Last week, I wrote about three predictions for healthcare regardless of next week’s the election results:
- States will be the epicenter for healthcare legislation and regulation; federal initiatives will be substantially fewer.
- Large employers will take direct action to control their health costs.
- Private equity and strategic investors will capitalize on healthcare market conditions.
As these play out, eight major issues will get attention vis a vis stop-gap measures reflecting regulator and elected officials’ responsiveness to industry pressure and voter sentiment:
- Generative AI use in Care Management: The tidal wave of attention given AI in healthcare will result in stop-gap regulations in states that disallow AI-derived clinical directives from unseating physicians as arbiters of clinical decision-making. Review panels of physicians and scientists will be mandated as insurers apply their proprietary AI-derived algorithms to authorizations and denials. The FDA will issue guidance for adaptive clinical trials in which AI-analytics is applied. And limited consumer access to GenAI clinical directives that might enable self-care will be authorized despite pushback from providers and insurers who fear litigation. These stop-gaps will expedite wider use of generative AI in care management and surface expected (necessary) court challenges.
- Private Equity Ownership: The health system is increasingly dependent on the infusion of private capital to fund innovations in care delivery and financing. The private equity model will play a growing role despite lawmaker concern (and objective data) it will raise prices and reduce consumer choices. In 2025, PE funds will have more money to invest even as valuations of investment targets shrink. PE will be a major player in US healthcare’s future: the most likely stop-gaps will evolve from heightened federal and state regulatory scrutiny of PE-sponsored combinations including wider disclosure of deal terms, claw-back provisions, estimates of consumer price and workforce wage impacts and GP compensation terms and conditions among others. Changes to IRS’ carried interest treatment of PE-GP earnings are unlikely but additional protections for LPs are near certain in 2025.
- Physician Compensation: Only 1 in 5 physicians now operates independent of hospital, private equity or large medical group employment. Physician employment offers policymakers a vehicle whereby clinical competence and cost-effectiveness may be rewarded without crossing corporate practice, private inurement and ‘reasonable and customary’ guardrails. Lawmakers are sympathetic to physician compensation issues in primary, preventive, behavioral and non-surgical specialties where practice expenses have increased faster than their income. The immediate stop-gap will be a delay in CMS’ proposed 2025 reimbursement cuts as an element of a continuing resolution in authorized by Congress in December to keep the federal government afloat but a long-term fix is unlikely.
- Not-for-Profit Health System Tax Exemptions: Prompted by 1-their active participation in For-Profit venture funding and development, 2-growing attention to community benefits’ variability (Schedule H, Form 990) and 3-heightened sensitivity to not-for-profit hospital executive compensation, the 2025 stop-gaps will include a comprehensive review of community benefits and charity care reporting accuracy and appropriateness. Though federal regulations or legislation is unlikely in 2025, states will move forward with modifications awaiting federal direction vis a vis state commissions, studies and hearings. The spotlight will shine brightly on not-for-profit health systems in 2025 with regulatory changes likely to follow in 2026 and after.
- Price Transparency: Price transparency laws and executive orders requiring price transparency for hospitals, prescription drugs and health insurers have been implemented federally since 2021 alongside state-level efforts. While popular with voters and intuitively logical, price transparency has not reduced health spending overall nor reduced out-of-pocket prices for consumers. The likely stop-gaps in 2025 will be sponsorship of research to transition regulatory policies from price awareness to price-driven purchasing across a variety of settings and circumstances. In tandem, regulators will pilot targeted price controls for specified encounters to assess the upstream and downstream impact on prices, competition and aggregate spending. Price transparency is a means to an end, but that end has not been reached despite efforts to date.
- Workforce Modernization: States control credentialling and licensing in most health professions: most defer to medical societies and vendors to adjudicate these responsibilities. Nonetheless, shortages in critical roles persist and solutions that integrate technologies for training, self-care and more are under-utilized. The Congressional Commission on Healthcare Workforce Modernization will be created in 2025 to recommend substantive changes to workforce issues that are forward looking, comprehensive and cost-effective. That’s the 2025 stop-gap. It will apply models that are not embraced widely in the industry’s approaches to sourcing, equipping and optimizing the effectiveness of its workforce i.e. use of AI in self-care and clinical decision support, changes in incentives, expanded scope of practice opportunities, funding for practice modernization and more. Title V of the Affordable Care Act called for modernization of the healthcare workforce: it was never implemented.
- Medicare Advantage: On the heals of repeated complaints from hospitals that MA plans have unreasonably elevated denial rates and evidence that corporate insurers (like UHG, Humana et al) have used aggressive upcoding to pad their earnings, it is probable that CMS will codify new rules around coverage, denials, marketing practices (including advertising, broker fees et al) and supplemental benefits. These stop-gap measures have broad support and allow the agency to demonstrate its willingness to challenge insurers.
