5 BIG THINGS
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Major Beef Settled
Envision and United have settled their beef (for now, anyway). They agreed to extend their contract after a high-school-level blame game fight. All of Envision’s ER docs will now retain in-network status with United (phew, for the patients). ER billing has been quite the contentious issue, and this squabble was at the forefront of the problem of “surprise billing.”
Rest assured this isn’t the only payor fight going on, either…so maybe, just maybe, this is part of a larger issue going on between payors and providers. Just look at Cigna and Tenet in Memphis, UPMC and Highmark in Pittsburgh, or Molina Healthcare and Golden Shore in California. The one that probably stands to lose the most among all these conflicts? The patient.
Drugs, Drugs, Drugs
Drug costs and Big Pharma’s pricing practices have been pressing issues in the current administration, even gaining potential bipartisan support. Several high profile news sites have been covering drugs quite heavily this year. Take for instance, this NY Times article highlighting the issues and perceived conflicts of interest that tie doctors to the pharmaceutical industry in seemingly shady, and un-reported, ways.
Nobody really knows the true reason why drug prices are so high in the U.S. compared to other countries. Many blame Pharmacy Benefit Managers (think CVS, Express Scripts, Walgreens). Others just blame the system in general. WaPo thinks there’s a big conspiracy, or… cartel, rather. The NY Times also weighed in this week, giving experts a chance to voice their thoughts on ways to cut down on a cost that every American faces.
Look for this trend to continue in 2019, as even top Big Pharma lobbyists are concerned with how much pressure drug companies are facing from Capitol Hill.
A Rare Hospital IPO Sighting
Ardent Health Services has filed for an IPO. In a healthcare market that currently doesn’t appear to be very friendly toward hospitals, they’re planning to raise about $100 million to pay off some debt. The system is pretty big, bringing in about $3 billion in revenue (chump change, right), but facing a debt burden of almost $1.3 billion. Sheesh.
Read more about it HERE
A Scalding Hot Private Equity Market
It seems like we get a mega-merger a month these days, and December is no exception.
Announced yesterday (12.13), FastMed and NextCare, two large urgent care operators, are merging. The deal will create a multi-state, 250+ urgent care location behemoth. Is this a potential defensive response to CVS / Aetna, or are private equity groups just trying to roll up the urgent care / primary care industry? This was a PE driven deal between BlueMountain Capital Management and Abry Partners.
One-upping the previous deal, BrightSpring, a highly diversified home health/hospice/community care giant, is merging with PharMerica, a pharmaceutical company that specializes in serving the post acute space. Both are backed by KKR, which is a huge private equity conglomerate.
It’s the latest merger in the vertical integration space (see CVS/Aetna, and Cigna/Express Scripts). It’s worth noting that PE groups are gobbling up home-based care assets like they’re candy (see the Humana/Kindred deal).
If you’re interested, we’ve covered important private equity trends in the physician practice space, too.
Political Arena…Seriously
Open enrollment, or sign-ups, for Obamacare end tomorrow (12.15) and it sure looks like they’re gonna fall well short of last year’s sign-ups, by about 20%. The Trump administration received some shade this week, since it sure looked like they altered the website to attract consumers to other private plans rather than Obamacare. The irony behind it all is the fact that since the administration slashed payments to Obamacare, the number of people capable of being insured through financial assistance actually increased to 4.2 million. The reason? Insurers raised premiums in response to the move. When premiums rise, the bill mandates that financial assistance actually rises, too.
Overall, the insurance market has been pretty stable lately. Premiums haven’t really risen, but the reason for this could be that insurers are implementing a narrow network strategy with Obamacare. Other hot topics surrounding the administration included the move toward requiring proof of work before receiving eligibility for Medicaid, and the ever-present buzzword of “Medicare for All.”
Honorable Mentions
Other great healthcare reads from the week:
Warning: an extremely long, but good, read about the profile of the man who was hired to head the healthcare startup spearheaded by JP Morgan, Amazon, and Berkshire Hathaway.
An informative read on the use of AI in healthcare decision making, and comparing AI to physicians.
Less focused on the stocks, more focused on the trends Motley Fool thinks will take place in the healthcare sector.
Another great data point from the CommonWealth Fund.
An interesting way that innovation is creeping its way into healthcare
Something to monitor as healthcare consolidation continues.
Kind of a freak story about electronic health records. You’d better make sure nobody gets anything wrong…
The Healthcare Blog raises a perspective of the perceived market power that employers could have, if used properly.
Are health IT valuations out of whack?
The Chinese CRISPR baby is…uhh…sketchy.
An update from nonprofit friends up north. Hint: they’re doing pretty well.
KHN dives into a story on varying healthcare costs and what causes the differences in breast implants.
Modern Healthcare highlights an orthopedic group moving quickly toward Total Joint procedures in an outpatient setting.
Amazon’s movement into the EHR biz
Feel-good story about technology saving a person’s life by detecting an irregular heartbeat.
Are ACOs the way to go?
Memorial Care and RadNet are makin’ moves.
Some pretty good highlights as to what politicians may be focused on in the healthcare space come 2019.
A pretty creepy story out of Dallas. The Death Doctor gets a well deserved punishment.
What Else We’re Reading
Ah, Bill. I love his reading list.
Is a 3% checking account too good to be true? Probably.
Stop freaking out about a recession, people.
A lot of great investment reading recommendations from a blogger I enjoy.
For those of you who are so “corporate.”
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