instead of needing all of the patients for a trial in one location, the partnership is trying to digitize clinical trials. That might mean that patients could walk into their local doctor’s office to report data rather than flying to another facility.

This could be a huge, promising push for drug development. All stemming from some silly consumer DNA ancestry testing!

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The post What the Partnership between 23andMe and TrialSpark means. appeared first on The Healthy Muse.

CVS Deal gets approved.

After a tumultuous 9 month run, a federal judge finally managed to approve the CVS-Aetna deal this week, paving the way for CVS to officially acquire Aetna (even though they’ve been operating as one entity for…almost a year). The approval comes at a time when CVS, traditionally a PBM player, is trying to transform its business model and the healthcare industry – even hiring a former Fitbit exec to lead its consumer health division.

Pharmacy Benefit Management’s evolution?

Ironically enough, though, the first industry to see significant change may be CVS’ core business of pharmacy benefit management. New startups are springing up, aiming for more transparency around the typically-shady PBM practice and a generally more consumer-friendly approach to the business. And don’t forget the heat the industry faced earlier this year from Capitol Hill.

Read for yourself an interview with PBM startup Capsule’s CEO, who talks about the changing industry. And another startup, Capital Rx (what’s with all the C names anyway?) just introduced a new way to price drugs in an itemized format.

The post The Transforming PBM Industry appeared first on The Healthy Muse.

The battle for the healthcare cloud is heating up between Big Tech titans as they compete for health data storage contracts (paywall – WSJ) with big-time health systems.

As one of the final frontiers for Amazon, Google, and others, these Cloud contracts could get a foot in the door to work with healthcare folks that could result in long, lucrative relationships that expand beyond just the Cloud.

Recent Cloud deals announced included Google and the Mayo Clinic, Microsoft and Providence St. Joe’s, and plenty of others. Generally, the agreements really are just for storage of healthcare and financial information.

Are you a healthcare provider? You can make your organization cloud-first, you just need to learn how. Ready to learn? https://t.co/qzuw8jczox pic.twitter.com/OJRKzRLHVp

— AWS for Government (@AWS_Gov) September 9, 2019

But we already know that Big Tech has plans to expand capabilities further, like including electronic health records and finding clinically useful information for trials and other treatments.

Of course, these developments come with a slew of problems – namely, privacy concerns (shout out HIPAA) and security issues (healthcare companies literally get hacked all the time) so…we’ll see where it goes from here.

Tech firms might not be too worried about that, though. How mad would shareholders be if they missed out on the market expected to reach $100 billion by 2025?

The post Battle for the Healthcare Cloud appeared first on The Healthy Muse.

Of course, the stories below were covered first in-depth on our newsletter over the course of the quarter. If you’re interested in following healthcare news in a weekly 5-minute easy read, then feel free to sign up!

4.1.2019 Healthcare Stories

1. New York Suburb Bans Unvaccinated Children from the Public

That seems drastic.

This week, Rockland County, a suburb of New York, declared a state of emergency based on the rampant measles outbreak facing their county’s population. The first step? Banning all unvaccinated children and teenagers from public places. This type of action is pretty unprecedented, but so is getting the measles. Although the measles vaccine is about 97% effective, only 72% of the Rockland adolescent population is vaccinated against the highly contagious disease. The ban comes at a time when measles cases through the first 3 months of the year have already outpaced last year’s total reported cases altogether.

2. PBMs going to testify before Congress Wednesday

This week’s hottest TV.

Tune in to the Senate finance committee hearing this Wednesday to see some absolutely heart-pounding, riveting, must-see TV. Last month in our March 4th edition, we covered lawmakers inviting drugmakers to Capitol Hill to ask why drug costs were so high. Those companies placed 100% of the blame onto pharmacy benefit managers (PBMs), who are basically the middlemen between the makers and the patients. Now, the Senate wants to ask PBMs some questions about their drug rebate practices and whether they’re ACTUALLY saving patients money on drugs. Companies like CVS, UnitedHealth, and Cigna are preparing to get grilled come Wednesday, especially as Congress prepares potential legislation around abolishing drug rebate practices for good (paywall).

3. Trump goes for the jugular on Obamacare

Fuel to the political fire.

As if declaring the Affordable Care Act unconstitutional weren’t enough, the Trump administration has now declared its intent to completely repeal and replace the ACA.

Remind me – what’s going on right now?

In 2018, the tax bill repealed the ACA’s individual mandate, meaning that people who opted not to have health insurance would not longer be penalized for doing so. After this happened, several states took the ACA to court in Texas late in December of last year. In that hearing, a judge ruled against the ACA, declaring the entire bill unconsitutional now that the individual mandate wasn’t a thing. Of course, the ruling was appealed and is still tied up in court.

Supreme Court Inbound.

With heated debates surrounding healthcare on both sides of the aisle, it seems as if a Supreme Court showdown is almost inevitable. Trump thinks he’s in good standing considering the currently conservative lean of the bench. But that raises the question – if the lawsuit against the ACA is successful, what comes next for healthcare? Because it doesn’t look like there’s any proposed system to take the ACA’s place. The debate around healthcare will only intensify as the administration turns up the heat and 2020 approaches.

4. Centene buys WellCare in $17 billion deal

A Medicaid Giant.

Centene secured plans this week to purchase its main competitor, WellCare, in a $17.3 billion deal (a 32% premium to their share price). The merger comes at a time when mega-sized healthcare firms are joining forces pretty frequently (think CVS / Aetna, Cigna / Express Scripts, and a whole host of others). What’s different about these firms, though, is that they’ve made their killing mainly by managing Medicaid programs for states. Their businesses really took off under the Affordable Care Act, which allowed for expansion of Medicaid, and thus, the expansion of Centene’s and WellCare’s businesses.

Not so fast.

Because this transaction is a huge ‘horizontal’ merger in a highly regulated area, this deal is highly likely to raise antitrust concerns. Also, as we just covered above, any existential threat to the ACA would probably REALLY hamstring any further growth available to the new company. If the deal does go through, look for these companies to leverage their size and aggressively target the Medicare Advantage market. Like we talked about in our February 11th 3rd story, Medicare Advantage is growing like a weed.

5. UPS Enters the Home Care Market

Robots and Drones.

As a part of UPS’ push into autonomous technology, the parcel giant is partnering with the drone company Matternet to deliver lab samples in North Carolina. The pilot program is part of a larger push from UPS into diversifying its revenue streams and changing home delivery as a whole. The approach is pretty innovative. If successful, the program could help seniors receive better and quicker care, all while pushing the lab industry toward an on-demand future (sound familiar, Theranos?).

6. Quick Hits

Keep on the look out for Johnson & Johnson’s new drug ad, which will disclose the cost of a drug for the first time on TV. Following last week’s story on the FDA’s secret medical device database, watchdog groups are now calling on the FDA to make all device data public. The FDA’s also looking into the safety of breast implants. And Thermo Fisher just bought Brammer Bio, a gene therapy specialist, for $1.7 billion.

Purdue Pharma reached its first settlement in the expansive opioid case coughing up $270 million in Oklahoma. Pediatricians now want soda taxes. Could artificial intelligence actually be bad for healthcare? And apparently Medicare made $23 billion in payment errors in 2017.

4.8.2019 Stories

7. Amazon’s Alexa is…HIPAA Compliant?

“Alexa, find me a doctor.”

Amazon (aka relentless.com) announced in a blog post this week that its personal assistant, our girl Alexa, is now HIPAA compliant. This means that the smart assistant can now securely access your personal health data on whatever Alexa enabled device you’re using. As a part of the initiative, several high-profile healthcare companies, including Cigna, Express Scripts, Boston Children’s Hospital, and Livongo developed and published ‘Skills’ for the Alexa app for use immediately following Amazon’s announcement. The skills involve allowing patients to check the status of prescription deliveries, receive information on post-op appointments, schedule primary care appointments, and much more.

8. Generic Drugs Expansion

CREATING Drug Competition.

One of the main ways that Congress is looking to combat rising drug costs involves increasing the supply of generic drugs. A lot of highly specialized drugs don’t have generic alternatives, which keeps those drug prices high. This week, the House approved the CREATES Act (now you see what I did with that sub-heading), which makes things a lot easier for generic drug makers to get drug-making approval. The bill has bi-partisan support and may have enough legs to get through legislation, especially since the Trump admin is all about lowering drug costs. The CREATES Act is expected to save about $4 billion over 10 years. Medicare spent about $100 billion on drugs as recently as 2017 – but still, the bill is a start.

9. Express Scripts Reduces the Price of Insulin

Good timing.

Ahead of the pharmacy benefit managers’ hot-seat meeting with Congress this week (yes, last week I told you guys the hearing was on the 4th, but it was re-scheduled to the 9th. I blame bureaucracy), Express Scripts, one of the said PBM companies testifying, conspicuously announced a new plan called the Patient Assurance Program. The new program aims to limit out-of-pocket costs for insulin to $25 per a 30-day prescription. This news is pretty uplifting for diabetes patients, who typically deal with ever-rising insulin costs and shortages of the popular drug. There are caveats, though: the new program will only be accessible to patients who participate in non-government funded plans (i.e., not Medicare or Medicaid), and plans that are managed by the newly combined Express Scripts and Cigna. Currently, the average out of pocket cost for insulin under these plans is about $41.50.

“What were they waiting for?”

That’s what Senator Chuck Grassley pondered wonderously. Via Axios, he had some choice words for the move: “Why couldn’t this have been done years ago? It shouldn’t take bad press and congressional scrutiny to get health plans, their pharmacy benefit managers and pharmaceutical companies to arrive at a fair price for a drug that’s been on the market for nearly a century.”

10. The Stem Cell Industry is out of Control

The modern day snake oil salesmen.

Stem cell therapy clinics have been popping up over the past few years, and the FDA is playing whack-a-mole to shut down the sketchy treatment sites. The shady clinics falsely market their ‘innovative’ stem cell therapies, even going so far as to say that the untested, unproven therapies can cure a variety of diseases and ailments, including uncured ones like Alzheimer’s and multiple sclerosis. The FDA is having none of it, sending dozens of letters to companies in its first pass at reining in the dangerous practices. Quite a few people have gotten hurt from the stem cell clinics, including several who were left blind after someone made the medical decision to have their eyes injected.

I’m skeptical.

It’s a shame because these shady clinics are overshadowing the promising future of stem cell therapies. Actual research shows that stem cell treatments could result in major medical breakthroughs, but the lack of trust propagated by these bad actors in the meantime might set back the industry’s development, especially as some hospitals venture dangerously close to unproven stem cell treatments, too.

11. Surprise Billing Solution

Solution in the works.

Along with controlling drug prices, ‘surprise billing’ is one of the rare public policy problems that has both bipartisan support and active solutions working through Congress. If you need a refresher on what surprise billing is, you can go back and read the 5th story on the February 1st edition. Insurance companies (think United Health) and providers (i.e., physicians) have been spatting for months about who’s to blame when a patient receives an exorbitantly large bill after an emergency visit. This week, panelists met with Congress to work through potential solutions to the issue – one that states have been working on for a while now.

So…any progress?

Main takeaways and ideas from the testifying witnesses included removing the incentives in place for doctors to remain out of network with insurers, forcing arbitration between the insurer, patient, and provider to find a reasonable payment solution, pinning out of network payments to Medicare rates, and implementing a bundled payment for all services rendered (i.e., one payment given for all hospital and physician bills). Most witnesses honed in on limiting the out-of-network status of physicians administering care at hospitals, ESPECIALLY in an emergency setting where patients have little to no say in where they receive care.

12. Quick Hits

Direct-to-Consumer medicine is picking up speed (i.e., you need Viagra, a company sends you Viagra directly), but at what cost? Encompass Health shelled out $218 million for Alacare Home Health & Hospice, based out of Birmingham – that’s more than double the amount they told investors they’d be spending on M&A in the entirety of 2019. And Trump just gave back ground on his administration’s plan to repeal and replace the ACA…for now.

Maine’s Medicaid expansion plan was approved this week. Alaska might be the first state to apply for Medicaid block grants – meaning the state would get lump payments to manage its Medicaid program. Health Quest and Western Connecticut Health Network are merging to form a $2.4 billion conglomerate called Nuvance Health. And some drug companies are still completely ignoring drug pricing pressures (paywall), raising their drug prices by hundreds of percentages.

Walgreens got hammered (paywall) after announcing its second quarter results, with its profits squeezed by the push for more generic drugs (they make more money based on the higher cost of drugs). Wal-Mart finds huge savings by picking and choosing the doctors (paywall) that its employees go see. Digital health investments slowed down a bit in the first quarter of 2019, but there’s still plenty of fish in the sea. A few states are suing because they don’t like the Trump admin’s new school lunch rules changes (hint – they weakened school nutritional standards for the food they provide). And telehealth use is growing faster than urgent care center use.

4.15.2019 Stories

13. Uber and Lyft’s Plans for Healthcare

Enter…Uber and Lyft.

As Uber and Lyft enter the publicly traded markets, the ridesharing duopoly has plans to expand their platforms into diversified services. Surprise! That includes our favorite industry – healthcare. Recently, Uber unveiled Uber Health, which allows healthcare providers to arrange scheduled and on-demand rides for patients with and without smartphones. Not to be outdone, Lyft announced Lyft Concierge, which partnered with providers, payors, and health tech companies to likewise expand ridesharing services into healthcare. It seems as if Lyft is taking a more serious approach to healthcare, identifying the industry as a key driver of revenue growth, whereas Uber sees the opportunity as another potential revenue stream. Both are shoe-ins to be large players in the home care rides market.

