Last week, reports from the U.S. Departments of Labor and Commerce confirmed what many suspected: the U.S. economy is in a down cycle and recovery is unlikely before mid-2023 at the earliest. In tandem, the Central Bank will continue to raise interest rates to tamp-down the 40-year high inflation rate and consumer sentiment will flounder as wage growth lags prices hikes for fuel, food, housing and healthcare. That’s what’s ahead.
In healthcare, it’s clear what this version of healthcare purgatory means: I wrote about it last week: https://www.paulkeckley.com/the-keckley-report/2022/7/25/the-us-economy-at-the-2022-mid-point-three-immediate-implications-for-healhtcare.
· The Business of Healthcare will Get More Attention
· The Value Agenda in Healthcare will be Temporarily Delayed
· Consumer Healthcare Spending and Affordability will Take Center Stage
What’s clear is healthcare will continue to play an oversized and growing role in the economy: as fuel and food prices settle, healthcare spending will ascend to the top of employer, household, state and federal lawmaker concerns. As is has for three decades until 1Q 2022, total spending will exceed GDP growth prompting employers and insurers to shift the majority to households vis a vis premiums, deductibles, co-pays and denials.
Delayed care from the pandemic will exacerbate matters, hitting lower- and middle-income households hardest. Trilliant’s Compass estimates at least an 11% increase in commercial health insurance premiums as private payers brace for higher utilization and unit costs for drugs and hospitalization. And the likely result of Campaign ‘22 and posturing for Campaign ‘24 will lend to strong rhetoric from elected officials and candidates about needed reforms but little action beyond court proceedings.
Healthcare purgatory favors some in the industry; others will find tough sledding. Those best positioned to respond are…
· Organizations whose cost structures are low and scalable vis a vis lower labor costs, differentiated leverage in purchasing and strong balance sheets buoyed by access to capital.
· Organizations that occupy a number one or two relative market share advantage in a market or sector.
· Organizations cautious about taking risk—whether in shared risk arrangements with payers/providers, participation in alternative payment models with Medicare or diversification of the core business sans operating expertise, data and infrastructure.
· Organizations that understand healthcare consumers—motivations, price-value relationships, circumstances, health and well-being.
Based on these, those more favorably positioned in healthcare’s financial purgatory for the next 12-18 months are these:
· Primary care disruptors whose clinical models include integration of physical, mental, dental and nutritional care delivered through technology-enabled self-care and aggressive referral coordination in capitated arrangements with insurers and large employers.
· Regional systems of health (operated by hospitals, health plans, medical groups, disruptors or insurers) that have successfully re-positioned inpatient services as cost centers in a network of physician, ancillary and alternative health services accessed through a strong primary care gatekeeper model and funded through insurance partnerships.
· High-volume, low-cost specialty/niche providers who produce equivalent or better outcomes for targeted populations (i.e., dual eligibles, workers comp, severe dementia/mental health, et al) and inpatient surgical care with significant cost variability) attached to customized insurance carve-outs.
There’s no doubt the landscape will shift: the traditional red-lines between payers and providers, physical and behavioral health and not-for-profit and for-profit ownership will be crossed. Chasing Christmas ornaments for recognition will be passe; solid execution and cost-management will be the rule of play. And Boards of Directors will be forced to re-consider the role, scope and future path of their organization’s growth and innovation outside traditional comfort zones and assumptions.
That’s what’s ahead. Healthcare purgatory is a time to re-group, re-think and re-invest.
Paul
PS: I am a not-too-good but avid golfer so the upstart LIV Tour vs. PGA is a fascinating story prompting comparisons to other industries being disrupted by sometimes unwelcome change agents. Ben Cohen’s piece “Money Can’t Buy the Future of Golf” asserts that the Saudi-backed upstart tour sponsor might prompt the PGA Tour to innovate: “There is something counterintuitive at the heart of so many clashes like golf’s civil war: What seems like an existential risk is really an opportunity for reinvention. Complacency breeds competition, then competition sparks rivalry, and rivalry kindles innovation.…The PGA Tour’s best shot against LIV’s seemingly bottomless pockets is better strategy. Ideas are the most effective and the most affordable way of leveling the playing field…. How things have always been done is not always the way they should be done “ Seems to me highly applicable in the current world of healthcare purgatory!
