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The Keckley Report

Increased Private Investor Activity, Weakened Consumer Confidence Driving Post Pandemic Healthcare

By November 1, 2021March 1st, 2023No Comments

This week, the national media spotlight will be on Glasgow for COP26—the 26th UN Climate Change Conference and expected votes on the President’s $1.2 trillion Infrastructure and scaled back $1.75 trillion Build Back Better (BBB) legislation.

Political pundits will watch the Virginia Governor’s race Tuesday to prognosticate about Campaign 2022 and school officials and parents will be watching for the CDC’ authorization of the Pfizer vaccine for kids aged 5-to-11 expected Wednesday.

While these items grab the headlines, the government’s accountants will be closing the books on the U.S. economy’s performance in the 3rd Quarter, 2021 and deciphering October’s early indicators. Most expect the economy is transitioning from pandemic-paralysis to recovery as noted in the Economist: “The turbo-charged phase of the American economy’s rebound from the covid-19 pandemic is over.”

What the post pandemic economy means for the U.S. business climate and its impact on the healthcare system remains unknown, but what’s clear is that two magnum momentum shifts will weigh heavily:

Increased Private Investor Activity

Private capital investing through venture funds, private equity and hedge funds hit record levels in 3Q 2021. And dividend recapitalization debt is readily accessible to finance private equity deals. Healthcare services remains attractive to investors– second only to technology. Consider:

  • Capital through healthcare-focused venture funds is at an all-time high: $82.9 billion was raised by 302 funds in the first 9 months of 2021 compared with $69.12 billion by 369 funds in all of 2020. VC investments in digital health are up 27% YTD and are projected to grow at a CAGR of 38%/year thru 2025. VC investments in telehealth-enabled primary and mental health services, artificial intelligence solutions in care coordination, employer benefits management platforms and others top their growing list of bets.

  • Likewise, private equity deal activity in healthcare hit an all-time record in 3Q 2021: valuations for healthcare PE-backed deals are up 50% over 2020 and companies backed by US-PE funds have taken on $58.5 billion in dividend-recapitalization debt this year through Oct. 20- higher than debt levels for 2019 and 2020 combined. Healthcare PE cap raises thru Q3 2021 have also exceeded all of 2020- $105.8B vs $100.3B, respectively. And like VC, the current year trend in fewer fund deals across greater aggregate cap raises- compared to 2020- continues in the space as well. Both equity and debt financed PE deals are expected to continue in 4Q 2021 and next year as bond yields have reached their lowest level ever (currently around 4.3%, after touching 11% in March 2020) and yields on leveraged loans are hovering at near historic lows-4.4%. (JPMorgan Leveraged Loan Index).

Weakened Consumer Confidence

The public mood is fragile. The combination of higher prices (transitory inflation), the pandemic hangover, political dysfunction in state and federal politics and economic anxiety accelerated a rapid decay of public confidence in 3Q 2021. Consider…

  • In its latest poll conducted October 23-26, NBC news found President Biden’s job rating decreased to 42% vs. 49% in August and 53% in April. Using Gallup’s historical data, Biden’s approval rating is the second lowest behind Donald Trump (37%) for first-year presidents at a similar point in time. Nine months into this presidency, 71% of Americans say the country is headed in the wrong direction including 93% of Republicans, 70% of independents and 48 % of Democrats.

  • Morning Consult’s Index of Consumer Sentiment (ICS) fell 1.8% in the 30-day period ending Oct. 21, 2021, though COVID-19 cases fell 37% in the same period. Concern about consumer prices and growing fear of inflation were cited as reasons.

  • The University of Michigan Index of Consumer Confidence consumer released last Friday fell to 71.7 in October from 72.8 in September– well below the level of 101 in February 2020, before the pandemic. Consumers in the poll also estimated the year-ahead inflation rate will hit 4.8%–the highest level since 2008.