14. PBMs take center stage, grilled by Congress

The drug blame game continues.

In the March 4th edition, lawmakers invited drugmakers (AKA Big Pharma) to Capitol Hill to ask why drug costs were so high. Those companies placed 100% of the blame onto pharmacy benefit managers (PBMs). This week, the Senate held a hearing with the PBM companies (think CVS, Humana, Express Scripts, United Health) to hear the other side and drill down on the drug pricing issue some more. During the hearing, PBM executives gave a few potential solutions to the drug pricing problem, and, of course, shifted the blame back to Big Pharma.

So what do the PBMs think causes the problem?

PBM executives called for the end of ‘Evergreening,’ arguing that the tactic by which drug makers can impede the approval of generic drugs and biosimilars, and even extend their patents beyond the legal limits is anti-competitive. PBMs also argued that the current proposal to ban drug rebates would not result in lower drug costs, but rather take away one of the ways that drug prices are controlled, in addition to raising premiums (which consumers apparently hated). Ironically, Big Pharma stated in their hearing that PBMs benefited from higher drug costs too because when PBMs negotiate a rebate, they take a cut for themselves. Well…the PBMs stated that wasn’t entirely true, saying that around 7 – 8% of total prescriptions are actually subject to negotiation. It’s no wonder that nobody really knows what the actual problem is.

So where does this leave us now?

Long story short, the PBM executives seemed to get off pretty easily given all the scrutiny and blame coming their way. Some lawmakers even seemed to be swayed by the end of the hearing. To further prove its point against Big Pharma, CVS clapped back this week with a press release of its own, stating that its PBM solutions helped to lower drug inflation for its constituents, and 44% of its commercial clients saw a decline in net prescription drug pricing.

Any current proposals I should know about?

Good question. Currently, Congress appears to be targeting a few different aspects of drug pricing, with a focus on increasing transparency. One, lawmakers want to equip Medicare Part D (that’s the drug part of Medicare) with more tools and ability to negotiate discounts for patients directly. Two, the Trump Administration wants to push through required price disclosure on TV ads. We’re already about to see the beginning of that practice with Johnson and Johnson’s drug, Xarelto. After the hearing on the 9th, PBMs may have saved their precious drug rebate practices from annihilation, but the jury’s still out on whether rebates will actually survive long-term. Finally, Congress may look to end Evergreening practices by making things easier for generic drug manufacturers and easing patent laws.

15. Digital Health IPOs Hit Wall Street

More Healthcare IPOs!

Keep an eye out for digital health IPOs coming to Wall Street soon. There is a ton of private money investing into healthcare startups right now, so there are bound to be some more IPOs coming our way. Livongo, a provider of services and tools that assist people with managing medical conditions, and Change Healthcare, which specializes in bringing down the costs of care, both have plans to IPO this year. Look for potentially major disruptors to enter the public eye soon, along with the speculative money that will fuel their endeavors.

16. The Administrative Burden of Healthcare

Who likes report writing?

Not me. This week, the Center for American Progress (CAP) released a study detailing the estimated administrative burden that healthcare providers face on a day-to-day basis. While the CAP made a lot of estimates in its calculations, the report found that U.S. payors and providers could spend almost half a trillion dollars on administrative tasks this year alone, which is much higher than that of other countries. The whole point of the CAP study aimed to prove that excessive administrative costs (e.g., billing and insurance sort of expenses) exist in the healthcare industry, and that the first steps to cut costs in the industry could be addressing the administrative problems that payors and providers face.

17. Texas Tech Medical School Ends Use of Race in Admissions

No more race.

After a 14 year probe from the Education Department’s Office on Civil Rights, Texas Tech’s medical school will discontinue the utilization of race as a factor in the school’s admissions policy. Civil rights groups, of course, were not fans of the decision in an area that has seen a higher proportion of legal activity lately.

Is a doctor’s race important?

The college admissions ‘affirmative action’ debate has now expanded into medical schools and healthcare. Of course, this story begs the question: what role, if any, does race play in practicing medicine? Do physicians who treat their own race administer better care to that race, and build more trust?

18. Quick Hits

Morgan Stanley thinks that Apple has up to a $313 billion (yes, billion) opportunity in healthcare. On that note, Community Health Systems announced that many of its affiliated hospitals now support Health Records on the iPhone. Walgreens is playing copycat to CVS (are they really even different companies at this point?) by expanding its stores’ primary care capabilities. Speaking of CVS, that pesky judge Richard Leon is STILL keeping their Aetna acquisition tied up in court. And Teladoc announced its partnership with Cincinnati Children’s Hospital, one of the best children’s hospitals around.

A Florida man (what’s new) was caught defrauding Medicare for over $1 billion. Healthcare M&A transactions grew 19% in 2018, but overall transaction values were 31% lower (i.e., less mega-deals). Starboard, the same company that opposed the Bristol-Myers-Squibb and Celgene deal, is now working to turn around Cerner (paywall – WSJ). Hospital employees are fighting to solve a different problem – violence within their walls. And are Skilled Nursing Facilities in trouble?

4.22.2019 Stories

19. Healthcare Stocks Get Wrecked

BEARISH.

Healthcare is on track to be the worst performing sector since 2006 amidst political drama and existential risks facing the current system, leaving healthcare investors (at least in the public markets) skittish. With 2020 approaching and Medicare for All cries rallying, insurance companies like UnitedHealth, Cigna, Anthem, and Humana have suffered through the few months of the year. Providers fared poorly as well – in fact, the S&P Healthcare Services index ($XHS) is 15% lower than the S&P 500 as a whole (negative for the year!), which is a massive divergence. Don’t forget about the Drug-makers selloff either.

Adding fuel to the fire, UnitedHealth’s CEO’s comments on its Q1 conference call seemed to indicate a defensive position – warning those on the 80 minute call how any of the proposals floating in Congress or among Democratic candidates would cause “wholesale disruption” of American healthcare, including jeopardizing the relationship people have with their doctors, destabilizing the nation’s healthcare system, limiting clinicians’ abilities to practice medicine at their best, and a severe impact on jobs and the economy. UnitedHealth urged those seeking reform to work within the current system to find the right solutions and correctly align business incentives with patient outcomes.

20. High-Deductible Health Plans Linked to Delayed Treatment

“I’ll wait.”

That’s what those with high-deductible health plans are saying. To cut down on costs, employers are increasingly switching to high-deductible health plans (HDHPs), which could be causing delays in care for people who might otherwise seek treatments. HDHPs essentially put the patient on the hook for more of the medical bill, making the patient’s out of pocket healthcare costs higher due to the larger deductible (but generally lower premium). These HDHP plans come packaged with a Health Savings Account (but we all know how good most Americans are at saving money). Based on a Health Affairs study, women who were switched from low-deductible to high-deductible health plans waited months longer on average to seek care for various conditions. This factor did not change when income and geographical area were taken into account, either. The issue boils down to the fact that many patients do not have, or do not want to spend, the money needed to seek preventive treatment for their conditions.

21. The Healthcare Cost Blame Game

Whose fault is it anyway?

Healthcare players are all looking for someone to blame when it comes to high prices rather than proposing potential solutions, according to ModernHealthcare. Here are just a few of their perspectives from the main healthcare sub-sectors:

Hospitals. “Insurers are a problem. If hospitals lowered prices, insurers most likely would not pass along those savings to patients anyway.”

Insurers. “Premiums track directly to underlying healthcare costs as calculated by actuaries. We’re not pocketing the extra savings providers generate by cutting costs. Value based payment models and better integration and collaboration with providers should be the way forward.”

Physicians. “It shouldn’t be squarely on us to manage all of our costs. We have large administrative burdens to deal with as it is.”

Big Pharma. “Hospitals mark up drugs to make a higher profit. We’ll charge what we want.”

The article outlines a few potential solutions to high hospital prices, including better alignment with payors (value based care models), giving physicians more responsibility with financial decisions, increasing hospital operational efficiencies and undergoing cost-cutting initiatives, and having employers (as the largest purchasers of insurance) use leverage to negotiate down prices.

22. Congress is Considering Raising the Smoking Age to 21

Tobacco gets smoked.

The Senate is considering raising the smoking age to 21, which would apply to all tobacco products (yes, even vaping). The federal move comes at a time when several states have already passed laws requiring the minimum age of 21. Interestingly, the large tobacco players actually support the legislation, despite the sell-off in their stocks on the news. Since the FDA is cracking down on youth vaping and tobacco products, Big Tobacco probably thinks this move is likely to keep them in somewhat good graces with the Feds.

23. Medical Professionals get Indicted in Opioids Case

You’re in trouble.

That’s what the feds are saying to 53 medical professionals. This week, the DOJ indicted these professionals, charging them with illegally prescribing and distributing opioids. Apparently these medical professionals also committed healthcare fraud. Swell. The opioids case continues to expand in scope, increasing the number of people charged with the crime of spreading the addictive drugs and perpetuating substance abuse nationwide. Some of the stories detailed in the article are absolutely wild.

24. Quick Hits

Bain & Co. released its 2018 Global Healthcare M&A Report this week. Louisiana might ban any new freestanding emergency rooms. Is there an impending U.S. healthcare crisis? How do insurance plans between America and Europe differ? Here’s the timeline for potential drug pricing rebate reform. In North Carolina, Atrium and Wake Forest are trynna merge in a $13 billion potential transaction. And bio-similars might not create effective competition.

4.29.2019 Stories

25. CMS Inpatient Payment Proposal Released

Inpatient payments boosted by 3.7%. Site neutral payment phase-in.

This week, the Centers for Medicare and Medicaid (AKA CMS) released its (their?) proposed 2020 ruling for the Inpatient Prospective Payment System (IPPS). The IPPS designates Medicare payments to hospitals and other providers for inpatient care. Note that this ruling is just the proposed changes to Medicare payments – the final ruling comes out later in the year. Still, the proposed changes give insight into what CMS wants to incentivize for inpatient providers. From Beckers, major highlights from the proposed ruling included the following:

• 3.2% increase for acute care hospitals that report quality data metrics to CMS and use their electronic health records in a meaningful way;
• 3.7% total estimated rate increase for all inpatient providers, when taking into account all new payment policies and uncompensated care;
• About a 2.6% increase in hospital DSH payments (we’ve covered this before in our January 11 edition – 5th story – payments for hospitals that have a higher proportion of charity care patients);
• Site neutral payment adjustments for hospital outpatient departments, which could have much broader implications on health system consolidation (FYI, hospitals are NOT pleased about this change) in addition to decreased physician employment by hospitals.

Rural hospital relief.

Among the more interesting changes, CMS seems to be extending a lifeline to rural hospitals, making adjustments to the wage index adjustment in addition to the floor payment that rural hospitals may receive.

26. Healthcare Stocks Bounce Back

That didn’t take long.

Eased by strong healthcare earnings reports from the likes of Centene, UnitedHealth, Anthem, Encompass, and others, healthcare stocks came roaring back this week. Last week, we covered the dramatic sell-off of these same stocks. The existential risk stemming from Medicare for All once again resurfaced after the proposed system was admonished as a “disruptive” threat to the economy on UnitedHealth’s Q1 earnings call.

Buy the dip.

Healthcare analysts were un-perturbed, though, calling it a baseless selloff. Remember that healthcare sold in droves (paywall – WSJ) before the 2016 election, too. People don’t like uncertainty, and healthcare has quite a bit of that.

Healthcare Risks.

Current legislation is not without its effects on public and private healthcare companies. This week, S&P released its global healthcare credit ratings report, which lists a few risks facing the industry this year. S&P expects policy changes this year in the areas of balance billing and drug pricing rebates, which would affect physician services companies like Envision and MedNax, and pharmacy benefit managers like Express Scripts, CVS, and UNH, respectively. Funnily enough, S&P has no faith in healthcare reform, at least for now: of all the current legislation and policy proposals out there, the firm lists ACA repeal and Medicare for All as extremely unlikely to happen within the next few years. It makes sense, given the current administration and the Senate makeup.

27. State of Washington Bill Restricts Nurse’s Shifts

A Hot Amendment Mess.

SHB 1155 was intended to be a bill that would help nurses out – mandating that nurses working in hospitals would be given uninterrupted breaks during their shifts. But the bill took a drastic turn when a senator proposed a wild amendment that suddenly morphed SHB 1155 into an entirely different beast – changing nursing shifts from 3, 12 hour shifts a week to 5, 8 hour shifts a week (what’s the grammatically correct way to structure that sentence, anyway? Someone PLEASE let me know). Now, hospitals and nurses alike are banding together (a rare occurrence, really) to oppose the bill.

Backlash from the Bill’s passage.

The Washington State Hospital Association (AKA the WSHA) had some strong words to say on the bill: “If SHB 1155 passes as amended, I am confident that hospitals will not be able to meet the care needs of their communities. Patients will suffer especially in emergencies. This would be terrible for the patients of Washington state.” It’s interesting to note that the WSHA INITIALLY opposed the bill, too. Now, the association ironically has the support of nurses across the state of Washington as they try to maintain their 3 day work weeks, an amenity that nurses greatly enjoy.

28. PBMs Taking Advantage of Medicaid?

Drug Pricing Contagion.

A new report from 46 Brooklyn analyzed various generic specialty drugs covered by pharmacy benefit managers (PBMs) under Ohio’s managed Medicaid program (i.e., Ohio essentially lets insurance companies run Medicaid for them). After matching state drug utilization data against PBM drug cost data, the 46 Brooklyn report found that PBMs appeared to be marking up generic specialty drugs (a practice known as spread pricing) by a total of almost $11 million in one quarter alone by controlling the specialty pharmacy market. As a result, Ohio’s Medicaid program probably way overpaid for these drugs, and cost the state’s taxpayers big bucks.