- Public Health Funding: Health policymakers and industry insiders know that food and housing security, clean air and adequate income correlate to better health and lower societal health costs. But outsiders—employers, educators, community leaders, elected officials—don’t understand the correlation nor are they inclined to study it in depth. Since the majority of public health funding/control rests in state and local government, stop-gaps measures will be taken that enable increased funding i.e. provider taxes, health system co-management, digital home care and many others. The stop-gap will be a national outreach by the public health community to lawmakers to enable increased integration between community health agencies and local hospitals and medical groups. The contrast between “health and social services” system vs. the “health or human services” models will be a central theme of the campaign. The need for higher funding for public health programs at every level of government is a campaign that will begin in earnest in 2025.
The context and timing for stop-gap implementations are impacted by two important realities:
- Court decisions may alter strategies and tactics: Court challenges to stop-gaps are likely as aggrieved parties seek to negate, modify or slow stop-gap measures through litigation. Recent examples: SCOTUS’ Chevron ruling (Looper Bright) that undermines the authority of government health agency directives, and cases pending that challenge the constitutionality of qui tam provisions and modify whistleblower provisions in false claims cases.
- Executive Branch priorities may change in a new administration: Using agency directives, administrative and executive orders and its array of levers, the 47th President and his cabinet enjoy strong authority to modify the trajectory and focus of U.S. healthcare. Every dimension in healthcare—innovation, safety, quality, consolidation, competition, spending, AI and more—falls within the scope of its delegated powers.
These issues are not new to healthcare: they’ve prompted endless symposia, sponsored white papers and discussion by trade associations, special interests and think tanks offering solutions beneficial to preserving their view of what’s needed. What’s new is the public’s distaste for the status quo in healthcare: in every major poll conducted since the pandemic, trust and confidence in the health system has been low and majorities have said the status quo is unsatisfactory.
Thus, stop-gap measures serve two purposes: they enable elected officials and government agency personnel to demonstrate responsiveness to important issues and they provide foundations for additional rules, laws and actions downstream. They’re a start.
Paul
Resources
U.S. Healthcare in 2025 and Beyond: Three Major Predictions, The Keckley Report October 21, 2024 www.paulkeckley.com
Sections in Today’s Report
- Quotables
- Care Management
- Consumers
- Corporate Announcements
- Courts
- Employers
- Health Economy
- Hospitals
- Insurers
- Polling
- Public Health
- Strategy and Governance
Quotables
Re: the role of middlemen in the U.S. system: “The U.S. health care system, by and large, does not regulate the prices providers charge in the commercial market, nor oversee private insurer claims decisions, particularly denials. Combined with the accelerating corporatization of health care delivery, this regulatory vacuum has fostered an ever-growing market for intermediary businesses to help clinicians navigate the processes of filing claims and maximizing reimbursements. At the same time, insurers increasingly contract with intermediary businesses in an effort to manage utilization and up their own margins. These competing “profit-enhancing middlemen” are likely increasing costs for consumers and spending in the private sector health system as a whole.
These for-profit businesses charge overhead fees or percentages on the services they provide, which can generate tremendous profits when compounded over billions of claims and payments. While some of these middlemen receive much public attention, such as pharmacy benefit managers (PBMs) and third-party administrators (TPAs), this article focuses on three other lesser known but equally concerning profit-enhancing industries: revenue cycle management, claims management, and claims repricing…”
The Incursion of Profit-Enhancing Middlemen in US Health Care | Health Affairs
Re: global impact of GLP-1’s: “Every day seems to bring more exciting news. First the drugs tackled diabetes. Then, with just an injection a week, they took on obesity. Now they are being found to treat cardiovascular and kidney disease, and are being tested for Alzheimer’s and addiction. It is early days yet, but glp-1 receptor agonists have all the makings of one of the most successful classes of drugs in history. As they become cheaper and easier to use, they promise to dramatically improve the lives of more than a billion people—with profound consequences for industry, the economy and society.
Rather as the contraceptive pill encouraged women to stay in education and work, so glp-1 drugs could lead to profound economic and social change by enhancing productivity and freedom. Some business models could be upended. If craving can be controlled, junk-food companies, advertisers and even drug-dealers may shift their focus from quantity to quality. Social mores could evolve. In the West thinness is prized as the ideal of beauty, because for so many it is hard-won, whereas obese people suffer discrimination and lower wages. If being thin is easier, that may change. Obesity and addiction may less often be seen as moral failings, but as illnesses that can be treated. The glp-1 revolution is just beginning. Its promise is tantalizing. “
It’s not just obesity. Drugs like Ozempic will change the world
Re: innovation funding: “So, if the venture-funded digital health upstarts are no longer changing the world, and the big retailers and Optum aren’t setting the world alight, who is taking the upper hand? Well, I expect that intermingled with the ex-pop stars and amazingly beautiful actresses on stage this week (sorry, but I love Halle Berry!), we’ll see a rash of big incumbent non- & for-profit systems. Look at their numbers. Procedures are heading up. ERs are filling up. Operations are profitable or in some cases, very profitable, corporate jets are being bought, and “reserves” –AKA hedge funds–are growing well due to being stuffed full of Nvidia stock.
