Bill Gates has a new favorite book.
Top Weekly Healthcare Stories
M&A | Mednax
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.
- You should know (WSJ paywall): Starboard also recently took a small, but notable stake in CVS.
Digital Health | Innovation
Digital Assistant Notable Lands a Huge Deal with CommonSpirit, one of the Largest Health Systems in U.S.
Digital health voice 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.
M&A | Managed Care
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.
Trend Watch | Big Pharma
Cancer Drug Market Heats Up
Last week, I briefly touched on Merck’s acquisition of ArQule for $2.7 billion, but I missed Sanofi’s purchase for Synthorx for $2.5 billion. Side note: don’t you love the names of cancer drug developers?
- Here’s the story: cancer drugs are the hottest market in biotech right now, and Bloomberg wrote a great article to prove it (soft paywall).
The Bigger Picture.
As the oncology market reaches a projected $230 billion by 2024, other conditions and diseases, like psoriasis or multiple sclerosis, might be getting neglected.
There’s only so much time, money, and development resources available, after all. Drugmakers are making the easy business decision to go after a more lucrative market – possibly at the expense of other diseases.
- Read more from the WSJ: Big Drugmakers Push Deeper Into Cancer Treatment
I thought this was an awesome graphic illustrating the trend:
Image source: Source: Boston Consulting Group, EvaluatePharma, IQVIA, via Bloomberg
Policy Corner, week of December 16th
Legislation | Surprise Billing
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.
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.
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.
ACA | Supreme Court
SCOTUS Leaning Toward Insurers in Latest ACA Legal Battle
The ACA is back in the Supreme Court. This time, big insurance companies are accusing HHS of pulling a classic bait-and-switch.
Details.
The insurers claim that HHS promised to subsidize certain ACA plans if insurers entered that market. Unfortunately, Congress defunded this part of the ACA, and insurers weren’t paid. Cue insurance companies suing HHS for $12 billion.
Important: Remember to distinguish THIS case from the from the other ACA case, where the courts are assessing whether the ACA is still constitutional after Congress dropped its individual mandate clause at the end of 2017, which previously had required everyone to have insurance coverage or face a fine.
- Other ACA Updates: The latest government spending bill is expected to remove two of the ACA’s more controversial taxes – the medical device tax and the Cadillac tax. Also in the deal? Raising the tobacco age limit to 21.
CMS | Insanity
A White House Counseling Session
In what has been described as a “f******” soap opera (fill in the blank), White House officials have been mediating counseling sessions between HHS head Alex Azar and CMS head Seema Verma. Speaking of Ms. Verma, she’s had quite the week:
- Ironic Timing: Modern Healthcare named Seema Verma healthcare’s #1 most influential person in 2019.
- You should see yourself out: Joe Kennedy wants CMS Head Seema Verma to resign after reports surfaced that she had asked taxpayers to reimburse her for $47k related to stolen jewelry on a work trip. Charges were, of course, dropped for insufficient evidence.
- This story was allegedly leaked by HHS officials, which goes to show the relationship both sides have with one another if that turns out to be true.
From the WSJ, certain CMS employees are now accusing HHS of sexism. Quotes from the article:
- “We call the sixth floor the ‘tall white men’s club.’ …This is so much bigger than these little stories. HHS is no longer a safe environment.”
- HHS reps disagreed. “HHS is one of the most friendly places for women.”
Conclusion: I wouldn’t want to work there.
Policy | 2020 Election
Latest Healthcare Election News
From Politico: Andrew Yang’s six-step plan for healthcare. Hint: it doesn’t involve Medicare for All.
Drug Pricing: House Democrats passed Nancy Pelosi’s drug pricing bill. Even though it’s dead on arrival in the Senate, it shows how Democrats are thinking about drug pricing going into the 2020 election.
- Details of the bill: direct government negotiation of drug prices, strict inflation controls, and interestingly, expansion of Medicare to cover dental, vision, and hearing.
Vapers: Will the vaping demographic swing the 2020 election?
Divergence: Republicans and Democrats are far apart when it comes to healthcare. In my brief experience, healthcare views tend to get politicized pretty quickly, so this poll’s results make sense.
Quick Hits
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.
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