Broader ramifications.

If it’s happening in the Ohio managed Medicaid program, it’s probably happening elsewhere, too. The report concludes by stating SOME transparency in healthcare (specifically, drug pricing) is not enough. 46 Brooklyn called for a 100% transparent system to spur competition and bring to light the secretive pricing practices that PBMs seem to engage in.

The PBM Defense.

As Axios reported, the Pharmaceutical Care Management Association (AKA pro-PBMs) gave a strong response to the analysis. The PCMA claimed that the data was ‘cherry-picked’ questioned the reliability of its data sources, and stated that the analysis did not take into account rebates, discounts, or overall plan outcomes.

29. HHS Proposes ‘Transformative’ Primary Care Models

A new primary care path forward.

This week, HHS and CMS announced new initiatives designed primarily to lower administrative costs and consequently allow physicians more time with patients.

Tell me about these initiatives.

The proposal will have five payment models under 2 different systems – Primary Care First, and Direct Contracting. Primary Care First (PCF) seems to be more or less a value-based (i.e., patient outcome-driven) capitation type model – where a physician will receive monthly lump payments adjusted for his or her patient base’s acuity levels.

What about the Direct Contracting model?

While the PCF models are more focused on individualized primary care practices, Direct Contracting (DC) models will be focused more-so on patient populations. DC models will partner with ACOs, managed care plans, and other population health managers to give these plan providers various “risk” options. Based on the level of “risk” they choose, the DC model will reimburse them fixed monthly payments of varying amounts. For instance, if an insurer chose a “riskier” payment option, the insurer would receive a higher fixed payment up front from Medicare, but they would also be on the hook if catastrophic disease rampaged their population/covered lives. It all depends on how these participants manage financial risk versus receiving fixed, predictable revenue streams.

These new models were introduced in an attempt to reduce overall healthcare costs and to see whether these types of models would produce better outcomes for patients. We’ll see!

What else?

In other primary care news, Humana announced the launch of its new virtual care model, partnering with Doctor on Demand to form its On Hand health plan. In its press release, Humana touted the plan’s capabilities to lower healthcare costs and lower monthly premiums.

30. Quick Hits

Civica Rx opened its headquarters this week in Lehi, Utah. The nonprofit generic drug initiative plans to address drug shortages in over 900 hospitals, with ambitious plans to supply up to 14 generics in its first year in operation. Alexandria Ocasio-Cortez made some perplexing comments about the Veterans Affairs’ healthcare system this week. Amid nationwide political action and backlash, Walgreens raised the minimum age of purchasing tobacco products to 21.

Here’s something you don’t hear every day. MD Anderson kicked out 3 Chinese scientists over fears of data/intellectual theft. So much for collaboration! Amazon started to market its direct-to-consumer pharmaceutical business, PillPack (something we touched on in our 2nd story Feb. 11 edition), with free delivery for Prime members. Speaking of tech companies, Google is continuing to try to crack into healthcare by looking for new ways to implement its AI technology.

The Chinese are coming for our drugs market (paywall – WSJ). Home Health Care News had a great piece on LHC Group this week on how the company is leveraging its Accountable Care Organization in its business strategy and population health management. You’re more likely to die in the good ‘ole South. And Anthem and UnitedHealth are about to spar over the acquisition of Magellan Health, a fellow managed care player.

And finally, the Washington legislature passes its emergency room surprise-billing law. Providers and payors will now be forced to arbitration for any out of network bills that patients receive. Keep an eye on Colorado too, as the state looks to pass a similar bill.

5.6.2019 Stories

31. What Each Presidential Candidate Wants to do with Healthcare

20 Different Healthcare plans, all with the same name.

With 2020 looming, Bernie’s Medicare for All rallying cries, and Joe Biden’s presidential announcement, there are a lot of candidates – and a lot of healthcare policies – floating out there right now. Luckily for us common folk, Axios put together a handy article listing the 20 some-odd presidential candidates and where they stand on healthcare policy. Most Democratic candidates are in favor of single-payor options, or, at the very least, want to expand Medicaid and Medicare to more individuals. Notable candidate policy positions include Bernie – the most extreme – who wants to obliterate private insurance in lieu of a completely public, universal healthcare option. In a more moderate position, Joe Biden favors an optional Medicare buy-in that expands the pool of individuals and employers that could participate in Medicare. Finally, let’s not forget about Mr. President, who doesn’t really have any solid healthcare policy yet – but he does want to repeal the ACA and replace it.P

What do all of these policies even mean?

In case you wanted a refresher on healthcare policy vocabulary, Kaiser compiled the different healthcare proposals into one useful list. And we touched on the different healthcare terms in our February 18th first story.

What about that CBO report?

Now you’re getting ahead of me. This week, the Congressional Budget Office released its long-awaited report regarding the issues, challenges, and opportunities that would come along with creating a single-payor health care system. The report noted that a single payor system could potentially reach $32 trillion over a decade (which might not be that different from the current U.S. healthcare spending), incentivize providers to invest in preventive care, and result in better population health management. However, the report also mentioned that lower Medicare rates (as opposed to higher commercial insurance rates) could lead to poor financial performance for providers, and thus reduced quality and amount of care. Conclusion: it’s somewhat of a mixed bag.

32. Centene / WellCare Deal Gets Challenged

AHA: “Not so fast, Centene.”

In our April 1st edition 4th story, we touched on the Centene / WellCare $17 billion merger and discussed that the horizontal nature of the transaction (i.e., both companies compete in the same markets in many states) would raise eyebrows and antitrust concerns. Well, this week, the American Hospital Association (AHA) affirmed those concerns in a report, stating that the merger, if approved, would significantly reduce competition and thus reduce quality and cost of care. The report went on to claim that allowing the merger to stand would give the newly combined company significant pricing leverage over providers in the Medicaid market. Centene has acknowledged that the firm would need to sell some of its plans in those overlapping areas, but the company does not believe that there is antitrust concern beyond those divestitures due to the fact that Medicaid rates are set by individual states – not by them.

33. Smartphones as Medical Devices, and Machine Learning in Biotech

A new kind of medical device. Your smartphone.

Scientists at the Michigan Kellogg Eye Center may have found an innovative new way to detect and diagnose Diabetic retinopathy in patients. The solution? Attaching an AI-enabled device to your smartphone, and screening often. The AI-enabled device sends pictures of patients’ eyes remotely to ophthalmologists, and recommends whether or not they should come in for additional screening. This promising sort of mobile medical device innovation could have widespread use in the early detection of diseases that are otherwise highly debilitating if left unchecked.

The Golden Age of Drug Discovery – Using Machine Learning.

Not to be outdone by the folks at Michigan, Y Combinator is developing a machine learning biotech platform through partnering with its promising startup, Atomwise. Atomwise developed an artificial intelligence interface called AIMS, which assists with computational drug discovery, and plans to make AIMS open-source software for academics. Y Combinator wants to incentivize all academics to use Atomwise’s software (called AIMS) for drug discovery. The startup incubator is providing an expedited path to creating new biotech firms for those academics that use AIMS and find new promising drug therapies. Under this platform, the firm believes that AI – specifically, machine learning – can lead to increased scientific discovery and potential therapies.

Flashy Headlines.

In our third ‘Healthcare Innovation’ story of the day, AstraZeneca, a large drugmaker, announced its partnership with BenevolentAI this week to – guess what – find new relationships and biomedical insights through the use of AI and machine learning programs. The partnership aims to begin with targeting new treatments for kidney diseases and pulmonary fibrosis, but the implications are clear: AI has found its place in biotech. Just be careful about the potential bias it brings along, too.

34. Recession-Proof and Recession-Exposed Healthcare Companies

What happens in a recession?

S&P Global Ratings issued its latest report on the healthcare sector this week and made several notable observations regarding the potential viability of various healthcare sub-sectors given an economic downturn. Although S&P maintained that healthcare is a more defensive investment (given that demand is generally constant), the firm cautioned that healthcare companies have increasingly worse credit ratings, meaning it’s harder for these companies to borrow money. Couple that with the regulatory uncertainty surrounding 2020, and healthcare companies are having a harder time raising capital than in year past.

Who’s at risk?

S&P noted hospitals like HCA and Tenet as among the sectors most vulnerable to an economic slowdown due to a rise in people who might be unable to pay for the care that they received. With the recent pressure on drug pricing and the potential elimination of rebates, PBMs such as CVS and Express Scripts were cited in the report as well. Of all the healthcare services firms, temporary staffing companies were listed as the riskiest, given the cyclical nature of employment. Interestingly enough, drug-makers like Pfizer and medical device companies such as Cardinal Health were on the lower end of the risk spectrum given the consistent demand that these companies serve.

35. Healthcare First Quarter Earnings Roundup

Earnings Palooza.

Last week was a big week for earnings, and healthcare companies were no exception. Here are some of the highlights:

CVS‘ acquisition of Aetna helped offset struggling retail margins this quarter. The company raised its full year guidance based on Aetna’s solid performance.

Similarly, Cigna bragged big time about its Express Scripts acquisition during the firm’s first quarter earnings parade, touting the innovative programs the combined companies can now create given the merger.

Teladoc passed the 1 million quarterly visits milestone during the first quarter, but shares slid in trading due to the company’s high valuation and growth expectations. On a positive note, the company expects to be cash-flow positive soon.

A still-struggling hospital operator, Community Health Systems surprised no one by continuing its divestiture strategy and losing $118 million. Still, the company produced more operating cash flow than expected.

U.S. Physical Therapy grew revenues 7.3% quarter over quarter, attributable to its increase in total patient visits and positive operational performance in its industrial injury prevention business. As a result, the company improved its gross margin to 23.0%, up from 21.4% a quarter ago.

HCA Healthcare’s same facility equivalent admissions grew 1.8%, while revenues totaled $12.5 billion in the first quarter of 2019. The efficient hospital operator re-issued its guidance based on its recent acquisition of Mission Health, a 6-hospital rural health system in west North Carolina. Compared to Q1 2018, its adjusted EBITDA grew over 150 bps to 20.3%.

Amid buy-out rumors for its London operation for $1.3 billion, Acadia Healthcare reported a slight earnings beat. The potential sale would comprise between one third and one half of the behavioral health company’s existing annual revenues.

Amedysis reported a strong 6.0% same-store sales growth figure, but the company’s shares sold off almost 6% shortly afterwards. A notable development: the home health and hospice firm is working with members of Congress to pass the Home Health Innovation Act, which would make reimbursement modifications to the PDGM legislation going into effect in 2020.

Tenet Healthcare beat the market consensus in Q1, but struggled with declining revenues, visit volume, and adjusted EBITDA.

Humana reported better than expected results for both revenue and earnings and upped its guidance for 2019, but shares dipped after the insurance giant received several analyst downgrades.

Fresenius Medical finished above the consensus for the quarter, with both its products and services segments contributing to the revenue increase.

MedNax came up short in both the revenue and earnings category, but investors must have liked something – the stock finished up on the day after starting more than 5.0% down at the open.

Molina Healthcare reported a 16% margin for its managed Medicaid business, and 7.5% margins for its managed Medicare operations. The firm increased its guidance for the rest of 2019.

Encompass Health had a strong quarter. The post-acute behemoth achieved higher volume in its home health operations, and investors received a bit more insight on its recent $218 million purchase of Alacare Home Health & Hospice.

Despite the impact of PAMA – price reductions in the laboratory industry – LabCorp beat expectations and is one of the best healthcare performers year to date on the market.

Universal Health Services‘ earnings missed by a wide margin in Q1.

Finally, Select Medical, which reported at the end of March, reported in-line with expectations. This week, the company announced a joint venture with Norton Healthcare for outpatient services in Kentucky and Indiana.

Overall, the S&P 500 Healthcare Sector returned -2.6% in the month of April, which was….the worst performing sector over the month. Notable outperformers included Cerner (+16.2%), Quest Diagnostics (+7.8%), CVS (+1.8%), McKesson (+1.9%), and LabCorp (+4.5%). Notable decliners included Anthem (-8.3%), Eli Lilly (-9.8%), and Intuitive Surgical (-10.5%).

36. Quick Hits

Some healthcare startups are great. Some might not live up to their fancy marketing. Physicians might be UNDER-prescribing painkillers now amid the opioid crisis. Kansas legislation kills its Medicaid expansion plans. Florida legislature repealed its Certificate of Need Laws. Kaiser Health’s bill of the month: a $142,938 snake bite. And did you miss any regulatory changes in the first quarter? GHA has your back there.

Epic and Cerner, two huge electronic health record providers, apparently control 85% of the large hospital (i.e., over 500 beds) market. Blackstone is getting into the ‘gambling on pharmaceuticals’ market. And HealthEquity just made a $2 billion bid for WageWorks, the other major H S A money manager in the market.

5.13.2019 Stories

37. Drug List Prices are now required on TV Ads

The Countdown Begins.

In an act that is almost certainly going to be challenged in court, HHS released its final ruling requiring all drug manufacturers to disclose drug prices in TV advertisements, in an effort to increase consumer awareness about drug prices. The pricing information must be displayed in a “legible textual statement at the end of the advertisement” for a “sufficient duration.” Drug-makers aren’t allowed to use any wacky fonts, either. Bummer – I was holding out hope for Wingdings.

A Lopsided Effect.

Interestingly enough, the ruling affects the five biggest drug-makers quite disproportionately, as StatNews reports. Pfizer, AbbVie, Eli Lilly, Amgen, and Allergan together comprised over half of all drug television ads over the past year. In response to the ruling, the drug-makers argued that drug list prices are an ineffective way of increasing price transparency, since insurance plans negotiate lower rates for their consumers anyway.