All of which leads me to believe that sadly HLTH isn’t about the future of health as much as it’s a retread of its past. Still, I’ll catch you at the parties if you’re there….”
The big guys can’t do HLTH right – The Health Care Blog
Re: PBMs: “Executives from healthcare organizations as varied as Amazon’s online pharmacy, retailer Walgreens, insurer Blue Shield of California and drugmaker lobby PhRMA called for an end to the pharmacy benefit manager model during HLTH 2024, saying the middleman structure misaligns incentives and drives up costs of drugs.
The executives are the latest to pile criticism onto PBMs, middlemen in the pharmaceutical supply chain that negotiate drug prices with manufacturers on behalf of insurers and employers and reimburse pharmacies for dispensing prescriptions.
PBMs argue they play a necessary role in the healthcare ecosystem and lower drug costs for their clients. However, pharmacists, insurers, lawmakers and researchers have lined up to refute that narrative, arguing the companies contribute to rising drug costs.
The Federal Trade Commission released a scathing report slamming the industry in July and sued the nation’s three largest PBMs — CVS’ Caremark, Cigna’s Express Scripts and UnitedHealth’s Optum Rx — last month for anticompetitive business practices that artificially inflated the price of insulin drugs. The agency accused the PBMs of steering patients to their own pharmacies and favoring more expensive brand-name drugs on their formularies, or list of covered drugs, resulting in higher rebates from drugmakers. “
PBM model is a ‘dead man walking.’ What comes next? | Healthcare Dive
Re: Long-term role of GLP-1 drugs: “IN THE HISTORY of medicine, a few drugs tower above all others. Humira for rheumatoid arthritis; Prozac for depression; statins to prevent heart disease and strokes. All have helped patients far beyond doctors’ initial expectations and continue to benefit millions of people every day. A new class of drugs is set to join their ranks and has the potential to eclipse them all—GLP-1 receptor agonists.
These drugs mimic the action of a naturally occurring hormone, glucagon-like peptide (GLP-1), and for decades have been used to treat diabetes. More recently they have become a wildly popular way for people to lose weight. But in March semaglutide (a GLP-1 receptor agonist sold as Ozempic for diabetes and Wegovy for weight-loss) was approved in America for cardiovascular disease in overweight people. In April tirzepatide (sold as Mounjaro and Zepbound) showed positive results in late-stage trials for sleep apnoea, a breathing disorder. In other trials it seems to reduce chronic kidney disease.
This is just the start. GLP-1 agonists are also being tested for everything from liver disease to substance-use disorders and addiction. One firm is even considering trials for those at risk of obesity—as preventive medications….
Drug companies are racing to find, test and market new versions and uses for these drugs…
The reduction of inflammation is the common thread that explains why patients taking GLP-1 agonists for diabetes or obesity also report improvements in other conditions, such as arthritis, ulcerative colitis or post-covid brain fog.
Cost looms large in any discussion about these drugs, as well as the need to take them for a lifetime. Both concerns are likely to prove temporary…
It is still unknown if patients will need to remain on these medicines for the long term, and at what cost and benefit. (The risks of long-term use in patients who are not diabetic, for example, are not fully understood.) So, estimates of how much they will be used remain guesswork. Moreover, their prophylactic uses could save money years into the future from the prevention or amelioration of long-term conditions. But that benefit is hard to quantify, and existing budgets for prevention are a tiny fraction of what is available for the treatment of existing conditions. Public-health systems are likely to be very slow to adopt the drugs as preventive treatments.”
The arrival of GLP-1 drugs has also shifted the way in which obesity is viewed: no longer as a disease of failing willpower but as a lifelong chronic condition from which the body never truly escapes. But diabetes and obesity have been just the start. Few drugs, if any, have promised to have such a revolutionary impact on human health, longevity and happiness. “
GLP-1s like Ozempic are among the most important drug breakthroughs ever
Care Management
Comparative cost effectiveness: Study: Bariatric surgery vs. GLP-1 drugs: Northwestern University researchers found:
Relative cost: Annual GLP-1 cost $11,628 vs. one-time surgical cost $18,581 USD. Combining surgery and GLP-1s yielded average savings of about $7,200 a year and five more quality-adjusted life years, compared with surgery alone. But the one-time surgery has more up-front expense, costing between $17,400 and $22,850. That’s compared with the average annual costs of between $9,360 and $16,200 for the drugs, which can be taken over a lifetime.
