Happy Monday to everyone except the worst person in the world – the guy who stabbed someone over a chicken sandwich. Get it together, people. Sheesh.
(Was this forwarded to you? Check out our stories below, and subscribe to join the healthcare fun).
Say goodbye to mom-and-pop physical therapy, home health clinics. Consolidation is coming thanks to CMS’ 2020 final ruling
With the CMS final rulings and the implementation of PDGM, smaller home health, physical therapy, and behavioral health bottom lines are about to get hit even harder with looming reimbursement cuts.
Further Consolidation is all but guaranteed.
Just as we’ve seen before, reimbursement cuts will lead to HEAVY consolidation in these industries. Larger operators that aren’t as affected by reimbursement pressures will have a field day in snatching up struggling operators.
Big home health players will keep winning.
The growth potential for larger operators through M&A will be unprecedented as industries like home health and physical therapy consolidate. Just look at the stock prices of public home health operators – their valuations are arguably through the roof, with trading multiples several times higher than the industry average.
Physical Therapy gets the short end of the stick.
Physical therapists are especially upset with the latest ruling. Just look at their subreddit. And the APTA, the physical therapy trade organization, disclosed the following statement:
“APTA is extremely disappointed that the physician fee schedule final rule will cut physical therapist payment in 2021, with no rationale or response from CMS to thousands of letters opposing the cuts. These cuts are a dire threat to patient access and safe alternatives to pain.
CMS did listen to reason on the PTA modifier policy, adopting all of APTA’s recommended changes, which makes their inaction and lack of explanation on flawed payment cuts all the more confusing.”
A quick shout out to my boy Chase for the heads-up on this story. If you ever have a story you think is worth sharing, feel free to reply to this e-mail anytime.
Millennials will get Sicker and Die Sooner than Any Previous Generation.
A study from Blue Cross released this week pointed out what we millennials have known all along: we’re the worst-off generation as far as health concerns go. In fact, we have excessively higher levels for conditions like hypertension, cholesterol, and depression.
The future is…bleak?
If millennials don’t get healthier, their mortality rate could increase by 40% (!!) as compared to Gen X. These statistics could significantly affect economic growth in the U.S. – not to mention the healthcare costs millennials would have to face as they age into poorer health.
The FDA releases a report on what they think causes drug shortages
Getting to the bottom of what causes drug shortages.
The FDA released a report this week all about drug shortages: what they think causes them and potential solutions to the problem.
They analyzed 163 drugs over 4 years and found that drug companies didn’t respond to drug shortages in the “right” way that economists predicted in their models (go figure).
Open Market Failures.
Drugs that had shortages tended to be unattractive for drugmakers to produce. But the intriguing part from an economic perspective is the fact that other drugmakers didn’t try to enter the market and then raise the prices of those drugs.
Since shortages existed in these drugs, that SHOULD have been a really easy and relatively profitable thing to do. But it didn’t happen. Why?
Why?
Honestly, I don’t really think the FDA gives a straight answer or solution to the issue. Basically, they cited a “lack of incentives” to produce low margin drugs, regulatory headwinds, and a few other things that got in the way of producing supply for shortages.
Read the full report here.
Uber integrates with Cerner to allow patients to have easier transportation to appointments
Give the driver 5 stars. Millennials don’t tip, though (allegedly).
Last week, Uber Health and Cerner, the largest (I think?) electronic health records company announced their plans to integrate in order to give patients easier access to their appointments.
How it works.
It’s actually pretty cool and a neat partnership. Providers using Cerner will be able to schedule an Uber directly from Cerner’s portal for their patients. Once that happens, the Uber driver will receive that patient’s info so that they don’t pick up the wrong person.
The bigger picture.
People miss appointments all the time for a host of reasons, but now it looks like it’s going to be easier for those with transportation struggles to make their appointments and hopefully receive better care because of it.
Policy Corner, week of November 11, 2019. Medicare for all loses appeal, CMS 2020 final ruling roundup, Trump nominates Stephen Hahn as next FDA head
Medicare For All loses appeal in recent months.
Last week, we touched on how Warren’s and Sander’s Medicare for All plans were getting attacked by their fellow Democratic candidates (Biden, Buttigieg).
Now, Nancy Pelosi is joining on the fun – as it turns out, she’s not a big fan of Medicare for All, either.
Finally, Pete Buttigieg chimed in with his healthcare plan this week, calling it “Medicare for All who want it.” Creative.
At the state level.
What’s more telling is what’s happening in state elections.
Democratic incumbents are shying away (WSJ paywall) from Medicare for All rhetoric, which signals that they don’t think it’s a viable or popular policy to run for re-election on – OR, they don’t want to be associated with Warren/Sanders camps.
It makes sense – healthcare is such a huge employer in most every market. Would voters approve of a policy where their jobs might be at stake?
The risk might not be worth it when they have easy healthcare talking points to Democratic voters, like Medicaid expansion and keeping preexisting conditions.
Pelosi’s drug plan is getting ghosted by the White House.
The White House isn’t really on board with Pelosi’s drug plan, and is distancing itself from the policy. Maybe they have something better in mind. Like surprise billing, drug pricing is in complete gridlock.