  • In the government’s October U.S. household interview survey, 27% of U.S. adults reported symptoms of anxiety/depression–up from just 11% in 2019.And even higher among young adults and in populations of color.

  • According to Pew’s 3Q 2021 analysis of attitudes about the health systems in 17 westernized countries, 76% of U.S. adults said our medical care system needs major overhaul vs. 41% in the U.K. and 43% in Canada.

  • Unflattering media attention about the health system magnifies discontent. Last week, featured stories in the New York Times, Wall Street Journal & Kaiser Health News showcased inexplicable hospital prices. It’s standard fare in major national media.


The combination of increased private investor activity in healthcare and growing consumer discontent is a recipe for disruption in every sector. The two-month standoff over the Reconciliation legislation is illustrative: notwithstanding legitimate concerns about government spending and debt, the lack of a dental benefit for Medicare enrollees and meaningful solution to drug prices in the BBB fans the flame of discontent among the already disaffected consumers and empowers private investors to pursue alternative fixes with abandon. Momentum from investors coupled with consumer disaffection opens healthcare to a new can of worms on uncharted turf.

It means trade groups and advocacy organizations must re-think stale positions. It means regulators must revisit the consequence of shareholder interests in policymaking. It means growing attentiveness to information, misinformation and disinformation in media coverage about U.S. healthcare. It means complete transparency to regain confidence and trust.

In the 3rd quarter, 2021, the psyche of the U.S. population shifted to life after the pandemic. It’s appetite for significant reforms that address affordability, price transparency and accessibility is palpable.



“Biden’s Job Rating Sinks to 42 percent in NBC News Poll a Year from Midterms”; October 31, 2021; NBC News

“America’s post-covid economic recovery suffers a setback” The Economist October 28, 2021; The Economist

“Q3 2021 PitchBook- NVCA Venture Monitor”; October 13, 2021; PitchBook-NVCA

Chris Cummings “Buyout Firms Set Record for Loading Companies With Debt to Pay Themselves”; October 25, 2021; Wall Street Journal

“Consumer Sentiment Sinks Despite Progress Against Delta Variant”; October 28, 2021; Morning Consult

Rae Ellen Bichell “How Billing Turns a Routine Birth Into a High-Cost Emergency”; October 27, 2021; Kaiser Health News

Elizabeth Rosenthal “A $1,775 Doctor’s Visit Cost About $350 in Maryland. Here’s Why”; October 24, 2021; New York Times

“Hospital Prices Are Arbitrary. Just Look at the Kingsburys’ $100,000 Bill” Wall Street Journal October 28, 2021; Wall Street Journal

Household Pulse Survey- Week 39; Census Bureau

S Hillis, et al, “Covid-19-Associated Orphanhood and Caregiver Death in the United States”; October 2021; American Academy of Pediatrics

“The Drug Overdose Toll in 2020 and Near-Term Actions for Addressing It”; August 16, 2021; The Commonwealth Fund

“New Health Report Identifies Need to Address Mental and Behavioral Health Among Teens and Children in the U.S”; October 6, 2021; UnitedHealth Group

“Employment Cost Index”; BLS


White House Build Back Better Framework: Current Components

The presumed framework for the $1.75 trillion President’s Build Back Better (Reconciliation) Plan includes:

  • An extension of the Child Tax Credit for one year.

  • A plan to offer universal preschool to 3-4 -year-olds and additional money to help new families defray the cost of childcare.

  • Funding home care for disabled and elder care.

  • Money to subsidize insurance payments on the Obamacare health insurance exchanges.

  • Hearing benefits for Medicare recipients.

What’s left out:

  • A plan to offer paid family leave was not included in the framework.

  • Giving Medicare the authority to negotiate directly with pharmaceutical companies on prescription drugs costs.

  • Expansion of Medicare benefits for dental and vision.

How it’s paid for:

  • Officials insisted that the total cost of the program would be offset by new revenue from corporations and wealthy individuals, without raising taxes on families making less than $400,000.