Resources
Sanjula Jain Delayed Care Leads to Increased Costs for Patients and Payers Alike Trilliant Health July 11, 2022 www.trillianthealth.com
Ben Cohen Money Can’t Buy the Future of Golf WSJ July 28, 2022www.wsj.com/articles/liv-golf-pga-tour-rivalry-trump
Public opinion
Morning Consult: consumer confidence in US at all-time low: Per on Morning Consult Economic Intelligence daily surveys of 19,000 across the world’s 44 largest economies for June:
· Global consumer sentiment fell for the 9th consecutive month in June with Morning Consult’s Index of Consumer Sentiment declining in 37 of 44 countries. The average monthly change in the ICS across the 44 countries was -3.3%.
· In the U.S., the Index fell 5.3% from May to 75.3
· “U.S. adults across the income spectrum are becoming more pessimistic, with the Index of Consumer sentiment falling across income groups in June. • However, the deviation between high- and low-income Americans is narrowing, as consumer sentiment among adults from households earning above $100,000 falls further and more quickly.”
Related: Consumer sentiment worsened in July for lower-earning households, but improved for those with more money per the July Morning Consult/Axios Inequality Index: down 2.7% in households with annual incomes of less than $50,000 a year, but up 1% among those earning more than $100,000.
Global Consumer Sentiment Has Yet to Find a Floor Morning Consult July 20022 https://go.morningconsult.com/2022-07-pg8139a1-global-consumer-confidence-report
Gallup: Americans’ Confidence in Major U.S. Institutions Down, Medical system #4 of 14: Findings from Gallup’s June 1-July 5 polling:
· 33% average confidence in 14 major institutions, down from 36% in 2020
· Public schools, medical system down after double-digit increases in 2020.
· Small business, military elicit the most confidence; Congress, the least
· The most trusted institutions are small business (70%, up 2% since ‘19), the military (69%, down 4% since ’19), the police (51%, down 2% since ’19) and the medical system (44%, up 8% since ’19 but down 7% from ‘20).
Gallup www.gallup.com
KFF Poll: Vaccines for young children get pushback from parents: With the FDA granting emergency use authorization for the Moderna and Pfizer COVID-19 vaccines for children ages 6 months through 4 years old, 43% of parents of children in this age group say they will “definitely not” get their child vaccinated for COVID-19. Republican or Republican leaning parents (64%) and parents who are themselves unvaccinated (64%) are particularly likely to say they will “definitely not” vaccinate their youngest children. Major concerns the newness of the vaccine and not enough testing or research, concerns over side effects, and worries over the overall safety of the vaccines. Additionally, about one in ten parents say they do not think their child needs the vaccine or say they are not worried about COVID-19.
Lopes et al KFF COVID-19 Vaccine Monitor Kaiser Family Foundation: July 2022www.kff.org/coronavirus-covid-19/poll
Care Management
Elder Care: loneliness is a key factor in health status: Per the Elder Index, developed by researchers at the Gerontology Institute at the University of Massachusetts-Boston:
· 54% of older women living alone are: either poor according to federal poverty standards or with incomes too low to pay for essential expenses. For single men, the share is lower but still surprising — 45%.
· 5 million older women and 2 million older men live alone, and more than 2 million older couples had incomes that made them economically insecure.
· A single older adult in good health paying rent needed $27,096, on average, for basic expenses in 2021 — $14,100 more than the federal poverty threshold of $12,996. For couples, the gap between the index’s calculation of necessities and the poverty threshold was even greater.