Medicaid Work Requirements screech to a halt.
Kentucky, Indiana, New Hampshire, and Montana all are ending their Medicaid work requirements programs for various reasons. Indiana is pausing its program as another court case challenging its Medicaid program makes its way through the legal system.
Meanwhile, Kentucky’s new governor isn’t a fan of work requirements either. The night Beshear won (I guess that’s still up for debate though?), he promised to get rid of the policy.
Finally, Montana delayed its plans to enact work requirements on Jan. 1, along with New Hampshire, which found that less than a third of people under work requirements were in compliance with the program.
Proposed price transparency ruling from the Trump admin expected by the end of the year
While it wasn’t included in the final ruling for the Medicare physician fee schedule, ModernHealthcare reports that the Trump admin is still expected to release an updated proposed ruling on the ever-contentious price transparency policy. Stay tuned…
Trump Nominates Stephen Hahn to head FDA.
As we all expected, Trump nominated renowned cancer doctor Stephen Hahn for FDA commissioner
Quick Hits
Biz Hits
- Pennant’s home health debut: I completely forgot to tell you guys that the Pennant group, a new smaller home health company that spun off recently, debuted on the stock market last week.
- Walgreens going private? The retail giant is considering a sale to private equity.
- Johnson & Johnson’s Baby Powder woes: J&J announced a voluntary recall of a ‘single batch’ of its baby powder this week. Ironically, Reuters reported that J&J’s own legal expert, whom they have used to testify that their baby powder is safe, was working for the FDA in testing random baby powder samples and found trace levels of asbestos in J&J’s own baby powder.
Earnings roundup:
- Tenet’s volume surge: Tenet posted its 3rd consecutive quarter of volume growth.
- U.S. Physical Therapy’s bad quarter: U.S. Physical Therapy tanked after its 3rd quarter amid looming PDGM headwinds. Like I said, physical therapy is getting shafted.
- Medical Facilities cuts its unsustainable dividend: Medical Facilities cut its dividend to fund growth through acquisitions and faced the unfortunate wrath of income investors – they were down 27% after their quarterly conference call.
- Quorum faces major struggles: Quorum Health cut guidance in Q3 and saw its stock fall 37%. The hospital operator is facing declining revenues, growth, and revenue cycle issues.
- Hospital September performance: Here’s Kaufman Hall’s hospital flash report for September – it was kind of a mixed bag performance-wise. Would you guys be interested in a resources page where I aggregate/link out to all of these types of reports on one page? I’m thinking about it…
2 updates on Google Health:
- They’re focusing a lot of efforts on health and its core business, online search.
- They’re partnering with an AI voice startup, Suki.
State Hits
- Private equity: Does private equity have a role in driving up healthcare prices?
- California’s disapproved merger: In a really interesting development, California just rejected the St. Joseph-Adventist merger. Keep an eye on that development because it might point to a larger trend of states studying health system deals more closely.
- Georgia’s Limited Medicaid Expansion: After Utah tried to ‘partially’ expand Medicaid earlier this year, Georgia is trying to pull the same stunt by proposing a limited Medicaid expansion.
- Montana’s seasonal workers: What about seasonal workers when it comes to Medicaid work requirements? That’s the issue Montana is facing.
- New York’s idiotic surprise billing arbitration: As one of the states trying to find a solution to surprise billing, New York tried out 3rd party arbitration between providers and insurers to determine reimbursement for out of network ER bills. The catch? New York legislation wrote the bill so that arbitrators would use 80% of the CHARGED rate as the starting/reference point. As you can imagine, this is getting…expensive. Quick.
Other Hits
- Hope for cystic fibrosis: A new innovative cystic fibrosis therapy shows promising results.
- HDHP trend reversal? High deductible health plans might be losing appeal as employers try to expand benefits to attract workers.
- A working value based care model: I personally think that Intermountain Healthcare in Utah is doing a lot of interesting and innovative things in healthcare. Here’s a report from them on ways they think value based care can be implemented in an effective and tasteful way.
- Generic Drug lawsuits: A quick update on the generic drug price fixing lawsuits going on in the news lately:
- In the 44 state case going on, generic drug-makers just received a tight deadline by judge’s order. She wants to get the civil case going QUICK.
- The companies face a lawsuit brought by 44 states that alleges industry-wide coordination to inflate prices, divvy up markets, and block competition. Potentially huge damages are at stake for the generic drug industry.
- In other news, Humana is making its own headway into generic drug price fixing by suing 37 drug making companies for overcharging for commonly used drugs. They think that the companies secretly met and purposefully schemed to fix prices higher.
- Read the entire 610 page complaint here. Keep in mind that Humana filed a similar complaint last year.
- Maybe generic drugs shouldn’t be super cheap?
My favorite reads this week
- Blue light isn’t the main cause of eye fatigue and sleep loss.
- Ray Dalio’s latest: The world has gone mad and the system is broken.
Thanks for reading. Save yourself some time by subscribing to our all-in-one newsletter, bringing you the top healthcare news across 40+ reputable sources – once a week.