Conclusions: “GLP-1RAs are not cost-effective when compared to bariatric surgeries in the treatment of obesity. Bariatric surgeries, such as Sleeve Gastrectomy and Roux-en-Y gastric bypass, financially dominate GLP-1RAs alone until a monthly cost adjustment to $568.A combination of both bariatric surgery and usage of GLP-1RAs offers the most cost-effective option when compared to individual interventions alone.”
Comparative Cost-Effectiveness Analysis of Bariatric Surgery and GLP-1 Receptor Agonists for the Management of Obesityhttps://www.surgery.northwestern.edu/docs/edelstone-bendix-research-poster/2024-posters/Sanchez-Joseph.pdf
Consumers
Out-of-Pocket Cap in 2025: Medicare Part D provides prescription drug coverage for nearly 56 million Americans. The Inflation Reduction Act of 2022 updated the Medicare Part D benefit, including a $2000 cap on enrollees’ annual out-of-pocket spending on prescription drugs that starts in 2025. Breakdown of the 3.2 million seniors likely to hit the cap:
- Hispanic: 18K enrollees (3.7% of Hispanic enrollees)
- Asian: 36K enrollees (5.1%)
- White: 2.8 million enrollees (8.5%)
- Black: 233K enrollees (9.0%)
- North American Indigenous Groups: 9.4K enrollees (13.9%)
- Other/Unknown: 125K enrollees (7.8%)
Corporate Announcements:
General Catalyst, HATCO: General Catalyst has raised another $8 billion and more than $1 billion of it is slated for healthcare-focused companies, the venture capital firm said Thursday. About $750 million is earmarked for General Catalyst’s health assurance fund that focuses on early-stage companies. Other funds dedicated to healthcare will be invested in late-stage, venture-backed companies and companies it co-creates with entrepreneurs. In November 2022, it launched the health assurance network, a think tank with more than 20 health system partners including Intermountain Healthcare, WellSpan Health, Universal Health Services, Cincinnati Children’s, UC Davis Health and OhioHealth.
CHS: 3Q financial results: From 10/24 earnings call: “Medicare Advantage payer denials and Hurricane Helene put a damper on Community Health Systems’ third-quarter earnings results. Chief Financial Officer Kevin Hammons said payer denials have doubled from a year ago, and more than half are from Medicare Advantage plans. He estimated a $10 million hit from denials in the third quarter. Other factors were also at play in CHS’ lackluster third-quarter performance. CHS reported a $391 million net loss, or $2.95 per diluted share, in the third quarter, compared with a $91 million loss, or 69 cents per share, in the year-ago period. The health system mostly attributed the quarterly losses to additional accruals for professional liability claims and losses from the sale of businesses. Hammons said CHS is making progress on its plan to sell $1 billion of facilities, and the majority of the remaining deals are expected to close in the fourth quarter or first quarter of 2025. CHS lowered its guidance for 2024 adjusted earnings to $1.5 billion to $1.54 billion, compared with the previous projection of $1.52 billion to $1.6 billion.” CHS operates 69 hospitals
HCA Healthcare 3Q Results: “The investor-owned hospital operator’s stock price continues to soar, reaching an all-time high of over $410 per share on October 23 — a year-over-year increase of approximately 70%. The growth follows an 8% increase in revenue for 2023. Behind Nashville, Tenn.-based HCA’s 184 hospitals and 2,000 sites of care. In the second quarter, HCA reported its net income increased 25% year over year to $1.5 billion. It estimates a net income of $5.7 billion to $6 billion for the year ending Dec. 31, up from its previous estimate of $5.2 billion to $5.6 billion. HCA is set to expand further in 2024, having grown by seven hospitals from 2019 to 2023. Its targeted acquisitions are part of HCA’s strategy, with Mr. Hazen emphasizing the focus on “selective strategic acquisitions that complement our networks” during a July earnings call. This strategy of selective acute-care hospital mergers and acquisitions is complemented by HCA’s outpatient growth plans. Mr. Hazen indicated at a healthcare event in September that the system currently operates an average of 13 outpatient facilities for each hospital, forecasting an increase to between 17 and 20 by the end of the decade.
Amazon One Medical injected artificial intelligence tools into its clinics this week — aimed primarily at its doctors. The tech aims to assist Amazon’s providers by writing notes from patient visits, summarizing medical histories, drafting messages to patients and helping coordinate care. That’s supposed to reduce administrative tasks by 40%, The company’s move suggests it believes the most immediate benefits of AI in health care will be for its clinicians, not the Amazon customers who pay for service at its clinics.
Walmart: Walmart said on Tuesday that its same-day prescription drug delivery is already live in six states — Arkansas, Missouri, New York, Nevada, South Carolina and Wisconsin — and will come to another 43 states by the end of January. Walmart+ members will get delivery for free, while nonmembers will pay a fee of $9.95. With nearly 4,600 stores, Walmart said it expects to offer delivery from its pharmacies to more than 86% of U.S. households.