  • Corporations will face a 15% minimum tax as well as new international rates.

  • Individuals who make more than $10 million will be subject to a new surcharge.

“President Biden Announces the Build Back Better Framework”; October 28, 2021; The White House

HHS: Uninsured Rate Stable at 8.6-9.7%

Per HHS latest analysis of insurance status data:

  • Recent survey data suggest a stable uninsured rate in 2020 despite the pandemic and related recession, with estimates ranging from 8.6% to 9.7% of the population (28.0 million to 31.6 million people).

  • More recent administrative data in 2021 show ongoing gains in Medicaid (1.7 million between January and April 2021) and Marketplace coverage (1.6 million between August 2020 and August 2021), which suggest that the uninsured rate may be lower now than it was in early 2021.

  • Uninsured rates continue to be higher in certain populations, including Latinos (18.3%) and Black people (10.4%), people with incomes below the poverty level (17.2%), and residents of states that have not expanded Medicaid (17.6%).

“Tracking Health Insurance Coverage in 2020-2021”; October 29, 2021; HHS

States Impose Mandatory Regulations on Nursing Home Expenses

Massachusetts, New Jersey and New York have set requirements for how much nursing homes must spend on residents’ direct care and imposed limits on what they can spend elsewhere, including administrative expenses, executive salaries and advertising and even how much they can pocket as profit. Facilities that exceed those limits will have to refund the difference to the state or the state will deduct that amount before paying the bill.

Next year, New York’s nursing facilities will have to spend at least 70% of their total revenue —including payments from Medicaid, Medicare and private insurers — on resident care and at least 40% of that direct-care spending must pay for staff members involved in hands-on care. In Massachusetts, Gov. Charlie Baker issued rules requiring nursing homes have to spend at least 75% of all revenue on residents’ care. New Jersey’s law requires its nursing homes to spend at least 90% of its Medicaid revenue on patient care. All three states promise a boost in Medicaid payments to facilities that comply with the laws.

Susan Jaffe “3 States Limit Nursing Home Profits in Bid to Improve Care” Kaiser Health News OCTOBER 25, 2021; Kaiser Health News

FTC Issues Guidance on PHI Protections with Health Apps

The Federal Trade Commission (“FTC”) issued guidance clarifying protections applicable to consumers’ sensitive personal data increasingly collected by so-called “health apps.”

The guidance deems developers of health care apps or connected devices to be “health care providers” subject to the Rule because they “furnish health care services or supplies.” It also clarifies that health apps that collect non-health data (such as calendar dates) are within the scope of the Rule. The FTC specifically called attention to “apps and other technologies [that] track diseases, diagnoses, treatment, medications, fitness, fertility, sleep, mental health, diet, and other vital areas.”
A violation/breach of the regulation is treated as an unfair and deceptive act or practice under the FTC Act and can carry civil penalties of up to $43,792 per violation per day.

“Apps Fall Under Health Breach Notification Rule, Cautions FTC”; October 22, 2021; American Academy of Professional Coders


Recent Company Announcements

Former Haven COO Jack Stoddard has launched Patina Health which uses online care teams and home visits to provide primary care for people who are 65 and older. The venture firms Andreessen Horowitz and Alphabet’s GV provided seed and Series A funding raising a total of $57 million.

The Mark Cuban Cost Plus Drug Company PBC and the Purchaser Business Group on Health’ EmsanaRx, a nonprofit coalition of nearly 40 large public and private employers, are starting new pharmacy-benefit management companies. Cuban is creating an all-in-one pharmaceutical supplier, combining manufacturing, wholesale distribution and pharmacy services under one roof. Note: Nearly 80% of U.S. prescriptions are managed by three PBMs: CVS Health Corp.’s CVS Caremark, Cigna Corp.’s Express Scripts and UnitedHealth Group Inc.’s OptumRx.

