Since March 2020, America’s focus has been on the pandemic. Most think the worst is past while fear of a new Omicron variant wave lingers.
Since January 2022, the U.S. economy has eclipsed its 41-year record inflation rate (8.5% in March) and a decline in productivity: through the first 4 months of 2022, the S&P 500 is down 13% and the GDP has shrunk at an annualized rate of 1.4%. Suddenly, the pandemic is old news and inflation is the new news.
Since February 24, 2022, America’s attention has been drawn to the Ukrainian invasion by Russia and NATO’s response. Early hope of a quick diplomatic solution is gone; what’s ahead and the role played by the U.S. is unknown.
And starting yesterday, May begins in what is likely the most consequential for healthcare in years due to the cumulative impact of these:
· Campaign 2022 starts: 14 states hold primaries this month. Races for 35 U.S. Senate seats, 435 U.S. House seats, 39 Governors (36 states, 3 territories) and 3300 state legislators in 88 of 99 state legislative bodies on the ballot. Second only to inflation and prices, healthcare will be the top domestic issue in this cycle. Politicians on both sides will promise better care, lower prices and equitable access. Lack of competition, price transparency and ill-gotten profits will pepper campaign ads and rhetoric and the industry’s leading trade groups will channel funds to the candidates whose protections they seek. The primary season started yesterday in TX and continues through August 2. Healthcare will be prominent, disinformation significant and voter antipathy toward the system stoked.
· Observances: May is National Nurses Month, Mental Health Month and Older Americans Month. Recognition of each has been fundamentally altered by the pandemic: Nurses are in short supply, incensed by travel-nurse pay relative to their own and clamoring for greater scope of practice freedom. One in four U.S. households faces a mental health problem and suicide is now the country’s 3rd leading cause of death behind heart disease and cancer. And wide disparity in the health and wellbeing of America’s 56 million seniors (16.8% of population) is driving a socioeconomic wedge between the haves and have nots among them. Observances invite media attention to the successes of a cause of group; they often attract unwanted attention to flaws and failures. We have many.
· Administrative clarity: In May, CMS will offer needed clarity about its alternative payment models, especially derivatives of its Medicare Shared Savings Program with an eye toward greater risk sharing by providers and constraints on their capital/business partners. HHS’ OIG will report additional flaws in Medicare Advantage Plan accounting requiring sponsors to make adjustments prior to the October enrollment cycle. The administration will remain smug about its price transparency rules for hospitals and insurers recognizing their bipartisan popularity and strengthen rules for nursing homes, telehealth and alternative sites of care. The FDA will tighten accelerated approvals for specialty drugs while the FTC and DOJ will sharpen stipulations for acceptable consolidation. Because lawmaking is paralyzed by partisan brinksmanship, rule making by agencies in tandem with court decisions will vector policy changes in healthcare through November and after.
· Consumer spending adjustment: The Federal Reserve Bank meets tomorrow and is expected to increase the federal funds interest rate 50bps; it follows a 25bps bump in March as the central bank aims to slow inflation. Though wages have increased (4.7% LTM), prices for necessities especially fuel and food have increased faster: coming out of April, gas prices are up 48% in the last 12 months, fuel oil is up 70%, used car prices are up 32% and food is up 8.5%. By contrast, medical care products are up 2.7% and medical care services are up 2.9%. Per Morning Consult, from February to March this year, consumer spending for health insurance shrank 3% and healthcare services dropped 4% as shrinking discretionary funds were spent on necessities by consumers. So, despite relative price constraint in healthcare in the aggregate vs. other sectors, consumer satisfaction is lower than others and delayed care, unpaid medical bills, loss of health insurance coverage and poor use experiences are mounting. Note: The Consumer Price Index for April 2022 is scheduled to be released on Wednesday, May 11.
May is the month marked as the end of the school year and beginning of summer. This year, May is the pivot point from which the health system transition from its response to a menacing global pandemic to a uniquely American institution in need of repair. To that end, operators and Boards must be vigilant about market trends and changes in laws and prepared to alter strategies, capital bets, business relationships and timing to address new opportunities and threats. They’re certain.
Paul
PS: I spent Saturday with 7 veteran members of Special Forces (Green Berets) listening, learning, and querying their views about military health. Three things stick out as I reflect: their dependence on the military health system to care for their families while they’re on active duty and later as veterans, their concern about flaws in the military and veterans’ health programs, and their profound sense of country—not partisan, political or anything else. Military health is 7.6% of the 2022 Defense Budget ($54 billion of $715 billion); Veterans Health is 42.3% of the 2022 Veterans Affairs budget ($115 of $270 billion). Their health matters.