Courts
Whistleblower suits impacted by District ruling: U.S. District Court of the Middle District of Florida Judge Kathryn Kimball Mizelle ruled late last month whistleblowers could not file False Claims Act lawsuits on behalf of the federal government. The opinion diverged from five other cases evaluating the constitutionality of the act’s qui tam provisions, but still casts doubt on a widely used tool designed to root our fraud in the healthcare industry.
If whistleblowers cannot file these cases on behalf of the government, that may reduce the number of whistleblower lawsuits, decrease transparency, influence providers’ compliance strategies and limit their related costs.
Background: The False Claims Act penalizes healthcare organizations for submitting inaccurate claims to Medicare, Medicaid and other government payers. Part of the act includes qui tam provisions that allow individuals, often current or former employees at the company they are suing, to sue an organization on behalf of the government. The Justice Department can choose to intervene in the lawsuit, which it does less than 25% of the time. Even if the government declines to intervene in a case, the DOJ can ask courts to dismiss FCA complaints if they have no merit.
The government collected more than $2.68 billion in False Claims Act settlements in 2023, according to DOJ data. Healthcare accounted for more than two-thirds of that share, or $1.82 billion. Whistleblowers can receive up to 30% of such settlements. In 2023, they received $200.3 million in healthcare-related False Claims Act settlements.
Employers
EBRI Report: Small employer benefits coverage: Key findings in the report include:
- The percentage of the nonelderly population with employment-based health benefits was at or near 70% from 1970 to 1989. By 2023, 60% of the nonelderly population had employment-based health coverage– the most common source of health coverage among the nonelderly population.
- Between 1996–2023, the percentage of employers offering health benefits was at a near record low in 2023 with less than one-half of employers offering health benefits. The erosion has been limited to small employers. Between 1996 and 2023, the percentage of employers with 1,000 or more employees offering health benefits increased from 96.7% to 97.6%. Similarly, the percentage of employers with 100-999 employees offering health benefits increased from 92.7% to 95.6%. In contrast, among employers with 25-99 employees, the percentage offering health benefits decreased from 80.8% to 76.7%. It decreased from 64.9% to 51.8% among employers with 10–24 employees and also decreased from 34.2% to 22.5% among employers with fewer than 10 employees.
- Despite the overall decline in the percentage of employers offering health coverage, the percentage of workers employed by private-sector employers who were eligible for health benefits (eligibility rate) has been mostly constant since 1996, varying from a low of 75.4% in 2014 to a high of 81.3% in 1996. “The eligibility rate has not changed much because, even though most employers are small, the majority of workers are employed by large firms.
Percentage of small employers offering health insurance is declining – Insurance News | InsuranceNewsNet https://www.ebri.org/
Health Economy
Altarum Health Sector Economic Indicators: October 2024:
This month’s health spending data reflect BEA annual revisions
- In August 2024, national health spending was 7.2% higher than in August 2023 and represented 17.5% of GDP.
- Nominal GDP in August 2024 was 4.7% higher than in August 2023, growing 2.5 percentage points more slowly than health spending.
- Personal health care spending growth in August was 7.4%, year over year, with utilization growth continuing to outpace price growth.
- Growth among major spending categories was highest for home health care, at 11.6%, year over year. Spending growth for hospital care grew the slowest, at 6.0%.
- This month’s spending brief incorporates annual revisions from the Bureau of Economic Analysis National Economic Accounts, with revisions beginning in January 2019.
Health care prices continue to rise faster than economywide inflation
- The overall Health Care Price Index (HCPI) increased by 3.1% year over year in September, up 0.3 percentage points over last month’s revised value.
- Economy-wide inflation fell slightly, with year-over-year growth in the overall Consumer Price Index (CPI) decreasing by 0.1% to 2.4% and growth in the Producer Price Index (PPI) also dropping 0.1%, to 1.8%.
- Among the major health care categories, prices for nursing home care (4.4%), hospitals (3.9%), and dental care (3.9%) were the fastest growing, while home health price growth was the slowest (1.3%).
- For major payers, year-over-year Medicaid price growth (5.7%) exceeded services price growth for private insurance (3.8%) and Medicare patients (1.7%).
- The implicit measure of health care utilization growth was 4.5% year over year in August, down slightly from the revised July value of 4.6%.
- Home health care utilization increased 10.0% year over year. While this was the fastest-growing category this month (as it has been since August of 2023), this nevertheless indicates a reduction to below its 3-, 6-, and 12-month moving averages. This category was followed by physician and clinical services (6.8%) and prescription drugs (6.6%), while hospital care and trailed the other categories at 2.6%.