Together with PhRMA, the powerful drug advocacy lobbying group, drug-makers have announced their own commitment to drug pricing transparency in their own way – by publishing pricing tools online and creating voluntary guidelines that they argue would increase transparency in a more effective manner than what was proposed by HHS. They have about 60 days to comply with HHS before the hammer comes down.

Not so fast, though – this ruling is going to almost assuredly be challenged in court.

38. 40+ States Attack Generic Drug-Makers with Scathing Price Fixing Lawsuit

Drug Pricing Conspiracy.

As if drug-makers couldn’t get any more PR lately, 40+ states filed a massive lawsuit on Friday that blames generic drug-makers for price fixing (AKA, keeping generic drug prices higher than they should be). They might have a point, considering some of the drugs mentioned in the lawsuit shot up thousands of percentage points over a few short years. For instance, the average market price of doxycycline increased over 8,000% in a single year. Oof. The lawsuit accuses 20+ companies of wrongdoing including collusion to ‘divide’ up the generic market in an effort to avoid competition with one another. The lawsuit singles out Teva Pharmaceuticals in particular as a central figure in the pricing conspiracy. In response, the drug-maker aggressively denied wrongdoing (duh). The unnaturally high generic prices could result in higher insurance premiums for the average consumer in the long run, which is why states are keen on getting to the bottom of these allegations. Drug-makers are, after all, the most profitable segment of the healthcare industry.

39. Huge Price Disparities between Medicare and Private Insurers

Speaking of Healthcare Pricing…

A study released by RAND Corp concluded that private insurers (AKA, the health plans that most employed people are covered) pay hospitals 241% more on average than Medicare does for the same services. The pricing study is the most comprehensive one to date, since it covered almost 1,600 hospitals in 25 different states – although the study did acknowledge its somewhat small sample size. Before we get ahead of ourselves here with the pitchforks, though, let’s remember – generally, Medicare generally reimburses hospitals at below-cost or at break-even levels of cost of care for patients, as the American Hospital Association is keen to point out. Hospitals argue that higher private insurance payments are needed to keep their lights on. Still, the study raises a few noteworthy observations – there are wide variations in payment rates from state to state. Is expensive care better than no care?

A Closer Look.

What each private insurer pays hospitals relative to Medicare reimbursement rates – by state. Indiana tops the list at 311% of Medicare, while Michigan resides at the low end at 156%

40. Surprise Billing Marches Forward as Trump Jumps into Action

A Tricky Issue.

As an update to our 5th story on the February 1st edition, President Trump continued his comments regarding support for a solution to surprise billing. Oddly enough, doctors, hospitals, and insurance providers all want to end surprise billing price gouging practices, yet they all seem to be at odds over the proper solution to the issue. Moral of the story: nobody wants to get stuck with sticker-shocking ER bills to pay.

What are the Proposed Surprise Billing Solutions?

The Trump Admin seems to be in favor of bundled payments – where the hospital and provider would receive one payment for services rendered. Some states, including Colorado, have introduced legislation to limit surprise billing to a maximum fixed percentage of Medicare – in Colorado’s case, no more than 125%. Others, like New York, prefer arbitration. Under New York’s arbitration, patients are not required to pay more than in-network rates, and an independent arbitrator resolves the payment difference between the insurer and provider. Although many solutions have been proposed (with some even already implemented at the state level), none have taken a firm federal hold. Stay tuned!

41. Medical Device Patents have Skyrocketed since 2007

A surge of medical devices.

With a 50% share of the global medical device market, the U.S. experienced a surge in medical device patents over the past 10 years, according to research conducted by Kilpatrick Townsend – significantly higher than any other observed industry. Of the various device segments, wearable device (AKA, Apple Watch), telehealth (AKA virtual visits; looking at you, Teladoc)) and surgical device (AKA, robotics) patent filings grew at the highest rates. Wearable devices drew a massive 359% increase in patent filings from 2007 to 2018, followed by a 181% increase in surgical device filings over that same time period. Coincidentally, most industry leaders identified these segments as having high growth potential in the near future. For instance, the Telehealth market is projected to reach a whopping $93.5 billion by 2026, according to Reuters.

42. Quick Hits

• The marked variation in healthcare costs.

• Tennessee is requesting an unprecedented block grant payment from Medicaid, but are block grants even legal?
• Aetna just launched Attain, its health and wellness app with an Apple Watch perk.
• Centene is VERY COMMITTED to its WellCare deal, despite the Humana buyout rumors.
• The stem cell industry, often thought of as a pipedream industry, is highly unregulated.
• Home Care’s employee turnover just reached an all time high of 82%!
• Speaking of home care, AT&T is joining the home care industry with Remote Patient Monitoring.
• UnitedHealth’s CEO is pretty confident in the managed care monster – he just bought up 20,000 shares.
• The Ensign Group plans to spin off its home health and hospice business into a new company called the Pennant Group, which will comprise 60 home health agencies, and 51 senior living centers.

5.20.2019 Stories

43. Trump is SERIOUS about Price Transparency

Pricing Power.

Back in the March 11th 1st story, we touched on a proposed HHS rule that would force hospitals to post prices for the surgeries and procedures performed – the ACTUAL ones that they negotiate with insurers (not just the chargemaster rule that’s currently in effect). At that time, the HHS simply wanted comments and feedback on what might happen if that rule were to go into effect. Well, in an interesting turn of events, the Trump administration took that HHS proposal to another level this week by announcing its plan to increase pricing transparency a step further, as the WSJ reports. A LARGE step further.

What’s Trump proposing?

For one, Trump’s admin really wants insurance companies to publish the rates that they pay for healthcare services. They might even FORCE these companies (think UnitedHealth, Cigna) to do so. Secondly, the administration wants providers to be able to give patients the entire price of care they would receive BEFORE any treatments are performed, which is QUITE different from the ‘guesstimate’ that we all receive today after a doctor visit.

How could that change healthcare today?

There’s no telling what might happen if healthcare entered a free-for-all period and prices were disclosed everywhere. Some smaller players might realize they were getting ripped off from a payment perspective and demand higher rates, which might increase costs. From a common sense perspective, these rules would more than likely equip the patient to make more educated decisions on where to receive care. I mean, hopefully.

Eventually, providers would theoretically compete on prices like other industries (I’m no economist, though). But in markets where little to no competition exists (think rural), experts think the hypothetical pricing transparency rule would have little to no effect.

44. Wal-Mart gets picky with healthcare providers

Picky providers and a quality first approach.

As a follow up to the WSJ’s story on Wal-Mart getting more selective with which providers they allow their employees to see, KHN revealed this week that Wal-Mart is also extending this selective practice to imaging centers. Basically, the retail giant is leveraging its data to see which diagnostic imaging centers are the most cost effective and deliver the highest quality care based on error rates and other factors. Then, the company delivers an approved list to its employees. A very interesting note: Wal-Mart and Covera (the company they’re partnered with on this stuff) chose the centers based on QUALITY – meaning that price was not a factor in the development of the Quality Centers List.

The larger trend.

Given how our healthcare system is structured with employer sponsored health plans, Wal-Mart and other large firms like GM have taken it upon themselves to combat rising healthcare costs. We could see this trend continue as employers move toward more narrow network-esque strategies, where poor-quality providers are given the boot from employer health plans.

45. The State of Washington just went public

States going rogue.

The state of Washington has taken the initiative upon itself to enter the private health market with a universally available public option. The plan will be called Cascade Care, and it works as more of a ‘hybrid’ option between the public (think Medicare, Medicaid) and private (think employer sponsored plans) health plans currently out there. The plan would cap payments at 160% of Medicare for services rendered. As an aside, keep payment caps in the back of your head moving forward, because there have been plenty of references to capping payments at certain percentages of Medicare rates from state legislatures.

Is it really ‘Public’ though?

Yes and no. Although the state of Washington is offering the plan, it’s still going to be run by a private health insurance company of the state’s choosing (a la, Medicare Advantage). Overall, though, the plan is an interesting mixture of moving toward universal health coverage while also working within the current healthcare system. The jury’s still out as to whether it will help with costs, but most state officials think it’s a step in the right direction.

46. Big Pharma wins big on Medicare Part D final rule

CMS Backs Off

CMS released its final Medicare Part D (the part of Medicare that covers drugs – D for drugs, get it??) ruling this week. In a resounding victory for drug-makers and pharmacy benefit managers, the agency maintained that Part D would continue to cover ALL drugs that are included in the 6 “protected classes,” which are categories of drugs that are required to be covered by Medicare. Prior to the announcement, that protection was in limbo.

CMS was actually considering whether or not to continue the 100% coverage, or replace the current system with a more flexible model where the agency would be able to exclude certain drugs. Instead, the agency decided to shelf the issue for another year.

Stop Gagging Me.

In other news, the final ruling included some additional guidelines around increased drug price transparency. CMS finally outlawed so-called Gag Clauses, where pharmacists were prevented from telling patients if the cash costs of a drug or similar drug happened to be lower than the price they were playing through their insurance (honestly, what even). Pharmacy groups weren’t happy, however, with CMS’ decision to hold off on changes to drug price concessions.

47. Senate and House get after surprise billing

Congress began work on abolishing Surprise Billing once and for all by drafting legislation this week that would get rid of the practice for good.

Proposed House Bill.

The No Surprises Act, which is the nifty name for the proposed Surprise Billing bill (that’s a bit repetitive, sorry) drafted by the House, would ban surprise medical billing for good and set a minimum payment rate for out of network providers based on median geographical in-network payment rates for those ER services. Notably, this bill does not include an arbitration clause – where a third party arbitrator would negotiate a rate between providers and insurers for the out of network bill. Insurance companies would be the big winners if this bill were to pass.

Proposed Senate Bill with a Key Difference: Arbitration.

Essentially, the STOP Surprise Medical Bills Act is the same as the House bill, except that this bill includes arbitration. Hospitals and providers are more into the arbitration idea, but the Trump Administration opposes it, citing the potential for disruption, less pricing transparency, and increased administrative burden associated with arbitration.

Both branches think that some sort of Surprise Billing legislation will be ready to sign by Trump by the end of summer. Read our timeline of Surprise Billing in 2019 to catch up what’s been going on in 2019.

48. Quick Hits

• Civica RX, the nonprofit drugmaker joint venture, is targeting antibiotics as its first products to combat shortages and costs.
• The hottest thing on the market: healthcare real estate.
• Who might Walgreens try to acquire?
• Gilead Sciences is under fire for trynna make its HIV drug a monopoly and stifling generic competition.
• Some disgruntled worker decided to shut down Oregon’s Medicaid systems for a bit in 2016.
• You wouldn’t believe it, but the CVS-Aetna merger review is still tied up in court.
• So why did Amazon actually buy Pillpack?
• AccentCare is getting acquired by PE Giant Advent International.
• Interestingly, JP Morgan is getting into the healthcare payments business. The banking giant purchased InstaMed for $500 million this week.
• The FDA finalized interchangeable biosimilar advice, with a focus on insulin.

5.27.2019 Stories

49. Senators draft huge-ass bill aimed at big-time healthcare reform

They DO listen to us, sometimes.

The Senate released a bipartisan 165 page bill this Thursday called the Lower Health Care Costs Act. It’s designed to lower health care costs (ignore me).

Anyway, the bill is pretty comprehensive in its efforts to address all of the following hot-button issues:

• Wiping Surprise Billing from the face of the earth with 3 proposed solutions:
  • 1 – Independent, third-party arbitration to negotiate payments between insurers and providers (providers like this method);

• 2 – Payment caps/benchmarks for reimbursing out of network providers. This type of pricing method would target payments for services at a certain percentage of Medicare payments (e.g., “I’ll reimburse you at 200% of Medicare’s rate for that surgery”) or at the median in-network rate for those services, adjusted for geographical region (insurers like this method);

• 3 – In-Network guarantee. This new proposal would require any hospital to guarantee/promise that anyone working there is also in-network with that patient’s health plan. The guarantee would also extend to laboratory and imaging testing, too (insurers like this method)

Interestingly, there’s no mention of bundled payments as a potential solution to surprise billing in the legislation. Originally, the Trump administration was pretty into tackling surprise billing via the bundled payment approach. It’s possible that bundled payments might get introduced in future bill iterations.

Here’s the general reaction from various healthcare trade organizations.

• Reforming Drug pricing:
  • An easier ability for generic drugs to get to market, which would increase the supply of generic drugs and hopefully lower costs;
  • A stricter drug patent law, meaning that companies wouldn’t be able to hold onto exclusive ‘brand-name’ drug patents as long;

• Increasing pharmacy benefit management (PBM) price transparency:
  • Requiring PBMs to provide quarterly reports that would include information on drug costs, fees received, and rebates detail;
  • Eliminating the drug rebate (i.e., requiring 100% of the discount to be passed along to patients);
  • These changes are actually pretty dang substantial.

• Creating an entity to manage claims data (i.e., the details behind a hospital or physician visit – this would be a BIG first)
• Increasing vaccination education;
• Granting funding for infant mortality, postpartum treatment, and healthcare professional discrimination training; and
• Improving privacy laws concerning HIPAA info online.

The bigger picture.

As you can probably tell, there’s a ton of healthcare change packed into this one bill. So it’s more than likely a bit ambitious to think that all of this will get passed at once, especially with the presidential election looming in 2020 and other bills circulating. Still, it’s interesting to note how Congress is approaching these issues and the attention that healthcare is receiving overall.