Resources
The Board of Governors of the Federal Reserve Bank www.federalreserve.gov
Consumer Price Index Summary Bureau of Labor Statistics April 12, 2022 www.bls.gov
Morning Consult April 2022 Consumer Spending Report: February vs. March 2022 www.morningconsult.com
Economic Indicators
From federal government reports last week:
· The country’s gross domestic product shrank at an annualized rate of 1.4% through the first quarter of the year. Consumer spending grew at an annualized pace of 2.7% through the first quarter, accelerating from the prior quarter’s pace. (Commerce Department)
· Compensation costs were up 1.4% from Dec. 2021 to Mar. 2022 and up 4.5% from April 2021 to year March 2022. In the same period, wages and salaries rose 4.7%, and benefit costs rose 4.1%. Most state and local government workers enjoyed 1% gains in compensation. Hospital workers gained 1.1% and public administration employees saw a 1.5% increase. Note: Real compensation, which is adjusted for inflation, fell 3.7% for all workers through the year that ended in March–worse than the 2.9% drop seen through 2021 and the biggest one-year decline in two decades. (Labor Department)
· The current federal debt is $30.3 trillion: it increased 18% from 2020 to 2021 and averaged + 5.6% from 1980 to 2019.The Fed)
From the private sector:
· April S&P is down 13% YTD and 8.8% in April vs. average +1.41% growth since 1928. S&P 500 companies have reported an average growth of 6.6% in second-quarter earnings to date (FactSet).
Pandemic
CDC: 58% infected with Covid: Blood tests show 190 million people including 3 in 4 children have been infected with COVID. .The overall U.S. seroprevalence, or prevalence of a disease in a population, for COVID went from 33.5% to 57.7% from December 2021 to February 2022, during the Omicron surge.
US Centers for Disease Control and Prevention www.cdc.gov
FDA approves remdesivir to treat infants and children over 28 days of age: The FDA’s decision makes the Gilead’s remdesivir drug the first approved COVID-19 treatment for children less than 12 years of age.
US Food and Drug Administration April 25, 2022 www.fda.gov
CDC: COVID-19 third leading cause of death in the United States in 2021 for second year in a row: The overall age-adjusted death rate for all causes in the U.S. was about 1% higher in 2021 than it was in 2020, but the death rate from COVID-19 increased by nearly 20%. More than 415,000 people died from COVID-19 in 2021, while about 605,000 people died from cancer and 693,000 people died from heart disease. Influenza dropped out of the top 10 causes of death in 2021, while suicide rose to the 10th leading cause of death overall.
US Centers for Disease Control and Prevention April 29, 2022 www.cdc.gov
Study: Adolescent suicides larger share of suicides at the start of pandemic: In 2020, individuals ages 10-19 comprised a significantly higher proportion of total suicides versus the pre-pandemic period of 2015-2019 (6.5% vs 5.9%, respectively), a 10%. “While there was also an increase in the absolute number of adolescent suicides in 2020, at 903 versus 835.6 on average in the pre-pandemic years, it was not statistically significant.”
Charpignon et al Evaluation of Suicides Among US Adolescents During the COVID-19 Pandemic JAMA Pediatrics. Published online April 25, 2022. doi:10.1001/jamapediatrics.2022.0515
Study: Employer incentive increases Covid vaccination rate: Researchers conducted a cross-sectional study between May 14 and September 30, 2021 to estimate changes in weekly vaccination uptake before and after the vaccination program announcement in August 2021. Results:
“On the week of the announcement, there was an increase of 54 employees receiving their first dose of vaccine and increase of 70 employees receiving their second dose. Prior to the incentive announcement, there were flat weekly trends in employees receiving first and second doses. Our results found that a workplace-based large ($1000) guaranteed financial incentive was associated with increased COVID-19 vaccine uptake.”
Georgiou et al Association of Large Financial Incentives With COVID-19 Vaccination Uptake Among Employees of a Large Private Company JAMA Network Open April 29. 2022;5(4):e229812. doi:10.1001/jamanetworkopen.2022.9812
Care management
Study: Specialist consults often fall short: To understand how stakeholders envision the ideal specialist inpatient consultation, researchers interviewed 17 specialists, 13 hospitalists, 4 patients, and 4 family members from 2017-2020. Findings:
There were 11 key information exchanges identified that occur among the specialist team, primary team, and patient/family during an ideal consultation: 6 defects (process failures) commonly derail information exchanges (complete omission, exclusion of a key stakeholder, poor timing, incomplete or inaccurate information, and misinterpretation) and 5 contextual factors (roles and boundaries, professionalism, team hierarchy, availability, and operational know-how) influence how information exchange unfolds, making some consultations more prone to defects.