September health care job growth accounted for a smaller share of economy-wide employment growth compared to the previous year
- In September 2024, health care industry employment increased by 45,200 jobs and non-health care industries added 208,800 jobs. Health care jobs accounted for 17.8% of all jobs added in September, compared to 28.3% in the previous 12 months
October 2024 Health Sector Economic Indicators Briefs | Altarum
Hospitals
Report: Hospital based ED services: The hospital-led Coalition to Strengthen America’s Healthcare contracted Bethesda, MD-based KNG Consulting to assess the role and scope of ED activity in US hospitals using, among other sources, the American Hospital Association’s Member Survey. Highlights:
- Hospital EDs are an important care setting for patients without regular access to physician offices. In 2021, 13% of all ED visits occurred in rural areas where access to physician services is hindered by shortages that limit routine and preventative care, resulting in higher unscheduled care. ED services were disproportionately utilized by non-Hispanic Black patients in both urban and rural areas, which could reflect access challenges in the community, such as insufficient access to primary care or increased likelihood to be uninsured or underinsured.
- The majority (61%) of ED visits occur on weekends or after normal business hours. Of the more than 136 million ED visits in 2021, 83.1 million occurred either on weekends or after hours (between 5pm and 8am), when most other providers are closed. A total of 17.6 million ED visits resulted in hospitalization, indicating the acute and serious nature of the patient’s condition, of which 55% or 9.8 million occurred on the weekend or after hours.
- There is little overlap between the most common conditions treated in EDs and by urgent care clinics. While the growth of urgent care facilities may offer alternative care settings to hospital EDs, the types of conditions treated at these settings vary, suggesting that urgent care centers are not substitutes for the care provided by EDs.
- Given the aging population, growth in chronic disease burdens, and advancing technology, patient care in hospitals is likely to become more complex and the patients they serve more severe. As a result, US hospitals will remain an irreplaceable provider of around-the-clock care and specialized services.
“Hospital Provision of 24-hour Care and Specialized Services Final Report” Coalition to Strengthen America’s Healthcare October 25, 2024 https://strengthenhealthcare.org/wp-content/uploads/2024/10/Hospital-Provision-of-24-hour-Care-and-Specialized-Services-Final.pdf
Report: Price transparency results: Turquiose Health analyzed commercially negotiated rates at over 200 hospitals across the 10 largest U.S. metropolitan areas, focusing on 37 common healthcare services from December 2021 to June 2024. Findings:
- Significant price convergence, with high rates declining by 6.3% annually and low rates increasing by 3.4% annually
- Pervasive price convergence across 82.8% of the markets we examined
- Greater price convergence in outpatient services compared to inpatient services
“Is Price Transparency Helping?” https://hey.turquoise.health/is-price-transparency-helping-white-paper
Insurers
OIG Report on MA Overpayments: “For the nation’s largest health insurer, the evidence of abuse was stunning and unmistakable: UnitedHealth Group reaped billions from the federal Medicare program by diagnosing patients with serious chronic illnesses, and then delivering no follow-up care.
The findings in the (OIG) federal report reveal that UnitedHealth repeatedly sent clinicians into patients’ homes and pored over their medical charts to add diagnoses for illnesses such as vascular disease, heart failure, and diabetes. The purpose was to collect more cash in Medicare Advantage — not to improve their health. The result? $3.7 billion in dubious payments last year alone.
The revelations contradict a core claim of UnitedHealth’s public messaging about its principal Medicare business strategy — that it’s focused on identifying conditions early and keeping patients healthy — and could usher in further investigations and new restrictions that clamp down on its primary ways of making money…
The company leverages its unique position as both the nation’s largest private health insurer and its largest physician enterprise, allowing it to stand on both sides of countless health care transactions and dominate huge swaths of the market. The Justice Department is investigating whether that dynamic breeds anticompetitive harm…
To be sure, the report identifies a total of $7.5 billion in questionable payments to insurers, which is a small share of the $455 billion in total federal payments that went to Medicare Advantage plans last year.”
Note: MA overpayments by insurer: UHG: $3.73B, HUM $1.71B, Cigna $236.95M, SCAN $127.64M, Alignment $59.96M
UnitedHealth used HRAs, chart review to boost Medicare Advantage profits
MA coding for observation stays: Proprietary data from Kodiak Solutions show that MA plans began classifying fewer stays as observation visits starting in January 2024, when a new federal regulation required MA plans to offer their members the same covered services received by beneficiaries in traditional, fee-for-service Medicare. Observation rates for MA plans ranged between 18.1% to 20.2% of claims in the last six months of 2023, then fluctuated within a lower range of 14.4% and 16.1% in the first six months of 2024. Observation rates in traditional Medicare also trended down over this 12-month period, but within a much lower range of 5.2% to 3.7%, with the exception of a spike to 8.5% in December 2023.
Note: IN Kodiak’s September 2024 poll of Healthcare Summit attendees, it reported 97% reported MA plans had higher denial rates than traditional Medicare, and 33% said their MA plans do not reimburse them for any portion of their bad debt.