Keep an eye on the expected vote date, which is expected to take place sometime in July. Also, there are a few other senators whipping up their own healthcare bill, so stay posted…

Trump’s Big Healthcare Stick

Not to be outdone by his colleagues in Congress, Trump and the dream team are planning an executive order on healthcare, which is a bit skimpy on details, but lays out ambitious changes to the system. Most people expect the order to include increased disclosures of cost data among insurers and providers along with tackling local health system monopolies that could be driving up prices in their markets.

50. Is Direct-to-Consumer the future of Primary Care?

Add that to my Netflix subscription.

Forget Trump: there’s yet another healthcare model making its way into headlines. Direct primary care is gaining traction among physicians in several states.

How it works.

Rather than working through insurance plans and billing indirectly for primary care services, direct primary care practices will charge patients a monthly membership fee up front. It varies from site to site, but that membership fee covers pretty much every ‘routine’ service – including various forms of testing.

According to the Wall Street Journal, cutting out the insurance plan and having patients deal directly with providers may help to lower drug costs, testing costs, and increase transparency. One flat fee – no billing, no co-pays. Keep an eye on the potential trend here. There are plenty of healthcare startups (not just in primary care) that are targeting direct-to-consumer strategies. Don’t forget though – there are plenty of growing pains with DTC healthcare.

51. The latest beef: are nonprofit hospitals getting too much of a break?

Tax Exempt in Limbo.

Add nonprofit hospital systems to the list of healthcare folks getting put under the microscope. Senators (specifically, Chuck Grassley if you care) noticed that the amount of dollars spent on charity care is decreasing, while hospital margins appear to be doing pretty well. Don’t tell that to Johns Hopkins, though, which decided to sue low income patients for medical debt.

As a result, the Senate is asking the IRS to investigate nonprofit hospitals. Specifically, they want the IRS to check into whether nonprofit health systems have enough oversight when it comes to their required charity care spending. What are those nonprofit health systems actually spending funds on? Hopefully patient care!

Arguably, nonprofit hospitals should in theory be doing worse, relative to their for-profit brothers. Think about it – the tax cuts enacted a few years ago only benefited for-profit health systems, giving these profit-driven systems extra cash to work with in lieu of the income tax they were previously paying.

Anyway, the AHA (of course) had a prepared statement over the spat, arguing that hospital charity care more than covered the required amounts.

52. Google’s AI making healthcare headlines

Google’s healthcare AI platform, Verily, made headlines this week by announcing several partnerships with big-name pharmaceutical companies including Novartis and Pfizer. It’s the latest push by big-tech as the firms try to break into the stubborn healthcare space. From the partnership, Verily and Google are looking to enter the business of clinical trials, including developing drug algorithms and aggregating E H R / wearable data to find new potential therapies and trial candidates.

On the other side of health IT, Google’s lung screening software showed serious promise in finding lung cancer, with a 94% sucess rate. The algorithm could turn into a very powerful tool at the hands of radiologists.

In other A.I. news, could robots be a boon to therapists when it comes to children with autism?
 

53. Healthcare Price Inflation Update

To the moon.

A recent report by Modern Healthcare highlighted healthcare inflation in various subsectors. Notably, healthcare services prices in April grew at a 2.3% rate, which was slightly above the rate of inflation. The real kicker here, though, was inflation in the health insurance sector.

Over the past 12 months, health insurance prices grew at a whopping 10.7% rate. This rate tells us how much insurers have been retaining (as profits, administrative cost, or re-distributions after factoring in the regulated medical loss ratio). If a managed care company does not meet the medical loss threshold, that company must issue rebates to their plan members to make up for ‘overcharging’ on premiums.

The hell happened?

Altarum, a consulting firm, thinks that premiums were much higher than expected claims for the year, which led to decreases in insurers’ medical loss ratios. Expected rebates that insurers must pay out are continuing to rise as managed care profits skyrocket.

54. Quick Hits

State highlights: Colorado is becoming the first state to cap the price of insulin at no more than $100. Connecticut decided to follow Washington’s footsteps to develop a public insurance option. Kansas in particular is getting hit hard by rural hospital closures. California, like most states, is dealing with a physician shortage, but physicians might be the ones keeping it that way? On another physician note, they don’t really like to stay in rural areas.

The FDA just approved the most expensive drug on the planet. Haven, everyone’s favorite mysterious startup, just lost its COO. Speaking of Amazon joint ventures, the e-commerce giant is working on a device that can…read human emotions. I like to think that it’s a smart mood ring. We’re long overdue for one of those, aren’t we? The biggest healthcare brand name is UnitedHealth. Here’s the rest of the list.

Here’s a nice longform piece from Fortune about CVS and the company’s vision for the future of healthcare. Right before Peloton Therapeutics (no, not the bike company) went public, Merck snatched the biotech startup for $2.25 billion in cash and future incentives. Did someone say snatching? In an interesting development, Blue Cross is taking a page from UnitedHealth’s book and scooping up physician practices nationwide. And the WSJ is bullish on healthcare stocks, citing cheap valuations (paywall).

6.3.2019 Stories

55. Healthcare heavyweights throw shade at Trump’s attempted healthcare pricing executive order

Healthcare heavyweights pull an Andy Ruiz.

You might have missed it among all the other healthcare legislation drafted last week (catch up on that here), but in the midst of it all, Trump has been preparing to issue an executive order that would force increased price transparency. Is that even within the executive branch’s constitutional powers? Anyway, as we all expected, this potentially disruptive change was hit with a massive amount of backlash from the healthcare industry.

So what’s the major beef?

The AHA argued that the order would cause the opposite of the desired effect and ultimately cause prices to RISE, as the price disclosures could create a FLOOR for prices.

Insurers aren’t happy about the news, either. The price negotiations are closely held trade secrets, and advocate groups argued that pulling the rug out from under those arrangements could result in a form of “bad transparency.” Both sides (shockingly) agreed that in such a situation of negotiation, there needs to exist at least a little bit of privacy.

My thoughts.

This price disclosure policy could actually have a substantial impact on the industry, but only in situations where the patient makes informed healthcare decisions based on price. Most of it boils down to the patient: if the patient blindly follows a physician’s orders regarding site of care, or doesn’t receive treatment at the appropriate setting, then price disclosures probably won’t really even matter.

Furthermore, the pricing policy might not be as effective in areas where less competition exists. Areas dominated by a few large health systems (think mainly rural regions) would theoretically maintain a good amount of pricing leverage.

Still, in competitive markets where providers are more prevalent, I HAVE to think that healthcare would more closely resemble a free market and at least somewhat compete on price. That’s economics 101, right?

By the way – personally, I’m not buying the industry’s argument about the whole floor pricing thing causing prices to rise. If someone has a different opinion, please feel free to reach out. Here are some other thoughts from the Incidental Economist on implementation of a claims database.

56. Cigna and Connecticut scuffle over proposed public health plan

Pivoting to state news – remember when we talked about Washington passing a public health plan option in the May 20th edition? Well, Connecticut was trying to pass something similar, except this plan would have been much more limited as to who was eligible for the public plan. This plan, though, was faced with massive opposition from Cigna, which made for quite the hairy situation. Can I get some #HealthcareDrama?

Sharply-Worded concerns.

Some who listened to the insurer’s remarks about the bill assert that Cigna threatened to leave its home state if the public option weren’t nixed. Cigna claims they said no such thing. Some legislators called Cigna’s remarks “sharply worded concerns.” I’ll leave that up to the experts to decide what actually happened.

Later, the insurance company stated that the legislation would “not be helpful to businesses that provide health insurance,” and that the plan “threatens the long-term viability and vitality of the state.”

It’s notable to mention that Cigna actually doesn’t have any customers on any of the plans that would have been affected by the public option, since the bill was only intended to cover both individuals and employers with less than 50 employees.

Still, as constituents of the state, Cigna’s opposition left lawmakers to question whether the public option needed some revision. As a result, legislators are taking a step back to reconsider the bill and make sure everyone’s on the same page next time.

57. Healthcare laws might be stifling payment innovation

Some healthcare specific laws, specifically the Stark and Anti-Kickback statutes, might be preventing new value based payment models from maximizing their potential. For instance, health systems might try innovative approaches to rewarding physicians for various quality metrics.

Blurring the regulatory line.

But because the law strictly prohibits health systems from giving financial or other rewards for physician referrals, the other, well-intentioned payments/incentives for value based care could also get caught up in the regulation, too (i.e., others may think that the health system is rewarding that physician for referring patients to them – which is illegal – rather than fairly reimbursing the physician under an alternative payment model).

As a result, many executives are asking for a reform to Stark and anti-kickback statutes, especially as value-based care models grow increasingly prevalent in our modern-day healthcare system. These health execs want the outdated laws to address newer forms of reimbursement and draw lines that health systems can’t cross in the new value-based wild frontier.

58. Stop me if you’ve heard this before: a lab testing startup gets in major trouble after lying to a bunch of people about a bunch of things

ANOTHA’ ONE.

What’s with it with these healthcare startups and their propensity for fraud? Following Theranos’ legendary footsteps, the microbiome testing startup cleverly named uBiome is refunding federal insurers after engaging in some faulty billing practices. The story actually goes further than that and gets a bit wild. Maybe they’ll get a book, too.

House of cards.

uBiome’s original co-founders were given the boot after its board discovered the billing practices. Don’t even mention the fact that they were in a romantic relationship AND one of them lied about their age to be put on Business Insider’s “30 under 30” feature.

To put a cherry on top of uBiome’s issues, the new CEO then discovered a plethora of hidden expenses and liabilities running through the startup’s financial statements. So…if I were a betting man, I’d say uBiome might not be around much longer. Oof.

59. Quick Hits

State highlights.

New York is (once again) mulling over single-payer (paywall – WSJ). And Utah is trying to cap Medicaid spending (don’t forget – previously, the state attempted to expand Medicaid and only partially succeeded)

Business highlights.

Universal Health Services invested a minority stake in Vera Whole Health Primary Care. It doesn’t seem like the DOJ is a huge fan of the Centene-WellCare Deal, which seems much more likely now that Humana’s bid for Centene is off the table. Here’s the top 4 medical device players. Acadia Healthcare is looking to sell its UK biz. And here’s a fantastic summary of the state of the PBM market.

Policy/Other highlights.

Healthcare spending is projected to hit $3.6 trillion this year, up from $3.5 trillion last year. There’s another battle brewing over lien practices. And what’s the potential impact of higher Medicare payments for rural hospitals?

6.10.2019 Stories

60. Managed Care’s big week

Over the past few weeks, the largest managed care players have provided us with insights into the healthcare industry from a payor’s perspective. Anthem, UnitedHealth, Humana, CVS, and Cigna all had interesting things to say.

Here’s what you need to know:

UnitedHealth wants to grow Optum to $100 billion in revenue by 2028, but they’re not planning on building any hospitals. The growth strategy banks on Medicare Advantage growth, increased local care delivery, expanding into areas of healthcare with increasing intensity of services (like ambulatory surgery centers), and increasing medical efficacy.

Anthem touted its investments in AI during the conference, giving mention to predictive analytics, adjusting for social determinants of health, and health risk assessments with the ultimate goal of driving down costs. The payor also wants to continue its Medicaid joint ventures with the Blues and likewise continue the integration of its newly established PBM Ingenio Rx.

In other Anthem news, the payor is making a push into behavioral and mental health with its recently announced acquisition of Beacon Health Options, a behavioral health management organization.

Humana‘s Chief Medical Officer made it clear that the payor’s strategy revolves around the home. He continued by saying that Humana differentiated itself from UnitedHealth and CVS/Aetna by focusing on the home, whereas UnitedHealth is focused on a primary care physician acquisition strategy, and CVS is honed in on retail settings.

CVS/Aetna‘s investor day was chocked full of growth details surrounding its new “HealthHUB” in-store plan. I touched on the HealthHUB plan previously while covering the JP Morgan investor conference at the beginning of the year. Anyway, CVS is expanding the “health and wellness” store concept to 1,500 locations by 2021. Ambitious af.

Cigna brushed off any challenges involved in the changing healthcare regulatory landscape, touting their ability to work through tough policy environments. The firm shrugged off any possible effect of drug rebate reform and reiterated its approach to partnering with physicians (rather than buying them) to separate themselves from the healthcare delivery system for the purpose of enhanced patient support.

Return of the Jedi health insurance tax.

Several insurers were asked about the return of the health insurance tax, and how the tax might affect the industry in 2020 and beyond. As you could imagine, they responded with some distaste, stating that the health insurance tax would cause instability in the insurance market and probably result in higher premiums.

Interestingly, some think that the health insurance tax wouldn’t affect insurers on the ACA exchanges – meaning that they could simply raise the price of premiums to exactly counteract any taxation.

Stunting Medicare Advantage growth to Tyrion’s level.

On the other hand, insurers might not get away with that tactic in the rapidly growing Medicare Advantage market due to the current competitive nature of that exchange (insurers want the Baby Boomer Biz – duh). Instead of passing on the tax via higher premiums, insurers might opt to provide less coverage through these plans, or compete in other ways.

Either way, insurers definitely do not want to lose any MA enrollees, since MA is the major driver of their growth story on quarterly conference calls. In fact, the health insurance tax might deter would-be enrollees from even signing up for Medicare Advantage, instead opting for traditional Medicare.

61. Veterans Affairs shifts to private model

VA gets privatized.

Enough about managed care companies. Veterans are about to be given the green light to receive care at any hospital – beyond just VA-designated hospitals. The policy appears to be a somewhat unprecedented move – according to the NY Times, the VA has about 9 million enrollees, which would mean that this shift would be the largest change in healthcare since the ACA.