Seventeen major hospital networks with operations in 40 states have joined Truveta, a hospital-led company seeking to aggregate de-identified patient data and put it in a standardized format so it can be sold for medical research. A separate cluster of health systems has formed a nonprofit called Graphite Health to create a marketplace that would make it cheaper and easier to plug in novel software applications.

LRVHealth’s portfolio company, Convergent Dental, has completed a $40 million Series C funding round. Convergent Dental’s flagship product, Solea®, is the world’s first laser to enable pain-free dentistry.

LifePoint Health and Kindred Healthcare will start ScionHealth which will consist of 79 hospital campuses in 25 states, including Kindred’s 61 long-term acute care hospitals and 18 of LifePoint’s community hospitals and associated health systems. LifePoint will combine its 65+ remaining hospital campuses as well as its network of physician practices and outpatient centers with Kindred’s rehabilitation and behavioral health businesses.

Cerner announced plans to create new division (Enviza) to sell data, research services for clinical trials leveraging its recent $350 million acquisition of Kantar Health and its Learning Health Network of 76 participating systems. Last year, Epic Systems launched Cosmos, a database of de-identified EHR data collected in the Epic Health Research Network. Allscripts’ Veradigm payer and life sciences division also sells analytics tools to providers and de-identified patient data for biopharma researchers.

Teladoc plans to take on financial risk for its offerings in the future, including its virtual-first primary service, Primary360, will be available through CVS Health-owned payer Aetna and Centene’s marketplace plans in Michigan, Mississippi, South Caroline and Texas early next year. In its third quarter financial results also released Wednesday, Teladoc beat Wall Street expectations on earnings and revenue, with a topline of $522 million, up 81% year over and 3.9 million visits in the quarter, up 37% year-over-year growth.

Brave Health, a virtual behavioral health provider aimed at people on Medicaid, raised $10 million in Series B funding, the company announced Tuesday. City Light Capital, Union Square Ventures and Able Partners led the funding round. The company has brought in nearly $21 million in total financing since its founding in 2017.

Spring Health, a provider of mental health solutions for employers and health plans, has raised $190M in a Series C round. The round drew participation from Tiger Global Management, Kinnevik, and True Capital Partners, among others

Hinge Health, an S.F.-based provider of musculoskeletal pain solutions, raised $400 million in Series E funding at a $6.2 billion valuation co-led by Tiger Global and Coatue. It also completed a $200 million secondary deal with Alkeon and Whale Rock.

Cardurion Pharma, a Boston-based cardiovascular biotech, raised $300 million from Bain Capital, Bain Life Sciences and insiders Takeda Pharma and Polaris Partners.

FemTec Health, a Houston-based women’s healthcare data analytics platform, raised $38 million from Longmont Capital, Ithaca LifeSciences, Unilever Ventures, Estee Lauder, Shiseido, e.Ventures, Viking Global and Trinity Capital.

Magnus Medical, a Burlingame, Calif.-based developer of neurostimulation devices for severe depression, raised $25 million in Series A funding co-led by Jazz Venture Partners and Red Tree VC.

Rowan, a New York-based ear-piercing startup, raised $20 million in Series B funding. VMG Partners led, and was joined by Thirty Five Ventures, Table Management, Beechwood Capital, Silas Capital and Goldcrest Capital.

New Hyde Park, N.Y.-based Northwell Health and startup studio Aegis Ventures formed a joint venture to launch artificial intelligence companies that address data and automation, health and wellness, and digital health and health technologies. As part of the joint venture with Northwell, Aegis plans to invest at least $100 million of seed-stage funds in companies.

Amazon announces Alexa Smart Properties for hospitals, apartments, hotels and senior-living facilities to facilitate care coordination and care at home.