2024 Healthcare Summit attendee poll results | Kodiak Solutions https://www.kodiaksolutions.io/
KFF: 24th Annual Survey of Medicaid Directors:
- Following years of significant growth, Medicaid enrollment declined by -7.5% in FY 2024 and state Medicaid officials expect enrollment to continue to decline by -4.4% in FY 2025… The unwinding of the continuous enrollment provision was the largest driver of enrollment declines.
- Total Medicaid spending growth slowed to 5.5% in FY 2024 and is expected to slow further to 3.9% in FY 2025. While state Medicaid officials identified unwinding-related enrollment declines as the most significant factor driving changes in total Medicaid spending, they also noted a number of upward pressures on total spending. This included enrollment increases from eligibility changes such as 12-month continuous eligibility for children or overall state or Medicaid eligible population growth, the higher health care needs of enrollees that retained coverage during unwinding, and rate increases.
- As anticipated, state Medicaid spending growth increased sharply in FY 2024 (19.2%) as the enhanced FMAP phased down and expired (after declining earlier in the pandemic despite high enrollment growth). State Medicaid spending growth is projected to slow to 7.0% in FY 2025, only slightly higher than total spending growth as the shifts caused by the enhanced FMAP expiration end.
- States project flattening revenue growth from tax collections and economic fluctuations, to the point where more than half of state Medicaid directors surveyed said they see at least a 50% chance that they’ll have a budget shortfall next year.
Medicaid Enrollment & Spending Growth: FY 2024 & 2025 https://www.kff.org/medicaid/issue-brief/medicaid-enrollment-spending-growth-fy-2024-2025
Polling
Campaign 2024 Voter Sentiment: “The economic anxiety divide between the parties appears to be borne out in data. September polling showed that a majority of Trump swing-state voters say their own financial position worsened in the last year, while Harris voters were much more likely to say their situation stayed the same or improved. There were similar results when voters were asked if they considered their financial situation as “secure,” or if they expected it to get better or worse over the next year. Democrats, in a historical flip, are now becoming the party of the economically comfortable, while Republicans are much more nervous about their finances — perhaps a reflection of the inversion of the traditional coalitions.”
Voters are convinced the economy is worse than it is. It could cost Harris the election. – POLITICO
APA Poll: Stress in America:
- 72% of adults are worried that the election results could lead to violence
- 56% believe the 2024 presidential election could be the end of democracy in the U.S.
- 69% think the Presidential Election is a major stressor—up from 68% in 2020 and 52% in 2016
West Health-Gallup Poll: Results for the West Health-Gallup poll based on telephone interviews conducted Sept. 16-28, 2024, with a random sample of 941 registered voters, aged 18 and older:
“Though in this year’s presidential election healthcare has seemingly taken a back to other issues including the economy and democracy, nearly eight in 10 registered voters still say the issue that has been critical in nearly every presidential campaign in modern history, remains extremely (37%) or very important (42%) to whom they cast their vote…This sentiment is consistent with what’s been expressed in most previous elections, although slightly more voters in 2000 and 2012 rated the issue as being extremely important.”
West Health-Gallup Poll: Healthcare May Be Sleeper Issue in U.S. Presidential Campaign | West Health
2024 Workplace Wellness Survey: For the survey, which is the 5th conducted since 2000 1,505 American full-time and part-time workers ages 21–64 were interviewed between July 22 – August 18, 2024. Highlights:
- Concern about mental well-being is down in 2024, with workers rating their level of concern an average of 5.5 out of 10, compared with 5.8 in 2023. Additionally, there is a general trend of concern about financial and physical well-being decreasing, with financial well-being concerns dropping from 6.9 to 6.3 between 2022 and 2024, and physical dropping from 6.2 to 5.7 out of 10.
- Concerns about the economy going into a recession impacting finances in the next 12 months is down from 2023 (80% vs. 85%), but 43% say the U.S. economy is currently in a recession.
- Further, workers are more likely to be prepared to handle an unexpected expense of $500 than in 2023, and fewer agree that their retirement plan savings are the only significant emergency savings that they have. There are no differences in how workers would pay for an unexpected expense of $2,000 vs. $5,000.
- Eight in 10 have non-mortgage debt. Credit card debt is cited as the biggest problem, like prior years — with quarter having at least $10,000 in debt. Of those with credit card debt, many are using their credit cards to purchase necessities rather than luxuries. Half of those who say credit card debt is a problem report that groceries and vehicle expenses contributed to the debt. Lower shares cite discretionary spending such as eating out/ordering in (29%), leisure travel (28%), entertainment, (19%) and luxury goods (11%) as a contributing factor. About eight in 10 workers report keeping discretionary spending to a minimum or budgeting for it to ensure that they can afford it. Medical debt is most often related to a health emergency (38%), prescription drugs (38%), or chronic illness (28%). COVID-related medical debt continues to decrease (11%). 26% of those who say medical debt is a problem cite mental health care as contributing to the debt.”