Roche et al “Patient and Clinician Perceptions of Factors Relevant to Ideal Specialty Consultations ”JAMA Network Open April 25, 2022;5(4):e228867. doi:10.1001/jamanetworkopen.2022.8867
USPTF downgrades use of prophylactic aspirin: Last Tuesday, the US Preventive Services Task Force (USPSTF) has released its updated 2022 recommendations,1 supported by an updated evidence report,2 to guide the use of low-dose aspirin for the primary prevention of atherosclerotic cardiovascular disease (ASCVD), changing the age ranges and recommendation grades and focusing on preventing ASCVD events. It now gives a C (chg. from 2016 B) recommendation (recommend individualizing the decision to initiate low-dose aspirin) for adults aged 40 to 59 years with a 10-year ASCVD risk 10% or greater and not at increased bleeding risk, and a D (chg. from 2016 C) recommendation (recommend against initiating) for those 60 years and older. For colorectal cancer, the 2022 recommendations concluded that the data were insufficient.
Mora et al Whom to Treat for Primary Prevention of Atherosclerotic Cardiovascular Disease The Aspirin Dilemma JAMA Intern Med. Published online April 26, 2022. doi:10.1001/jamainternmed.2022.1365
Private equity
Study: PE hospital ownership associated with improved AMI outcomes: “In this cross-sectional study of more than 21 million Medicare beneficiaries with 5 different acute medical conditions who were hospitalized at short-term acute care hospitals, PE acquisition was associated with significantly lower inpatient mortality (−1.1 percentage points) and lower 30-day mortality (−1.4 percentage points) among patients admitted with acute myocardial infarction. However, PE acquisition was not associated with significant differences in other dimensions of quality and spending or with differences across other medical conditions.”
Cerullo et al Association Between Hospital Private Equity Acquisition and Outcomes of Acute Medical Conditions Among Medicare Beneficiaries JAMA Network Open April 29, 2022;5(4):e229581. doi:10.1001/jamanetworkopen.2022.9581
Study: private equity practice acquisition concentrated in regions, specialties: Private equity acquisition of US physician practices increased from 59 deals representing 843 physicians in 2013 to 136 deals representing 1882 physicians in 2016. Because PE acquisitions are not evenly distributed across the US, some markets are more affected. This cross-sectional study examined geographic variations in PE penetration of US physician practices (share of physicians in PE-acquired practices) across 6 specialties involving 97,094 physicians: dermatology, gastroenterology, ophthalmology, obstetrics/gynecology, orthopedics, and urology. Findings: Across examined specialties, PE acquisitions of US physician practices were concentrated in certain HRRs in the Northeast, Florida, and Arizona.
Singh et al Geographic Variation in Private Equity Penetration Across Select Office-Based Physician Specialties in the USJAMA Health Forum April 29,2022;3(4):e220825. doi:10.1001/jamahealthforum.2022.0825
BuzzFeed investigative report: BrightSpring faltering after being acquired: Prominent private equity KKR spent $1.3 billion to buy group home operator BrightSpring Health Services in 2021. BuzzFeed analyzed the company post transaction finding high turnover and pressure on staff to occupy beds. KKR/BrightSpring called the report “inaccurate, misleading and fundamentally flawed.”
Profit, Pain and Private Equity: The Private Equity Giant KKR Bought Hundreds Of Homes for People With Disabilities. Some Vulnerable Residents Suffered Abuse And Neglect. BuzzFeed April 25, 2022 www.buzzfeednews.com/article/kendalltaggart/kkr-brightspring-disability-private-equity-abuse
Drug prices
Poll: Majority favor drug price legislation: GS-Hart surveyed 1000 likely voters April 19-14. Findings:
· 82% think drug prices are too high vs. 18% just right
· 85% think it should be a priority for Congress vs. 12% who think it’s not important.
· 83% think Medicare should have the power to negotiate drug prices directly vs.10% who oppose (89% of Dems, 77% of Independents and 80% of Republican voters)
· 77% favor penalizing drug companies who raise their prices above inflation vs. 16% who oppose (84% of Dems, 70% of Independents and 80% of Republican voters)
Patients for Affordable Drugs April 25, 2022 https://patientsforaffordabledrugsnow.org
Social determinants
Study: handgun carry up 41% among youth: The rate among 12- to 17-year-olds rose from 3.3% in 2002-2006 to 4.6% in 2015-2019: up among white (3.1% to 5.3%), rural (4.3% to 6.9%), and higher-income adolescents (2.6% to 5.1%) and down among Black (4% to 3.2%), American Indian/Alaskan Native (6.8% to 4.4%), and lower- income adolescents (4.3% to 3.7%).