Pew: US Sentiment Toward Health System Highest Among 17 Developed Systems of the World

Across 17 advanced economies surveyed this spring by Pew Research Center: those who believe their nation’s system “needs major changes or needs to be completely reformed”

  • The political system: Overall median: 56%; 85% in U.S.–3rd among 17 countries behind Italy (89%) and Spain (86%)

  • The economic system: Overall median: 51%; 66% in U.S.–5th behind Italy (85%), Greece (84%) Spain (83%), South Korea (72%)

  • The health system: Overall median: 45%; 76% in U.S.—2nd only to Greece (77%). UK (#13 overall) is 41 and Canada (#10 overall) is 43

“Citizens in Advanced Economies Want Significant Changes to Their Political Systems” Pew Research Center October 21, 2021; Pew Research

Study: 340B Drug Discounts Not Associated with Increased Hospital Services for Uncompensated Care

NYU researchers analyzed secondary data on 340B participation and uncompensated care provision among general acute care hospitals and critical access hospitals from 2003 to 2015. Findings:

“We do not find evidence that hospitals increased provision of uncompensated care after entry into the 340B program differentially more than hospitals that never entered or had not yet entered the program…Relying on hospitals to invest surplus into care for the underserved without marginal incentives to do so or strong oversight may not be an effective strategy to expand safety-net care.”

Sunita M. Desai, PhD, J. Michael McWilliams, MD, PhD “340B Drug Pricing Program and Hospital Provision of Uncompensated Care”; October 11 2021, Vol. 27, Issue 10; American Journal for Managed Care

MGMA Poll: Administrative Burden Forcing Physicians to Think About Retirement

According to the latest STAT poll of medical practices by the Medical Group Management Association (MGMA).

  • 33% of medical practices had a physician retire early or leave due to burnout in 2021, compared to 63% who did not and 4% who responded “unsure.”

  • 28% of medical practices had a physician unexpectedly retire from the organization in the past year — of which nearly half were related to the COVID-19 pandemic.

  • Of the one-third of practices reporting burnout-related physician departures/retirements, some of the top causes of that burnout included: administrative/paperwork burdens, EHR fatigue, Fighting with insurance companies over prior authorization and other payer requirements, Loss of work-life balance and others.

  • 92% said healthcare consolidation such as acquisitions of physician practices by health systems and hospitals is increasing and 72% said consolidation is having a negative overall impact on the U.S. healthcare.

  • 79% said the move toward value-based payments for Medicare and Medicaid patients has increased the regulatory burden on their practices and 70% said the move toward value-based payments has not improved the quality of care

“MGMA Stat Poll”; October26, 2021; Medical Group Management Association

Study: Accelerated 3-Year MD Pathway Programs work as well as Traditional Programs

Researchers analyzed the perceptions of accelerated (AP) and traditional medical students (non-AP), with respect to satisfaction with educational quality and the learning environment, residency readiness, burnout, debt, and career plans. Results:

  • AP students were as satisfied with the quality of their education and felt as prepared for residency as non-AP students. AP students also reported a more positive learning climate than non-AP students from AP schools and from all schools as measured by the student-faculty interaction (15.9 vs 14.4 and 14.3, respectively) for both pairwise comparisons) and emotional climate (10.7 vs 9.6 and 9.6 respectively) scales.

  • AP students had less debt than non-AP students and more planned to care for underserved populations and practice family medicine than non-AP students from AP schools (55.7% vs 33.9% and 37.7% vs 9.4% respectively).

Leong et al “Graduates’ Perspectives on Education Quality, the Learning Environment, Residency Readiness, Debt, Burnout, and Career Plans”; August 10, 2021; Association of American Medical Colleges

Survey: Telemedicine Valuable in Primary Care but Operationally Challenging

Findings from the survey of 1,263 primary care clinicians in mid-August by the Larry A. Green Center, in collaboration with the Primary Care Collaborative (PCC):

  • 64% think telemedicine is a keyway to maintain patients’ access to care but 41% worry their practice will be unable to support telemedicine.

  • 71% said patient visits were more complex and took more time, 54% said they were unable to hire staff for open positions in their practice, and 45% said they personally knew primary care clinicians who had retired early or left practice because of the pandemic.