Essentially, this move is more or less privatizing VA healthcare with the intention of “greatly opening” medical care to veterans.

62. Congress gets fed up with health data breaches

Whipped into shape.

An EVER growing number of healthcare companies continue to get hacked.  This time, though, Congress had some things to say to Quest and LabCorp, who got in trouble from some reps after using a third party agency called American Medical Collection Agency.

Representatives thought that the companies were acting pretty lazy with the precious data by outsourcing. It’s also worth noting that while the companies won’t be fined or financially punished by the hack, the data breach is a credit-negative event.

63. Is a $2.1 million drug price ethical?

A price tag on life. Sort of.

Novartis drew raised eyebrows over the weekend when it priced its spinal muscular atrophy treatment Zolgensma at $2.1 million. Yep, you read that right. But is that a good or bad thing? Is the price ethical when it’s saving lives? Some of my (somewhat ignorant) thoughts are below. Interested to hear others’ opinions as well.

In this specific case, here’s the perspective of Novartis: drugs in general are extremely costly to research, develop, and bring to market. The disease that the drug treats, spinal muscular atrophy, is extremely rare. If the disease is NOT treated, then the infant may die and/or struggle long-term with expensive treatment and machinery for the rest of its life.

But if the drug is effective – which it appears to be in most instances – it could save quite a bit of time, money, and healthcare utilization by stopping the disease in its tracks.

In my mind, it seems as if Novartis more or less attempted to estimate the cost to the healthcare system of that patient WITHOUT the new drug, then priced their drug within – or, as they claim, well below – that range. Still, the distinct possibility exists that the drug might not work in all patients, and the final list price was $2.1 million, after all.

It remains to be seen whether insurance covers any of that price, but Novartis is guaranteed to have a payment installation plan in lieu of insurance.

Since Novartis developed the drug, the biotech firm gets ‘rewarded’ for taking on the high, high risk of developing a cure for SMA. If Novartis hadn’t found a cure for the disease, the company would have pumped billions of dollars into R&D and received…nothing. Which happens decently often.

Despite these factors, many experts still consider the list price excessive. The final question I would ask on the ethics, though, is would you rather have the drug at an excessively steep price or no drug at all? It’s a tough one, huh…

Read some perspectives from parents and individuals who actually have, or have seen, the disease firsthand:

Is $2.1 million too much for a drug? For affected parents, there is no debate

I have spinal muscular atrophy. Critics of the $2 million new gene therapy are missing the point

64. Quick Hits

Business Highlights:

LabCorp has its new CEO – the former Merck President. The firm also just bought Envigo. CVS and Walgreens are thought to be the same exact company, but they’re taking very different strategies when it comes to healthcare. Oh, yeah…that whole CVS/Aetna merger? STILL tied up in court. Someone let me know why that didn’t happen to Cigna/Express Scripts. Pfizer isn’t very happy with Johnson & Johnson over anticompetitive issues with its drug, Remicade. Medical device companies might get screwed by Trump’s Mexico tariff.

Could patenting actual genes become a thing? Not the Onion: a group of Senators just asked Big Pharma’s lobbying group for ways to reform drug pricing. Apple’s Watch can now track menstrual cycles and tell you when an area is too loud. And tech companies seem to be hitting the same wall in the attempted disruption of healthcare. In fact, there could be a big Medical AI Data problem brewing.

State Highlights:

Here’s a comprehensive list of all the big managed care players by state. Beckers did us a big favor by publishing the largest commercial insurance health plans by state, too.

Apparently 16 hospitals in Massachusetts are storing a smooth $1.6 billion in offshore accounts.

Louisiana just officially banned freestanding Emergency Rooms in a ploy to save rural hospitals.

And a Kentucky hospital lost its Medicare licensure and had to cut half of its staff as a result.

Policy/Other Highlights:

Big news from the Supreme Court: the DSH changes enacted were ruled to be illegal, meaning the cuts to the program won’t go into effect yet.

There are plenty of headaches and complications behind full price transparency in healthcare. CMS is trying to get rid of some of those headaches by asking for ideas to cut down on the red tape in healthcare.

The Medicare Advantage growth hype might not live up this year. And what might happen in the event of an international pricing index model for Part B drugs?

6.17.2019 Stories

65. Therapy through your Phone, and the growth of the mental health industry.

Therapy as a Service.

A slew of mental health apps have been making their way through the app store and onto people’s phones in a big way. Whereas apps like Headspace and Calm are focused on meditation and mindfulness, newer platforms such as BetterHelp, a subsidiary of Teladoc and leader in the online therapy space (makes sense) and Talkspace, which recently raised $50 million and is partnering with Optum, are bringing counseling and therapy services directly to your phone.

Mental Health’s growth.

The apps point to a larger trend. The mental and behavioral health industry is growing like wildfire and is projected to continue at a 7% clip through 2024. Just last week, Anthem acquired Beacon Health, a huge behavioral health organization.

Easy Money.

Now, mental health startups like BetterHelp, Talkspace, and Quartet Health are popping up. Just this week, the startup announced a successful $60 million Series D funding round courtesy of Centene (another big Medicaid player). To date, Quartet Health has raised almost $153 million so far, which is only one example of not only the deep pockets of healthcare venture capital, but also the ease of fundraising in 2019.

66. Are Patients a big part of the U.S. healthcare spending problem?

Fat Americans.

An interesting article this week brought up a fascinating topic of discussion: should consumers be blamed at all for the high cost of healthcare in the U.S? 

I’ll take a Big Mac.

The Atlantic article published this week argued that Americans have unhealthy behaviors rooted in cultural norms, which leads to poorer outcomes for the population (hello, pizza night!).

It goes on to state that Americans tend to be over-treated, disregard preventive and routine care, undergo dangerous elective surgeries, and treat physicians like deities. It concludes that a high cost healthcare system is enabled by the poor healthcare choices made by Americans.

The story only covers the consumer side of the healthcare cost argument, but it’s an interesting perspective, and one not touched on as often. Don’t forget – American’s aren’t exactly healthy.

Who do people normally blame for high healthcare costs?

67. AMA Spurns Medicare for All…for now…and other highlights from the conference

AMA vs. Medicare for All smackdown.

During its annual Chicago meeting, the American Medical Association, or the advocacy group for physicians, voted on various policies and stances to support over the next year. Of course, the big ticket item this year was whether or not the AMA would support any single payer, or as the media so fondly calls it, ‘Medicare for All’ proposal. While the vote was ultimately struck down, it was much closer than most expected – 53% of participants voted against the policy.

In other developments, the AMA voted to adopt more technology and A.I. friendly policies, including working toward developing applications for A.I. in healthcare, technology training for physicians, and generally deeper integration of tech in healthcare.

68. Pfizer buys Array Biopharma in huge $11.4 billion deal

In a deal that led to an across the board biotech rally, Pfizer announced its intention to acquire Array BioPharma for a total of $11.4 billion, or $48 per share – which is a gigantic 60ish% premium over its most recent share price.

Array was a pretty attractive buyout option given its super innovative cancer therapies along with its licensed revenues and medicines.

It’s been a pretty good 30ish months for biotech M&A.

69. California expands health insurance to illegal immigrants

On the taxpayers’ dime?!?!?!

This week, California unveiled a public health plan that would be made available for illegal immigrants in the state. The plan would more or less be an extension of Medicaid and is expected to cover about 90,000 19 to 25 year old individuals. Although the plan hasn’t passed yet, it’s expected to move through Cali’s legislature quickly.

70. Quick Hits

State Hits:

Where does your state rank on healthcare performance and outcomes? And Maine just became the 8th state to legalize medically assisted suicide.

Business Hits:

Ever wondered what a healthcare startup pitch deck looked like? Novant Health just launched its Institute of Innovation & Artificial Intelligence. As we all expected, U.S. drugmakers filed a lawsuit against requiring drug prices in TV ads. And Medidata just got snatched up for $5.8 billion

Policy/Other Hits:

Trump is planning on rolling out a new healthcare plan in the next couple of months – stay posted! What happens when the medicine your child needs isn’t available in your country’s single payer system? And the U.S. healthcare system is full of monopolies – which might cause problems with any price transparency disclosure.

6.24.2019 Stories

71. Trump just issued an executive order on price transparency

He just did that.

Toda, Trump issued an executive order all about healthcare price transparency.

All bark, no bite…for now

The mandate doesn’t really do anything…yet. More or less, it just asks Health & Human Services to propose ways to increase price transparency in healthcare, specifically around the prices that insurers and providers negotiate for services rendered along with the prices that patients would pay out of pocket.

The backlash.

As you can imagine, there’s plenty of back and forth among industry players regarding the transparency push (you can read about that and my brief thoughts here), and some legal battles that are bound to take place.

Legal questions to consider: does HHS have the authority to push this type of issue? Is the forced disclosure of prices constitutional? There’s more to come – that’s for certain. Isn’t healthcare fun?

You can read all about the executive order here (paywall).

72. UnitedHealth: the Dealmaker.

Pac-Man Optum gobbles up more physicians.

UnitedHealth is the deal making machine in this week’s Muse after buying/closing DaVita Medical Group for $4.3 billion, healthcare payments firm Equian for $3.2 billion, (remember, JP Morgan just bought one too), and PatientsLikeMe over the past 7 days.

Tell me more about DaVita Medical Group.

The healthcare behemoth finally received FTC approval for the $4.3 billion purchase of DaVita Medical Group, with a few conditions:

UnitedHealth has to sell off DaVita’s Vegas operations (no craps for you) to Intermountain, who I’m sure is stoked about that development, and must give up a few exclusive managed care contracts in Colorado (not even a scratch).

As a reminder, DaVita Medical Group’s operations include primary care and specialist physicians, urgent care centers, and surgery centers across quite a few states. I’m sure this acquisition will be pivotal in OptumCare’s push for $100 billion in revenue by 2028.

Vertical Integration: Good, or Bad?

Bear with me, but I thought Colorado’s state attorney general’s office had some REALLY interesting comments about vertical integration in healthcare.

Since UnitedHealth-Optum is a payer (really morphing into a payer-provider at this point), and DaVita Medical Group is a provider, the two firms will integrate vertically. UnitedHealth seeks to benefit from the acquisition by directing patients to its newly acquired providers for the sake of lowering costs to its insurance plans.

Think of vertical integration almost as a completely siloed supply chain, where one company controls all inputs and outputs to the same product. This effect works especially well in healthcare, where insurance plans direct patients to specific providers and services.

So what did Colorado have to say?

Colorado was asked after the fact as to why the state didn’t further press the issue given the size of the transaction and the ever growing presence of UnitedHealthcare. The state attorney general responded with the following intriguing comments:

“We do not rule out the possibility that vertical mergers can harm competition under a RRC theory. We both voted to issue the complaint, which alleges a similar vertical theory of harm in Nevada. And given both substantially stronger facts and the significant horizontal overlap in that state, that was the right call.

“But vertical mergers often generate procompetitive benefits that must also factor into the antitrust analysis.

“A major source of these benefits is the elimination of double-marginalization, which places downward pressure on prices in the output market. We conclude that the evidence in Colorado, quantitative and qualitative, reflected both dynamics, with mixed results.

“In our view, taken together, the evidence would not have convinced a judge that the proposed acquisition was likely, on balance, to harm consumers in Colorado.

“As our colleagues note, a lawsuit based upon this evidence posed significant litigation risk. Among other things, the law on vertical mergers is relatively underdeveloped, and an adverse decision can impact enforcement in later cases that present clearer harm.

“Of course, all litigation presents risks, and sometimes the risks are worth taking. But, faced with a body of evidence of harm that was ambiguous in the first place, we cannot agree with our colleagues that this was a case on which to roll the dice.”

Final Point.

It’s interesting to note that horizontal mergers, especially in healthcare, are much more obvious and are scrutinized much more heavily than are vertical acquisitions, where there exists less precedent.

The quotes above indicate that the jury is probably still out as to whether or not vertical consolidation is good OR bad for consumers. That, or the state attorneys are looking for bigger fish to fry than a relatively small $4.3 billion deal.

TL;DR – UnitedHealthcare is everywhere.

73. People don’t really understand what Medicare for All is

Who trusts survey data anyway?

Good ‘ole Kaiser Health just released the results of a Medicare for All survey, and it turns out that a lot of people in the US on both sides of the aisle really have no idea what Medicare for All is, or what the probable consequences will be from the policy.

Most new proposed policies from Democratic candidates seem to get improperly lumped under the ‘Medicare for All’ reform umbrella in one way or another. Don’t forget that #feelthebern Bernie Sanders is the original brainchild of Medicare for All.

Everything in moderation.

Moral of the story is that since healthcare is confusing, and Medicare for All is confusing, maybe a more moderate, stepwise option would make more sense – like Biden’s proposed Medicare buy-ins, or state public options run by private payers, similar to the one that just passed in Washington.

74. Amazon’s master PBM takedown plan was just…partially revealed

Remember when we caught a glimpse into Haven’s covert operations after UnitedHealth took the Amazon-Berkshire-JP Morgan healthcare venture to court?

Well, we just learned a little bit more about Pillpack and Amazon’s potential strategy to disrupt the PBM industry through its litigation with CVS over a former employee non-compete.

Thanks to Stat, who dug through plenty of court documents (truly saints), it looks like Amazon is aiming to cut out these gigantic middle men altogether by contracting directly with health plans and employers.

Not so fast.

It’s probably gonna take Amazon a little while to make its way into the industry.