2024 Workplace Wellness Survey
Study: Disparity in high deductible plans use by household income: Researchers examined the equity implications of high-deductible health plans within the context of racial and ethnic wealth disparities. Findings:
“Results show that White households consistently held significantly more wealth than did Black and Hispanic households across income levels. In the lowest income quartile, White privately insured families had more than 350% more in financial assets than their Black counterparts. Low-income Black and Hispanic families with high-deductible health plans but no savings accounts had median financial assets ($2,200 and $2,000, respectively) that were well below the average family coverage deductible. Study findings highlight the role of systemic racial wealth disparities, beyond that of income, to establish a unique pathway whereby high deductibles can exacerbate health care inequities.”
Report: Medical debt, hospital prices and hospital consolidation: “Medical debt has been a major burden on households’ financial well-being and health across the United States. About 27 million consumers had such debt in collections on their credit reports in 2022, and communities of color and people living in the South were disproportionately affected.
At the same time, health care costs have grown faster than inflation. Some speculate this may be attributable to increased concentration in health care provider markets, which is when a small number of providers dominate a market and reduce competition. In 2017, 90 percent of hospital markets in the US were highly concentrated (PDF). Since then, hospital market concentration has continued to grow to an all-time high.
Evidence shows that increased hospital market concentration harms consumers and generally raises prices. Prices at monopoly hospitals are 12% higher than those in more competitive markets. Elevated costs can then be passed on to patients, likely increasing the chances that people incur medical debt…
While medical debt on credit reports declined across most US counties between 2012 and 2022, increases in hospital market concentration prevented such improvements in many areas of the country.
We find that counties that experienced larger increases in hospital market concentration, as measured by the Herfindahl-Hirschman Index (HHI), experienced smaller declines in the share of residents with medical debt. The correlation between a county’s change in medical debt and its HHI is 0.2. For comparison, this correlation is similar in magnitude to that observed between a county’s medical debt and its racial and ethnic makeup but is a weaker correlation than that between a county’s medical debt and its health insurance coverage rates and chronic disease prevalence.”
https://www.urban.org/urban-wire/hospital-market-concentration-related-medical-debt
Public Health
Health and social services: The Georgia State University School of Public Health announced yesterday that it will open a Center on Health and Homelessness in Atlanta. Only a small number of academic institutions have programs focused on the intersection of health and housing, including USC, Harvard, and NYU.
Research at institutions like these has highlighted that increasing the availability of affordable housing is one of the best ways to reduce homelessness. Still, many lawmakers have turned to actions like encampment sweeps.
Source
Strategy and Governance
McKinsey study: Corporate venture development: Per McKinsey’s survey of more than 1,100 business leaders re: the share of investment needed for new ventures to deliver the share of total revenues desired by their parent organizations’ leaders.
“Respondents on average expect to achieve 24% of their organizations’ revenues from new ventures in five years’ time. To achieve this share, many companies will need to meaningfully increase their level of investment. In fact, the findings suggest that those that achieve this share have invested 2.4 times the average of those that are targeting that share but haven’t achieved it.
Indeed, incumbents have proved their impressive ability to build high-revenue ventures. Additional research finds that the ten largest new ventures built by established companies in the past decade have averaged 1.5 times more revenue than that of the largest start-ups launched in the same period. These new ventures can benefit from their core organizations’ access to customers, brand, and expertise, often enabling them to scale revenues quickly.
What’s more, venture building can affect more than just revenues for an organization. Survey respondents report that new ventures launched by their companies in the past five years have generated 16 percent of their enterprise value, while revenue created by new-venture building was 13%.”
How CEOs are turning corporate venture building into outsize growth | McKinsey
PWC: Board pitfalls: The PWC Governance practice offers four observations about ineffective/suboptimal boards:
- Threat rigidity: … “the tendency for a group to become less flexible when external pressures mount.” In simpler terms, when a crisis hits—a cyber breach, a shareholder activist letter, a reputational issue—board members may instinctively retreat into old patterns rather than adapting to the new circumstances.
- Escalation of commitment: the tendency to double down on past decisions, even when new evidence suggests a change of direction is needed.
- Undervaluing collective intelligence: … boards are typically composed of accomplished individuals with impressive resumes, their strength lies in their collective intelligence. Yet, too often, boards overlook this in favor of deference to a few dominant voices.
- Lack of psychological safety: In PwC’s survey of over 700 directors, more than half admitted they do not feel comfortable expressing dissenting views in their boardrooms. “Your ability to be effective as a board member depends on your ability to voice your view—even if it’s unpopular… When boardrooms lack safety, important conversations get stifled, and potential issues go unaddressed.”
Why Good Boards Make Bad Decisions Newsletter – Corporate Board Member