  • 52% of clinicians said two to three conversations were needed to change the mind of vaccine-hesitant patients and 67% said that for most of their vaccine-hesitant patients, it’s a gut or political opinion that cannot be changed.

“A Resilient Primary Care Supported Patients During Summer Surge of COVID” Primary Care Collaborative October 11, 2021; Primary Care Collaborative

Study: 28% of Admin Costs could be Saved

In 2019, the US spent an estimated $3.8 trillion on health care, including an estimated $950 billion on nonclinical, administrative functions, and that number has increased despite major technological enhancements. Findings:

  • A typical US services industry (for example, legal services, education, and securities and commodities) has approximately 0.85 administrative workers for each person in a specialized role (lawyers, teachers, and financial agents) vs. 1.7 in US health care (5.4 million administrative employees).

  • An estimated $265 billion, or approximately 28% of annual administrative spending, could be saved without compromising quality or access by implementing about 30 interventions that could be carried out in the next 3 years.

Sahni et al “Administrative Simplification and the Potential for Saving a Quarter-Trillion Dollars in Health Care”; October 20, 2021; JAMA

KFF: Medicaid Funding Increase Expected to be 7.3%

To support Medicaid and provide broad state fiscal relief, the Families First Coronavirus Response Act (FFCRA), enacted in March 2020, authorized a 6.2% increase in the federal Medicaid matching rate (“FMAP”) (retroactive to January 1, 2020) if states meet certain “maintenance of eligibility” (MOE) requirements. Key findings from the 21st annual survey of Medicaid directors completed by 47 states in September 2021:

  • After increasing 10.3% in FY 2021, states expect Medicaid enrollment growth to slow to 4.5% in FY 2022.

  • FY 2022 state budgets for responding states assume total Medicaid spending growth will slow to 7.3% compared to 11.4% in FY 2021.

  • While states reported that the state (nonfederal) share of Medicaid spending grew by 4.0% in FY 2021, they project sharper FY 2022 growth of 14.0%.

“Medicaid Enrollment & Spending Growth: FY 2021 & 2022”; October 27, 2021; KFF


COVID Tracking Tools

CDC Guidance

KFF Poll: Majority of Parents Unsure about Vaccinations for their Kids

From the latest KFF COVID-19 Vaccine Monitor:

  • 27% of parents of 5–11-year-olds (27%) are eager to get a vaccine for their younger children vs. 31% and 30% who say they will definitely not get the vaccine for their 12–17-year-old or their 5–11-year-old.

  • 72% of adults say they have gotten at least one dose, the same share who said so last month.

  • 25% of workers say their employer has required them to get the COVID-19 vaccine—up 16% since June. 37%) of unvaccinated workers (5% of adults overall) say they would leave their job if their employer required them to get a vaccine or get tested weekly, a share that rises to seven in ten unvaccinated workers (9% of all adults) if weekly testing is not an option.

“KFF COVID-19 Vaccine Monitor: October 2021” KFF October 28, 2021; KFF

Fitch: Healthcare Workforce Shortages Hurt Nursing Homes, Rural Hospitals Hardest Hit During Pandemic

Per the US Bureau of Labor Statistics (BLS) September jobs report:

  • Healthcare employment is down by 524,000 since February 2020, with nursing and residential care facilities accounting for about four-fifths of the decline. In September, 38,000 losses were at nursing and health care facilities, hospital payrolls declined by 8,000 and jobs at offices and clinics increased by 28,000.

  • Resignations in the healthcare and social services sector reached “unprecedented levels” in August, with a 13% jump over the summer resulting in an increase of over 50% from February 2020.the healthcare unemployment rate has fallen and is now the second lowest of all sectors, resulting in a significant labor supply/demand imbalance.

“Not-for-Profit Healthcare Staffing Shortage Has Long-Term Effects”; October 27, 2021; FitchRatings