Carey et al Prevalence of Adolescent Handgun Carriage: 2002–2019 Pediatrics April 25, (2022) 149 (5): e2021054472.https://doi.org/10.1542/peds.2021-054472
JPM: lower-income households hardest hit in pandemic: The Consumer Price Index for food increased by 13% from pre-pandemic levels. The share of spending allocated to food is also higher for older and retired individuals, who are experiencing lower income growth than the median worker.
Households stockpiled savings worth $2.5 trillion during the pandemic, with the largest % rises in liquid balance in the lowest income quartile. Black and Hispanic households, and Americans with lower incomes experienced higher % increases in balances during the pandemic, though the same was not generally true in absolute dollar terms. However, these savings did not keep with increases in the same asset classes disproportionately held by high-income White households i.e. stocks, real estate.
Rising prices for fuel, rent, and food eat into families’ financial gains JPMorgan Chase Institute Take April 2022 www.jpmorganchase.com/institute/research/household-income-spending/rising-prices-falling-gains
Hospitals
KLAS: Epic dominates EHR market: A net 74 hospitals installed or signed contracts to install Epic’s EHR platform in 2021, expanding its market share from 31% to 33%. Cerner was second with 24% followed by Meditech had 17%. Epic, Cerner and Meditech topped the market with 31%, 25% and 16% of hospitals, respectively, in KLAS’ report from last year.
KLAS Research US Hospital Market Share 2021 https://klasresearch.com/report/us-hospital-market-share-2021
Study: Hospital price variation widely variable for commercial purchasers: RAND researchers analyzed data for 3,612 hospitals across 306 hospital referral regions (HRRs) to compare commercial-to-Medicare payment rate ratios. Findings:
· Commercial-to-Medicare price ratios were fairly steady between 2012 and 2019, increasing 7%, from an average of 173% of Medicare in 2012 to 180% of Medicare in 2019; “however, these ratios varied significantly across HRRs. “
· “Had the HRR-level percentage-point increases in commercial-to-Medicare price ratios been capped at the increase observed at the national level (7%), then the average ratio would have been 164 % in 2019—that is, 9% less than the level observed (180%).” In other words, “restraining the growth rate of HRR commercial hospital price ratios to the national average during [the] sample period would have reduced aggregate spending by $39 billion in 2019.”
Trends In Hospital Prices Paid By Private Health Plans Varied Substantially Across The US Health Affairs April 2022 www.healthaffairs.org
Urban Institute: physicians charge commercial plans up to 3-X Medicare rates: Researchers analyzed claims data charges for 17 specialties from March 2019 to February 2020 covering more than 150 million people nationwide. Findings:
· Family medicine, obstetrics and gynecology, dermatology, ophthalmology, and psychiatry had the lowest commercial markups relative to Medicare prices, averaging about 110% of Medicare rates or less.
· 9 specialties received commercial payments between 120 and 150% of Medicare rates, on average. These included gastroenterology, cardiology, general surgery, and orthopedics.
· Radiology and neurosurgery received commercial payment rates of 180 and 220% of Medicare rates, whereas emergency department and critical care specialties received commercial payment rates of 250 % of Medicare rates. Anesthesia received the highest markup at 330% of Medicare rates.
Commercial Health Insurance Markups for Physician Services Urban Institute November 2021 www.urban.org
Value
Study: value-based study rigor limited: “This first systematic review of commercial value-based payment models produced three main findings. First, between 2000 and 2020 only forty-one peer-reviewed studies evaluated outcomes of commercial value-based payment programs. Most published studies were evaluations of pay-for-performance models; few were of models with downside risk. Second, our review found that value-based payment models tended to improve quality outcomes, but there was less evidence of spending reductions and improvements in the appropriateness of utilization. Finally, studies with methodologically strong designs were less likely than those using less rigorous methods to find positive results.”
Value-Based Payment Models In The Commercial Insurance Sector: A Systematic Review www.healthaffairs.org
Medicare advantage
OIG: Medicare Advantage denials inappropriate: “…among the prior authorization requests that MAOs denied, 13% met Medicare coverage rules—in other words, these services likely would have been approved for these beneficiaries under original Medicare (also known as Medicare fee-for-service)…We found that among the payment requests that MAOs denied, 18% met Medicare coverage rules and MAO billing rules. “Insurers reversed their prior authorization denials in about 3% of cases and their payment denials in 6% of cases within three months, the Office of Inspector General found. The OIG examined data from the 15 largest Medicare Advantage companies—including UnitedHealth Group, Humana, CVS Health, Kaiser Permanente and Anthem—over a one-week period in June 2019.
Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care U.S. Department of Health and Human Services Office of Inspector General Christi A. Grimm Inspector General April 2022, OEI-09-18-00260
