Plenty of healthcare stories this week. Here’s what we’re reading to keep you up to date with the current healthcare news.

EKG, Other Heart Health Features Come to Apple Watch  (Seattle Times)

TL;DR

• Apple released anew update for its Apple Watch, which finally enables the long-awaited ECG feature.
• Noteworthy: the FDA approved and cleared the device for both the atrial-fibrillation-detecting algorithm, as well as the ECG monitor itself.

MUSE

• This clearance is pretty groundbreaking, considering it’s the first device of its kind.
• Hmm…is Apple slowly turning into a medical device company?

U.S. healthcare spending stabilizes at 17.9% of GDP (Healthcare Economist)

TL;DR

• Total healthcare spending grew by 3.9% from 2016 to 2017.
• This rate was below the annual growth for U.S. GDP.
• The decrease in the increase in spending (confusing, I know) was largely attributable to lower utilization. That is, less people went to the doctor, or received scans, or paid for prescriptions.
• Noteworthy: According to the report, hospitals and physician services amounted to about 59%of total healthcare spending.

MUSE

• Furthermore, since utilization decelerated, we should have seen a bigger impact to healthcare spending’s total spend versus total GDP. Considering GDP grew at a relatively high rate this year (compared to recent memory), it feels like we actually should have seen that number fall.
• As growth is expected to slow and health costs are a white-hot issue, where will total healthcare spending go from here?

READ MORE: Growth in U.S. Healthcare Spending Slows (WSJ)

Millions of Americans Could Face Surprise Emergency Room Bills in January (Bloomberg)

TL;DR

• In case you missed it, there’s some MAJOR beef going on between United Healthcare and Envision this year
• Envision ER doctors are currently under contract with United for ER services, but this contract expires at year end
• The two sides have been at an impasse essentially all year on prices that Envision allegedly charges for ER services
  • United blames Envision for price gouging-esque practices
  • Envision blames United for leaving gaps in their coverage that causes patients to have exposure to higher ER costs
• Both sides are still working toward finding a solution, but it seems more and more likely that patients will be the ones losing when Envision ER docs go out of network starting Jan 1

MUSE

• This kind of dispute is pretty unfortunate for the end consumer…in this case, the patient
• Why? Well…no one can really control when a medical emergency happens, right?
• We’re not talking about small dollars here. United made up about 13% of Envision’s annual revenue, which is why this issue seems to be pretty contentious

Lack of provider competition raising healthcare prices, Center for American Progress argues (Healthcare Dive)

TL;DR

• As a continuation of the New York Times article, the Center for American Progress argues that less competition in healthcare likewise results in higher prices.
• To summarize, the paper claims that less competition results in “fewer patient choice”and does not lower price
• CAP calls for a higher level of regulatory scrutiny over these deals, including:
  • Increasing the level of competition nationwide
  • Less ability to merge both vertically (think CVS/Aetna) and horizontally (think CHI/Dignity)
  • Greater transparency on prices, quality, and utilization (keep dreaming)

MUSE

• Health system mergers are going to continue to happen (see Baylor/Memorial Hermann and CHI/Dignity), unless states suddenly decide these deals are worth looking into
  • Take, for instance,last week’s top reads’ report on the merger between Beth Israel and Lahey Health
    • The deal was approved after both sides agreed to cap prices at 3%, along with a few other stipulations
    • This is just one example of ways states are putting their stamp of approval on health system mega-mergers
    • Look for this consolidation trend to continue in 2019 as hospitals continue to struggle
• Axios has a great article on the effects of “Bigness” or the”Curse of Bigness” for any company

READ MORE:

• Reforming America’s Healthcare System Through Choice and Competition

New York Threatens to Block $69 Billion CVS-Aetna Merger (NYPost)

TL;DR

• The CVS-Aetna merger was all but cleared, but now New York (what’s new) is asking for a few more things from the giants
  • New York wants CVS to guarantee that it won’t raise premiums and agree to other pharmacy benefit management regulations

MUSE

• New York is clearly pretty concerned about the vertically integrated merger, stating that Aetna was a clear cut competitor to CVS’ pharmaceutical business in a very large New York market
• The deal should still go through no problem, but CVS won’t come out unscathed
• Still, overall,it’s probably a win for CVS
• Keep track of what changes CVS makes to its stores with its new-found healthcare market presence

READ MORE:

• CVS To Return 100% of Drug Rebates Under New PBM Price Model
• Check Out This New Move By CVS

Sectors In the News:

Hospitals: HHS Finally Finalizes 340B Drug Pricing Rule

• HHS Finalizes Long-Awaited 340B Drug Price Rule

Skilled Nursing: More Stringent Requirements for Nursing Homes

• Medicare Cuts Payments To Nursing Homes Whose Patients Keep Ending Up In Hospital (KHN)
• Feds Order More Weekend Inspections Of Nursing Homes To Catch Understaffing (KHN)
• CMS Implements Stricter Nursing Home Staffing Survey Rules for States (SkilledNursing News)

Biotech: Under Pressure?

• Drug Maker Actelion Pharmaceuticals Pays $360 Million to Settle Investigation Into Charity Kickbacks
• 4 things you need to know about the administration’s latest Part B proposal (PHRMA)
• Top Biotech Lobbyist: Industry Under ‘Greater Threat’ Than Ever Before
• Bipartisan Senators Introduce New Drug Pricing Bill

What Else We’re Reading

• Great read about money and capital markets, and when market paradigms shift.
  • When Things Stop Working (Of Dollars and Data)

• Uh-oh. Here goes the bubble talk again.
  • Top private equity exec warns of credit “bubble”

• An uplifting tale of forgiven medical debt.
  • 2 New Yorkers Erased $1.5 million in Medical Debt for Hundreds of Strangers (NYTimes)

• Competition spurs innovation, lowers costs, and ultimately benefits the consumer. Who knew?
  • Bracing for Amazon, Walgreens Launches Next-Day Drug Delivery with FedEx (Forbes)
  • Fitch: Hospital Profits Slide as Threats Emerge from Amazon to CVS (Forbes)

• Some resources for anyone interested in hospitals
  • Community Health Systems Presents at Bank of America Merrill Lynch Leveraged Finance Conference – Slideshow

• An interestingread. It’s a somewhat similar situation to United and Envision, except at thestate level
  • A messy divorce: UPMC and Highmark leave patients out (Pittsburgh Gazette)

• An important trend to follow that could turn into something more substantial, and even increase competition, if CON laws are repealed or relaxed (there ya go, CAP and HHS?)
  • White House Urges States to Repeal CON Laws (Modern Healthcare)

• The difference between a Private Equity healthcare transaction going well, versus poorly, is outlined in this read. Why healthcare is different for PE
  • Why Regulatory Due Diligence is Essential in Healthcare PE Transactions