Catch up on everything healthcare and election 2020 with our Healthcare 2020 Election HUB
Here’s last week’s edition.
The Big Stuff.
Healthcare Stock pops and drops.
Community Health’s Resurgent Comeback.
Community Health Systems (CYH +40%) stock saw huge gains after it released its fourth quarter and full-year earnings report. Investors were pleased with the strong cash flow from operations and the successful divestiture plan for its small pack of struggling hospitals.
- Notable: Community Health Systems’ stock is up over 115% year-to-date, and it’s only February. Could this be the comeback story of the year in healthcare?
- Shrewd business maneuvering. In the past 2 years, 80% of hospitals that Community sold are either losing money, bankrupt, or closed.
UnitedHealth’s plans to end contracts with Mednax in 4 states.
On February 20, UnitedHealthcare announced its plans to end in-network contracts with Mednax in 4 states.
What does that mean?
Physicians employed by Mednax (anesthesiologists (pain medicine), neonatologists (NICU), and obstetricians) in Georgia, Arkansas, and North and South Carolina will no longer be covered by UnitedHealthcare’s health insurance plans in those states.
- Since a lot of Mednax physicians work in and contract with hospitals, that likely means MORE surprise medical bills for patients.
The impact to Mednax: Its stock dropped 25% over the two days following the announcement. Mednax said that the contracts represented about 2% of its revenues – which equates to about $70 – 80 million.
- Read more from Beckers here.
Nonprofit charity care study raises some eyebrows.
Expect increased scrutiny on hospital nonprofit status this year. A study released by the JAMA indicated that “for both insured and uninsured patients, nonprofit hospitals with superior financial performance provided disproportionately low levels of charity care.”
- A few caveats: Note that the study used Medicare cost report data, which is self-reported and unaudited. There can also be other factors that play into lower levels of charity care.
- If most of your hospitals are located in more affluent areas with more people on better insurance (not Medicare or Medicaid), you’re naturally going to make more money and have less charity care.
Health insurers begin competing with hospitals, physician practices on care.
- A very noteworthy trend: Insurers like UnitedHealthcare and Aetna (owned by CVS) are competing with traditional hospitals and physician practices by steering patients toward THEIR owned clinics. (WSJ)
Coronavirus update.
Here are the latest stories & numbers from Axios’ live coverage tracker. Infections were confirmed in Italy and South Korea, leading to a large decline in the S&P 500 Monday. Biotech stocks surged on promising vaccine developments.
- Let’s hope it doesn’t get worse.
Other things to know.
- Private equity medical practice takeovers more than doubled from 2013 to 2016 – in 2019, PE firms raised more money than ever before.
- Some employers are leaving insurers for riskier, less costly arrangements.
- Health systems are seeking out partners more than outright mergers as M&A regulatory scrutiny ramps up.
Digital Health
Top Innovation, Collaborations, and Tech Stories
- Amazon Care, the company’s virtual medical clinic, is now live for Seattle employees
Election 2020 – week of 2/24/2020: Bloomberg gets Bodied, Dems attack Trump on drug pricing, and highlights from the latest debate.
Plenty of action in this week’s election update. First off, Bloomberg apparently got destroyed in his debate debut (at least, according to Twitter).
- Apart from broad healthcare clashes on Medicare for All, the debate didn’t really focus on the topic much. Elizabeth Warren came in hot, claiming that Klobuchar’s healthcare plan was written on a post-it note, while Buttigieg’s was a PowerPoint.
Other debate highlights.
Bernie and Bloomberg – both 78 years old – claim to be heart healthy. But really none of the candidates want to share their health records with you in the first place.
- Should voters be concerned about the health of an elected official, especially ones that will enter their 80s during their first term? Share your thoughts with me.
Bernie takes Nevada.
Ahead of South Carolina’s primary on 2/29 and Super Tuesday on 3/3, Bernie earned another hard-fought victory in Nevada. Remember last week we saw many healthcare stocks – especially insurers – pop on that news? This Monday, all healthcare stocks dropped hard.
- Apart from the extreme market selloff, many believe that sentiment around healthcare companies is shifting as Bernie gains steam.
- That’s quite the contrast from a week ago – but generally, healthcare stocks underperform in an election year anyway.
Dem candidates attack Trump on Drug Pricing.
Several candidates pointed out Trump’s drug pricing policy roadblocks this week. Bloomberg, Bernie, and Klobuchar all have recently taken shots on failed policies, including the TV ad list pricing policy that was blocked in court.
While the candidates claim that nothing concrete has passed regarding drug pricing, he actually shares some similar ideas to many of them – namely, cheaper drug importation from places like Canada, and tying drug costs in the U.S. to a basket of developed countries that pay much lower prices.
- Other Trump drug accomplishments: The administration implemented a faster FDA process to get generic drugs to market quicker.
- Trump also signed a bill that removed pharmacist gag clauses – pharmacists can now tell patients at the counter whether an alternative drug would be cheaper to pay out-of-pocket.
You should know: Democrats passed a drug pricing bill in the House late in 2019.
- The main conflict between Republicans and Democrats on drug pricing: Democrats are fine with the government directly negotiating with drug companies on prices for both public and private markets. Republicans are against this expansion of government authority.
Read more on direct negotiation:
- 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.
The big picture: The main issues in healthcare right now – and, by extension, the 2020 election – really boil down to three key points: costs (Medicare for All/Public Option/Medicaid reform), drug pricing, and surprise billing.
Policy Corner, week of 2/24
Policy stuff to know this week:
- How the drug lobby lost its mojo in Washington. (WSJ)
- The FDA is changing its classification of insulin to get more production of the critical diabetic drug.
- CMS is considering extending its hip and knee replacement model for another 3 years.
Quick Hits
Biz Hits
- Amedisys’ CEO thinks that we’re already seeing signs of disruption in the home health industry, led by recent changes in its reimbursement model.
- Atrium Health becomes the second health system in a month to switch from Cerner to Epic’s electronic health records platform.
- CommonSpirit Health, the largest nonprofit health system in the U.S., posted its first operating profit since the merger between Dignity and CHI.
State Hits
- Unable to find a buyer, West Virginia’s hospital plans to close.
- As Colorado is finding out, there are loopholes in the insulin price cap the state imposed in 2019.
Other Hits
- Read Warren Buffet’s annual letter if you haven’t already. One of the few yearly must-reads.
- A record 19 rural hospitals closed in 2019.
Thought-Provoking Editorials
- Guys, this is long. But it completely contradicts traditional thinking on healthcare costs: Why conventional wisdom on healthcare is wrong. If that post is too long for you, there’s a summary of it on Healthcare Economist.
- Could direct-to-consumer primary care create a ‘caste system’ in healthcare? (Jezebel)
- Why are nonprofit hospitals so highly profitable? (NY Times)
- The House Democrats’ capitulation on surprise billing proves they’ll never pass Medicare for All. (The Apothecary)
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