75. Quick Hits

State Hits

• Texas joins the state surprise billing legislation fold

Business Hits

• In other deal news, Centene and WellCare just received a glowing endorsement from Institutional Shareholder Services in favor of their proposed merger. Their shareholders overwhelmingly support the deal, too.
• In the IPO category, it looks like Change Healthcare is shooting for a $1 billion capital raise. If I were a betting man, I think they achieve that goal.
• Tenet and Aetna just buttoned up a new 4 year deal, with an option to renew for a 5th year if the going’s good. In the northeast, CityMD and Summit Medical Group just announced their plans to merge in a pretty big partnership between a large urgent care player and provider organization. And Intermountain Healthcare and deCODE have ambitious plans to undergo the largest DNA mapping project in the U.S.

Policy/Other Hits

• Another surprise billing plan was announced this week. They just keep pouring in, don’t they? And mental health looks to be a larger campaign issue during the 2020 election cycle.

If you made it this far, thanks for reading!

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The post The 75 Biggest Healthcare Stories from Q2 2019 appeared first on The Healthy Muse.

The Surprise Billing Conundrum.

Nobody likes getting catastrophically big, unexpected medical bills after an emergency situation. We’ve all seen the headlines where patients get slapped with thousands of dollars in emergency room bills from out of network providers.

But what is surprise billing? Where did it come from, and what’s the latest news?

2019 Surprise Billing Recap – Updated September 2019

Since our last surprise billing update in May, there’s been plenty of squabbles (as you can imagine) between providers, insurers, and Congress.

Of course, everyone wants a solution to the surprise billing problem, but each side ALSO wants the solution that will maximize their benefit.

The politics involved is a mess, too. Congressional representatives might prefer to let patients continue to struggle with these bills rather than hand the current administration a healthcare victory.

The current Surprise Billing predicament.

Proposals from Congressional leaders were taking shape on the surprise billing front, rhetoric was good, and it looked like a surprise billing solution was inching closer to the finish line as legislation hashed out the details.

Texas and California make a Surprise Billing push.

Meanwhile, states were making their own push against surprise billing. Texas and California became two of the dozen-or-so states with legislation either partially or fully banning surprise billing practices.

Each state developed its own way to deal with the issue (Texas with third party arbitration between the provider and insurer, California with previously agreed upon, benchmarked median in-network rates for out of network emergency bills).

Surprise Billing comes to a not-so-surprising halt.

As Congress returned to class in September after its summer recess, all of a sudden, the lobbying scene was flooded with a huge amount of pushback on the surprise billing front.

The culprit? A ‘dark money‘ group apparently backed by major national physician staffing companies.

Given this development, many national media outlets described surprise billing initiatives as in legislative gridlock.

Both sides – providers, who favor third party arbitration – and insurers, who favor rate-setting benchmarks for out-of-network care – aren’t giving up any ground yet. As you can tell, the issue is pretty tricky.

Translation: we might be back to where we started, despite all the back-and-forth rhetoric.

As a response to the lobbying blitz, Congressional leaders in the House launched an investigation into private equity groups that back these physician staffing companies.

We’ll see if any major surprise billing initiatives come through the federal level. For now, I would turn your gaze toward the states.

TL;DR. Bi-partisan support for surprise billing largely exists and is very real. But insurers and providers can’t compromise on a solution. With a new provider group lobbying to take down any surprise billing legislation, we might be in for a long ride.

For a timeline of surprise billing events from earlier in the year, keep reading below:

1.25.2019 – Trump raises the issue of Surprise ER Billing.

Getting along for once.

Add surprise medical bills to the short list of things that politicians agree on. This week, President Trump held a chat with patients and experts on surprise medical billing, where patients are charged with the brunt of an unexpected out of network medical bill after insurers say “we won’t cover this.”

Trump and many members of Congress are seeking ways to end the practice of surprise billing after hearing countless stories of people getting hit with huge medical bills over seemingly simple medical procedures.

It’s everywhere.

You can Google “surprise medical billing” and see that it’s become a pretty big issue in healthcare. The current administration is striking an aggressive tone over the issue, and we could see this be one of the few healthcare related issues passed through Congress this year.

2.1.2019 – What is Surprise/Balance Billing?

Emergency Care Costs. 

The countless stories of patients receiving extravagant bills from the ER for simple care (like a flu shot) give bad optics to the healthcare industry. The issue has gotten so out of hand, in fact, that Vox started asking individuals to submit their emergency room bills to create an online database.

Billing Bonanza. 

The problem of Surprise Billing and Balance Billing (note: these are two distinct terms) emerged from a few sources, including payor-provider scuffles over emergency care coverage, and the increased prevalence of freestanding emergency rooms (think urgent cares, but for emergency services).

Because these emergency rooms were freestanding and not connected to a hospital, patients 1) initially did not understand the difference between this facility and an urgent care, and 2) were billed emergency room rates, instead of what they thought were urgent care rates. Imagine receiving a $20,000 bill from a small bike accident.

Needless to say, a lot of people were confused by emergency care billing practices. Insurers stopped paying the exorbitant rates charged by out-of-network emergency care providers. Naturally, the emergency care providers then simply would pass on the rest of the bill to the patient, hence the name ‘Balance Billing.’ Luckily for patients, Balance Billing is largely illegal, now. But Surprise Billing isn’t (yet).

What Surprise Billing Is. 

Surprise Billing occurs when a patient receives a much larger-than-expected medical bill from services and treatments received while at the ER. The most important thing to remember when it comes to surprise billing is that a HOSPITAL can be in-network on a patient’s insurance plan, but the PHYSICIAN might not necessarily be covered.

If the physician practice is out of network with the patient’s insurance, they can bill much higher out-of-network rates that the patient is completely responsible for.

This unfortunate fact happens because hospitals generally contract with physician groups, who then contract SEPARATELY with insurance plans. That’s why patients generally receive two bills whenever they go to the ER. Physicians can easily opt out of any insurance plan if they don’t like the negotiated rate that the insurance plan is offering.

Patients grew confused – “Wait,” they thought. “I thought my insurance covered an emergency room visit?” Well, yes, Karen – your insurance might cover the facility (hospital) portion of the bill, but the emergency physician treating you (who is separately contracted and probably works in an emergency physician practice) might not be covered at all. Which would put YOU on the hook for 100% of that out of network bill. Yikes.

So, in summary, patients receive 2 bills for an ER visit – one from the hospital, called the “facility” bill. Then, one from the physician, called the “professional” bill. The physician bill can be out-of-network, even though your insurance covers the hospital bill.

Surprise billing is so contentious because patients in a medical emergency can’t exactly CHOOSE which hospital they can go to. Obviously, they’re going to go to the closest one. And if the ER physicians at that hospital are out of network with your insurance? Well, you’re SOL.

In the News.

Obviously, the practice of Surprise Billing gained huge notoriety and a vast media presence. Now, emergency physicians and bi-partisan lawmakers are looking for solutions to the problem to ending Surprise Billing once and for all. Intermountain Healthcare in Utah is already ahead of the game by proactively negotiating with insurers.

4.8.2019 – Panels Form and Ideas Take Shape.

A Solution in the works.

Along with controlling drug prices, ‘surprise billing’ is one of the rare public policy problems that has both bipartisan support and active solutions working through Congress. Insurance companies (think United Health) and providers (i.e., physicians) have been spatting for months about who’s to blame when a patient receives an exorbitantly large bill after an emergency visit. This week, panelists met with Congress to work through potential solutions to the issue – one that states have been working on for a while now.

So…any progress?

Main takeaways and ideas from the testifying witnesses included removing the incentives in place for doctors to remain out of network with insurers, forcing arbitration between the insurer, patient, and provider to find a reasonable payment solution, pinning out of network payments to Medicare rates, and implementing a bundled payment for all services rendered (i.e., one payment given for all hospital and physician bills).

Most witnesses honed in on limiting the out-of-network status of physicians administering care at hospitals, ESPECIALLY in an emergency setting where patients have little to no say in where they receive care.

5.13.2019 – Trump joins the Surprise Billing Chorus with force this time. States take Surprise Billing Action.

A Tricky Issue.

President Trump continued his comments regarding support for a solution to surprise billing. Oddly enough, doctors, hospitals, and insurance providers all want to end surprise billing price gouging practices, yet they all seem to be at odds over the proper solution to the issue. Moral of the story: nobody wants to get stuck with sticker-shocking ER bills to pay.

What are the Proposed Surprise Billing Solutions?

The Trump Admin seems to be in favor of bundled payments – where the hospital and provider would receive one payment for services rendered. Some states, including Colorado, have introduced legislation to limit surprise billing to a maximum fixed percentage of Medicare – in Colorado’s case, no more than 125%. Others, like New York, prefer arbitration.

Under New York’s arbitration, patients are not required to pay more than in-network rates, and an independent arbitrator resolves the payment difference between the insurer and provider.

Although many solutions have been proposed (with some even already implemented at the state level), none have taken a firm federal hold. Stay tuned!

5.16.2019 – For the first time ever, tangible legislation is proposed specifically to take on Surprise Billing.

Proposed House Bill.

The No Surprises Act, which is the nifty name for the proposed Surprise Billing bill (that’s a bit repetitive) drafted by the House, would ban surprise medical billing for good and set a minimum payment rate for out of network providers based on median geographical in-network payment rates for those ER services. In other words, the House is trying to CAP out-of-network payments.

Notably, this bill does not include an arbitration clause – where a third party arbitrator would negotiate a rate between providers and insurers for the out of network bill. Insurance companies would be the big winners if this bill were to pass.

Proposed Senate Bill with a Key Difference: Arbitration.

Essentially, the STOP Surprise Medical Bills Act is the same as the House bill, except that this bill includes arbitration. Hospitals and providers are more into the arbitration idea, but the Trump Administration opposes it, citing the potential for disruption, less pricing transparency, and increased administrative burden associated with arbitration.

Both branches think that some sort of Surprise Billing legislation will be ready to sign by Trump by the end of summer.

5.23.2019 – Different Sides of the Same Coin.

Who wants what?

Well, as previously mentioned, everyone wants to see patients protected from out of network bills. But we’re still struggling a bit to get there.

What providers (physicians, hospitals) want.

Arbitration to settle payment disputes for out of network emergency bills.  Arbitration would allow providers to negotiate for favorable rates.

The American Hospital Association went on to release a statement in favor of an arbitration clause, arguing that any “rate capping” measures taken by Congress would give insurers more leverage – possibly even removing any incentive for insurers to contract with providers for reimbursement (since Congress would now be arbitrarily setting reimbursement rates).

What insurers want.

Unsurprisingly, in direct contrast to providers, insurers want Congress to cap payments at some agreed upon rate. Whether that payment rate is at a fixed percentage of Medicare (e.g., “we’ll give physicians / hospitals 200% of Medicare for the out of network portion of the bill) or the median in-network rate adjusted for geography, it would be a big win for insurers for something like payment caps to get through Congress.

What the White House (currently) is thinking.

Trump isn’t too keen on arbitration, much to the dismay of providers (cue a collective sigh). The administration is actually looking into bundled payments – as in, the hospital and physician collectively send that patient’s insurer ONE bill, instead of billing separately.

That’s it for now. Be sure to subscribe to keep up on the latest healthcare news and trends!

The post A 2019 Timeline of Surprise Billing: Everything You Need to Know (Updated September 2019) appeared first on The Healthy Muse.

Healthcare under-performed the broader market in the 1st quarter.

• XHS (S&P Healthcare Services Index) Q1 Total Return: 3.35%
• XLV (S&P Healthcare Sector) Q1 Total Return: 7.69%
• S&P 500 Q1 Total Return 13.00%

Story 1: Medicare For All and the 2020 Election.

Buzzworded to Death. 

Get used to the phrase ‘Medicare For All.’ You’re gonna be hearing a lot about it. The concept, named and popularized by candidate Bernie Sanders, involves creating a single-payer healthcare system for the US where the government, in the form of Medicare, covers everything.

As the presidential election and campaign trail unfolds this year, Medicare for all is all but GUARANTEED to be at the forefront of every major Democratic candidate’s 2020 campaign message. A recent poll indicated that 56% of the public supports Medicare for All. I find that a bit fishy, though, considering another poll indicates that 46% of people haven’t even heard of Medicare for All. Maybe we just shouldn’t pay attention to polls? More interestingly, people’s support for Medicare for All drastically decreased when they learned that it would result in…ahem…higher taxes.

The heck is Medicare For All? 

As we’ve talked about before, Medicare for All means different things to different people. Basically, a lot of politicians have varying views as to what Medicare for All actually looks like – from a fully-fledged universal, single-payer system 100% run by Uncle Sam (think Bernie Sanders, socialists) to simply making Medicare more widely accessible. For instance, a popular proposed alternative to a full-on healthcare policy assault currently would lower the Medicare eligibility age to say, 50.

What does this mean for us? 

Nobody really knows what the TRUE cost of Medicare for All would be, but that hasn’t stopped some from guessing. Current estimates for Bernie Sanders’ Medicare for All would amount to $32.6 trillion over 10 years. But that’s before offsetting costs from removing the current system. Still, the report shows that the economics of such a drastic shift in healthcare policy is just way too difficult to estimate. All we know is that any such policy would most definitely mean higher taxes for, well, everyone.

Will this actually happen? 

Considering that Republicans and the healthcare industry as it stands today also exist, a fully baked single payer system probably won’t happen anytime soon. At the absolute most, it would probably be phased in incrementally over a very, very long period of time. Many industry players (shout out UnitedHealth) want to work within the existing system to find solutions that would be less disruptive. The issue remains – is it possible at all to create a healthcare system where a single public program funds everything, but delivery is still controlled by privately managed doctors and hospitals?

