The Big Stuff
this week’s top healthcare news
market update: healthcare vs. the S&P 500
- Broad healthcare (XLV) is probably outperforming the S&P 500 because of biotech. Shout out all of the big pharma firms looking for a vaccine – hope you find one – or an effective treatment – soon!
ER Staffing and ASC firm Envision considering bankruptcy.
Per Bloomberg, Envision Healthcare is considering a bankruptcy filing. The firm with over 25,000 staffed physicians is backed by private equity giants like KKR and has a lot of debt.
As you could probably deduce from HCA’s Q1 earnings call, emergency room visit volume is down QUITE a bit for them (50%), so it’s probably down similarly nationwide.
- Less ER volume and suspension of elective procedures at ASCs = less revenue = less ability to repay large debt pool = Chapter 11 bankruptcy.
Health insurers win big in court over ACA case.
The Supreme Court ruled in favor of health insurers today, compelling the federal government to pay large insurers like Blue Cross, Centene, Humana, and others about $12 billion related to risk corridor underpayments. (Read more: what’s a risk corridor?)
What was the case about?
The federal government wanted to incentivize health insurance companies to enter state ACA exchanges. So in order to make that happen, the Feds told insurers that the government would subsidize losses if the plans ended were more costly than expected (AKA, risk sharing).
- As it turns out…this is exactly what happened. The ACA plans were pretty unprofitable. No problem though, right? The federal government said that they would step in and cover these losses. Except they didn’t.
Then Congress took it once step further by fully repealing the federal government’s obligation to repay health insurers altogether under this so-called risk corridor program.
- The Supreme Court compared this sly maneuver to a ‘bait and switch’ and, in an 8-1 ruling, confirmed that the U.S. was legally obligated to pay health insurers the money.
The WSJ has a good write-up on the case. Read it here. (Paywall)
What about that other ACA case?
- Oh, you mean the third challenge to whether the ACA is legal at all? It’s slated for late 2020/2021. Look for it as soon as October.
What pandemic? Amedisys buys AseraCare.
- Amedisys is acquiring AseraCare Hospice, a 14 state operator, for $235 million.
Coronavirus need-to-know’s.
- As of this writing: 993,852 infected in the U.S. and 56,009 deaths (Live Tracker) (Global Tracker). The CDC just updated COVID-19’s list of possible symptoms with 6 more ailments.
- Certain states like Georgia and Tennessee are easing coronavirus restrictions, opening up restaurants and retail stores – and notably for healthcare, elective procedures.
- Testing, a crucial component of re-opening, is increasing. Slowly.
- Antibody testing in places like New York indicate that a lot more people have had the coronavirus than previously thought (which implies a lower death rate).
- Hydroxychloroquine probably doesn’t work. Remdesivir, an antiviral drug made by pharma giant Gilead, might work? Here are some other drugs and treatments that could help, too. And what about a common heartburn drug?
- The WHO is warning that the pandemic is far from over and causing shortages in OTHER vaccines.
- New York state’s health department is mapping the coronavirus genome.
- There’s no end in sight to coronavirus-related stimulus spending.
- Despite allegations that HHS secretary Alex Azar was getting the boot, Trump says Azar is staying.
- A $46.5 billion plan pitched for COVID-19 tracing – with primary care physicians at the center of it.
- A detailed guide for state and local governments to consult before re-opening anything.
Anotha stimulus.
$484 billion more in stimulus money is headed the economy’s way. Trump signed the bill, deemed Stimulus Phase 3.5, into law on Friday, April 24th.
- Don’t talk to me about the U.S. deficit or our future – I’ve heard enough hot takes.
Healthcare bailout $$$ distribution.
The latest round of stimulus funding includes $75 billion more in healthcare bailout money, which brings total funding to $175 billion. Here’s where all the funding has gone so far:
- Phase 1: $30 billion to hospitals based on historical Medicare fee-for-service revenue
- Phase 2: $20 billion to hospitals based on 2018 total net patient revenue. $10 billion for pandemic hot spots, $10 billion for rural health providers, and $400 million for the Indian Health Services
- Yet to be distributed: $105(ish) billion. Most of this pool is probably going to be used to cover reimbursement for uninsured COVID-19 patients.
With this new $75 billion increase in bailout money, CMS is now suspending its accelerated payment program to providers.
- On another interesting note, rural hospitals are now eligible for small business loans after worries of being ‘crowded out’ of bailout funding.
- More: Which hospitals have received bailout funds, and how much? Also, some of the CARES act funding went to closed hospitals, according to ModernHealthcare.
Quick Hits
Biz Hits
- Meditation is a billion dollar business.
- U.S. Physical Therapy released a statement detailing how its business has been impacted by COVID. Long story short – visit volumes cut in half, revenue down, dividend suspended, and its credit line is maxed out.
- About half of physicians are now using telehealth, up from 18% of physicians in 2018.
- Kaufman Hall’s April hospital flash report shows severely impacted profit margins. Median operating margins dropped 12%.
- With the impending Envision bankruptcy and stories like this one (paywall), where Steward Health apparently strong-armed the state of Pennsylvania into a bailout, private equity investments in healthcare may soon be put on the hot seat.
Other Hits
- Inside the dystopian, post-lockdown world of Wuhan. (Bloomberg)
- Top Google searches during COVID-19. (Axios)
- Google released its healthcare API amid the pandemic. (ModernHealthcare)
- People are filling more prescriptions by mail amid the coronavirus crisis. (Axios)
- The secret group of scientists and billionaires pushing a Manhattan project for Covid-19. (WSJ)
- Learning more about Apple and Google’s digital contract tracing app – a deeper dive. (Forbes)
Thought-Provoking Editorials
- The ongoing crisis calls for a special federal enrollment period for ACA plans. (ModernHealthcare)
- Would you sacrifice your privacy to get out of quarantine? (The Atlantic)
- We don’t know #&@%# (Managed Care Matters)
Thanks for reading. I’m out. @B_Madden4
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