Things you should know.

As the 2020 election heats, up, it’ll be important to keep straight the various healthcare terms tossed around. For instance, many have joined the ‘Medicare for All’ rally cry without knowing whether or not they specifically support what that means. Here’s a little cheat sheet for you:

• Medicare For All – Medicare is expanded to cover everyone; not just those aged 65+. This healthcare system would be run by the government publicly, presumably abolishing all private healthcare plans. This would be a type of single-payer system.

• Universal Coverage – Everyone in the healthcare system is covered regardless of income or job status. Note that this doesn’t necessarily mean ‘free.’ Multiple payers could exist in this system. By requiring healthcare coverage, this term implies that healthcare is seen as a fundamental right.

• Single Payer – The entirety of healthcare is covered under one payer, whether that payer is Medicare or managed by a private company. Again, not free.

• Medicare/Medicaid Buy-in – A current proposal where regular U.S. citizens who are not currently eligible for Medicare or Medicaid could buy into these coverages, functioning as a regular health plan.

• Medicaid work requirements – Another proposal where proof of work must be given in order to be covered under Medicaid. Kentucky is one of the most recent states to pass such a proposal.

Story 2: The Drug Pricing Conundrum

Go see the Principal.

Some of Big Pharma’s largest drug companies received a good ole’ talking to from Uncle Sam in January. Congressional leaders heard testimonies from top executives from AbbVie, AstraZeneca, Bristol-Meyers-Squibb, Johnson & Johnson, Merck, and Sanofi as they discussed and dissected the problem of rampant, belligerent drug prices.

So what happened?

Congress asked Big Pharma about drug prices and even shot some flack at the industry’s practices. Their concerns (putting it mildly) included rapid drug price hikes (in the order of thousands of percentages), patent-protecting strategies to try and extend drug monopolies (therefore delaying competition/supply for these drugs), and scapegoating other parts of the healthcare industry rather than taking any of the blame themselves (namely, insurers and PBMs).

Pointing Fingers.

Drugmakers responded by – you guessed it – deflecting. Essentially, the executives blamed the system as a whole for the drug pricing problem and explained that there were various incentives implicit within the healthcare system to price drugs higher.

When asked why other countries paid less than the U.S. for drugs, the execs claimed that America foots the bill for other countries and that the world would have much less drug innovation if this were not the case. They pointed out that the costs of research and development, along with bringing drugs to market, can be quite high, and quite risky. The drugmakers also made clear that any over-regulation of U.S. prices could potentially threaten patient access to drugs, along with future breakthrough drug innovations.

Alright…what now?

Good question. Not sure. Right now there are a few proposals being floated around in Capitol Hill. The first would force PBMs (think CVS, Walgreens) to return 100% of the rebates that they negotiate to the patient. Drug makers LOVE this idea. A second proposal – one that Big Pharma doesn’t like nearly as much – would tie drug payments to a ‘basket’ of international country drug payments.

Another idea being floated around would involve Medicare directly negotiating with drugmakers on price. The bottom line is that everyone simply wants more transparency when it comes to healthcare prices in general.

Pharmacy Benefit Managers go to Testify.

The Senate wants to ask PBMs some questions about their drug rebate practices and whether they’re ACTUALLY saving patients money on drugs. Companies like CVS, UnitedHealth, and Cigna were grilled on drug pricing a few months after the drug-makers made the trek. PBMs have been in defense mode, especially as Congress prepares potential legislation around abolishing drug rebate practices for good (paywall)

Story 3: The Potential End of Surprise Emergency Bills

Emergency Care Costs.

The countless stories of patients receiving extravagant bills from the ER for simple care (like a flu shot) gives bad optics to the healthcare industry. The issue has gotten so out of hand, in fact, that Vox started asking individuals to submit their emergency room bills to create an online database.

Balance Billing Bonanza.

The problem of Balance Billing emerged from a few sources, including payor-provider scuffles over emergency care coverage, and the increased prevalence of freestanding emergency rooms (think urgent cares, but for emergency services). Because these emergency rooms were freestanding and not connected to a hospital, patients 1) initially did not understand the difference between this facility and an urgent care, and 2) were billed emergency room rates, instead of what they thought were urgent care rates. Imagine receiving a $20,000 bill from a small bike accident. 

What Balance Billing Is.

Needless to say, a lot of people were confused by emergency care billing practices. Insurers stopped paying the exorbitant rates charged by emergency care providers. Naturally, the emergency care providers then simply would pass on the rest of the bill to the patient, hence the name ‘Balance Billing.’

Patients grew confused – “Wait,” they thought. “I thought my insurance covered an emergency room visit?” Well, yes, Timmy – your insurance might cover the facility portion of the bill, but the emergency physician treating you (who is separately contracted and probably works in an emergency physician practice) might not be covered at all. Which would put YOU on the hook for the rest of the bill.

Seeking a Solution.

Now, emergency physicians and bi-partisan lawmakers are looking for solutions to the problem to end Balance Billing once and for all. Intermountain Healthcare in Utah is already ahead of the game and striking deals with insurers to avoid surprise medical bills.

Congress Takes Action.

‘Surprise Billing’ is one of the rare public policy problems that has both bipartisan support and active solutions working through Congress. Insurance companies (think United Health) and providers (i.e., physicians) have been spatting for months about who’s to blame when a patient receives an exorbitantly large bill after an emergency visit. At the beginning of April, panelists met with Congress to work through potential solutions to the issue – one that states have been working on for a while now.

So…any progress?

Main takeaways and ideas from the testifying witnesses included removing the incentives in place for doctors to remain out of network with insurers, forcing arbitration between the insurer, patient, and provider to find a reasonable payment solution, pinning out of network payments to Medicare rates, and implementing a bundled payment for all services rendered.

Most witnesses honed in on limiting the out-of-network status of physicians administering care at hospitals, ESPECIALLY in an emergency setting where patients have little to no say in where they receive care. Once they figure out the kinks, expect some sort of solution to come from Congress. Everyone is on board for some change, but the issue is figuring out a surprise billing solution that everyone can agree upon.

Story 4: Major M&A Activity in Healthcare

Bristol Myers Squibb Spends a Chunk of Change on Celgene

Biotech Kraken Bristol-Myers Squibb announced the acquisition of biotech giant Celgene for a hefty $74 billion in the first quarter. Maybe they can finally change their name to something that rolls off the tongue a bit easier…that is if they’re actually able to close the deal.

Both of the companies are particularly focused on the development of cancer drugs, and, if approved, the new biotech behemoth would be in position to bring specialized cancer drugs to market AND would have significant leverage to negotiate for better rates for their new drugs. The deal is expected to close in Q3 2019.

Anyone else hot in here?

Not so fast, though: Apparently Starboard, who is a big shareholder in BMY, is NOT on board with the $74 billion decision. They think the deal is super risky and told BMY management so. Citing expiring patents (especially on Celgene’s biggest moneymaker, Revlimid), a risky drug pipeline, a large debt load, and historically poor management execution on BMY’s operations (talk about a kick to the pants), Starboard claimed that BMY doesn’t have the right or the track record to close the biggest biotech acquisition of all time.

All aboard!

They’re not the only ones, either. Other activist investors with large stakes are now hopping on the ‘no-go’ train. Wellington Management, who owns 8% of BMY, thinks they’re getting a raw deal. BMY responded to the pushback, claiming that they’re paying a fair price for Celgene, which includes access to very specialized cancer drugs and new experimental gene therapies. Now, they’re trying to smooth out the wrinkles with their investors to make sure the deal still gets done. As of this writing, it looks like BMY made it through the choppy waters and will close the Celgene deal.

Altria Gets Be-Juuled

Teen vaping has been a huge hit (pun intended), so much so, that Altria is shelling out almost $13 BILLION for a little over a third of the trendy company.

Juul has a massive market share in the vaping space (a whopping estimated 75%), and Altria is looking to cash in on that by placing Juul products in premier locations on the infamous tobacco wall. Despite all odds, tobacco lives on…

Cigna / Express Scripts Merge and CVS / Aetna Latest

As if the Juul acquisition weren’t enough to rustle up some jimmies, several mergers are scheduled to close by year-end, including Cigna and Express Scripts, which was approved and finalized. The deal took conspicuously less time than CVS-Aetna, which is still stuck in legal purgatory (but looking to close soon), as some judge got offended when he felt like the companies were treating him like a “rubber stamp.” Seriously, lesson learned – don’t mess with judges. He’s still delaying the merger as of this writing.

Civitas Solutions bought for $17.75 a share

Around the public sector corner, Civitas Solutions (think home care type stuff) was bought out for $17.75 by private equity firm Centerbridge..a whopping 27% premium to its average 30 day share price and $1.4 billion transaction. Cha-CHING.

Cambia and BCBS North Carolina Link Up

Two large not for profit healthcare companies, Cambia (which could be described as something of a healthcare ‘conglomerate’) and Blue Cross Blue Shield of North Carolina (a health insurance company) are joining forces to create a $16 billion behemoth (yeah, look at that alliteration). The joint company, retaining the name Cambia, will cover over 6 million people. The merger is a bit interesting, considering most of the companies under the Blue Cross Blue Shield umbrella haven’t participated much in healthcare consolidation. Still, this merger is the latest culprit in the vertical integration trend.

Centene buys WellCare

Centene secured plans to purchase its main competitor, WellCare, in a $17.3 billion deal (a 32% premium to their share price). The merger comes at a time when mega-sized healthcare firms are joining forces pretty frequently (think CVS / Aetna, Cigna / Express Scripts, and a whole host of others). What’s different about these firms, though, is that they’ve made their killing mainly by managing Medicaid programs for states. Their businesses really took off under the Affordable Care Act, which allowed for the expansion of Medicaid, and thus, the expansion of Centene’s and WellCare’s businesses.

Not so fast.

Because this transaction is a huge ‘horizontal’ merger in a highly regulated area, this deal is highly likely to raise antitrust concerns. Also, as we just covered above, any existential threat to the ACA would probably REALLY hamstring any further growth available to the new company. If the deal does go through, look for these companies to leverage their size and aggressively target the Medicare Advantage market. Like we talked about in our February 11th 3rd story, Medicare Advantage is growing like a weed.

Baylor and Memorial Hermann Call Off Merger

Out of the not for profit sector, big news from Texas made headlines when the two largest health systems, Baylor Scott & White, and Memorial Hermann, called off their previously planned merger. While there was no official word why the two called it quits, Baylor announced that the organization believed it could achieve its healthcare objectives without the need for a state-wide merger. The canceled deal comes at a time when large health systems are consolidating more frequently at the state level, with increasing levels of regulatory scrutiny. Interestingly enough, the long-awaited Dignity Health and Catholic Health Initiatives merger finally closed. Say an official hello to CommonSpirit Health!

Story 5: The (However Slow) Push for Healthcare Price Transparency

Hospitals may be forced to disclose ACTUAL prices.

Buried deep in a 700-page report published last month (kinda sounds like the intro to an Indiana Jones film), HHS dropped a major proposal that would force physicians and hospitals to disclose publicly how much they get paid by insurers.

This proposal would expose the entire pricing negotiation between healthcare providers and insurers and potentially up-end the entire pricing system that the industry has grown so accustomed to. Right now, HHS is only requesting comments on the said proposal, but it shows the way that the current admin is thinking about changing the healthcare industry. Also, expect major lobbying efforts.

The Price is Right.

Note that this would be COMPLETELY different from the rule that went into effect at the beginning of 2019, where hospitals were required to disclose their chargemasters (which is the price they charge for procedures, not the price they’re paid from insurers). If this current proposal goes through in any form, everyone in the country would know every single healthcare provider’s negotiated rates of payment for all procedures.

Providers and insurers hold rates in extreme secrecy, so this is definitely something to keep an eye on. I know it’s just a comment period on a potential proposal, but this news doesn’t seem to be getting the type of attention I’d expect for something that would probably cause a massive landslide.

Read the WSJ feature article here (paywall), and expect future initiatives (however slow-moving) to continue around healthcare price transparency.

Honorable Mention: Quick Hits

Dialysis companies (DaVita, Fresenius) took a hit this quarter as HHS looks to revamp the kidney care industry. Specifically, HHS is pushing for a higher level of home care in the industry (instead of dialysis clinics).

FDA Commissioner Scott Gotlieb announced his resignation after tweeting a few months ago that he wasn’t “going anywhere.”

Biogen’s much-hyped Alzheimer’s drug failed in late-stage clinical trials in March. It’s bad news all-around – no more groundbreaking treatments for this debilitating disease are in their pipeline, and investors in the biotech giant were hammered as well. The drug seemed poised for potential success after a promising Phase II study, but that hope came crashing down when an independent firm concluded that it was no more effective than the placebo at preventing the development of a brain protein that eventually leads to Alzheimer’s.

Medicare and Medicaid committees are taking an alarming note of proposed DSH cuts currently pushed by Congress (we touched on this debate in our January 11th edition’s 5th story as well).

There are 2,000 rural hospitals nationwide, and, according to new data, about 430 of those are considered at risk of closing/bankruptcy in 43 different states. For our math majors out here (thanks for following a healthcare newsletter) that’s about a fifth of all rural hospitals, which is a pretty big deal.

About the Healthy Muse.

The Healthy Muse is a healthcare newsletter created for the purpose of simplifying healthcare news.

Every week, the Healthy Muse sends out a newsletter with the 5 biggest healthcare news stories from that week, along with other minor relevant news stories – those we call “Quick Hits.”

Please feel free to subscribe to the weekly newsletter here if you like the content: https://www.healthymuse.email/subscribe/

Thanks for reading!

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