‘True Cost of Aging’ Index Shows Many Seniors Can’t Afford Basic Necessities July 25, 2022 Elder Index
USPSTF Recommendation: Behavioral Counseling Interventions to Promote Healthy Behaviors for CVD Prevention Background: Cardiovascular disease (CVD), which includes heart disease, myocardial infarction, and stroke, is the leading cause of death in the US. Adults who adhere to national guidelines for a healthy diet and physical activity have lower rates of cardiovascular morbidity and mortality than those who do not; however, most US adults do not consume healthy diets or engage in physical activity at recommended levels.
Recommendation: “The USPSTF concludes with moderate certainty that behavioral counseling interventions have a small net benefit on CVD risk in adults without CVD risk factors. The USPSTF recommends that clinicians individualize the decision to offer or refer adults without CVD risk factors to behavioral counseling interventions to promote a healthy diet and physical activity.”
Behavioral Counseling Interventions to Promote a Healthy Diet and Physical Activity for Cardiovascular Disease Prevention in Adults Without Cardiovascular Disease Risk Factors US Preventive Services Task Force Recommendation Statement US Preventive Services Task Force JAMA July 26,. 2022;328(4):367-374. doi:10.1001/jama.2022.10951
Walmart study: rural health needs better solutions: Last week, Walmart and Medscape released the Healthcare Professionals’ Perspectives on Healthcare in Rural America based on a survey of 10,000 primary care professionals. Findings:
· Rural primary care health care professionals ranked quality as a greater concern than access to care in their communities, particularly for chronic care and mental health.
· Rural health care professionals are utilizing telehealth already. It is not a new tool and is integrated into the care they currently provide. Fewer than two in five rural clinicians are optimistic that these tools will improve care quality. Non-rural HCPs also do not see remote monitoring and personal tech as offerings that will improve quality of care.
· Rural health care professionals highlighted more staff for team-based care, better community support systems and patient financial assistance as the top three factors that would improve the quality of care they provide.
“Walmart offers programs to support SDoH such as food insecurity, maternal and infant health, diabetes and hypertension solutions to improve overall health disparities. With 90% of the US population located within 10 miles of a Walmart, and 4,000 of our stores located in medically underserved areas as designated by the Health Resources and Service Administration (HRSA), Walmart is in a unique position to provide health and wellness services to all Americans, particularly those in rural and underserved communities.”
Cheryl Pegus New Study from Walmart and Medscape Show Quality of Care is Most Concerning to Primary Care Healthcare Professionals in Rural America June 9, 2022https://corporate.walmart.com
Cambridge Alliance Study: 31% of dietary supplements with FDA warnings still sold: CHA analyzed 31 dietary supplements that had amphetamine analogue β-methylphenethylamine (BMPEA), the ephedrine analogue methylsynephrine, or the dimethylamylamine analogue octodrine (DMHA). The FDA issued warning letters for these stimulants in 2015, 2016, and 2019, respectively. Findings:
Of the 31 products, 1 (3%) was recalled by the manufacturer, 9 remained available for purchase online a mean of 6 years after the FDA issued warning letters. After chemical analysis, 5 of the 9 products were found to contain at least 1 FDA-prohibited ingredient, 4 contained 1 prohibited ingredient and 1 product contained 3 different prohibited ingredients.
PK note: The study methodology used in this study is limited due to the small sample size, and by the fact that only one sample of each supplement was analyzed, so the results may not be generalizable to all dietary supplements subject to FDA warning letters. It is also unclear whether the presence of banned substances may vary by batch or over time.
Cohen et a Recalls, Availability, and Content of Dietary Supplements Following FDA Warning Letters JAMA. 2022;328(4):393-395. doi:10.1001/jama.2022.9734
Hospitals
Wall Street Journal analysis: Nonprofit hospital tax breaks questioned: The Journal analyzed annual cost reports filed by hospitals with Medicare for the most recent year available (2020 or 2021) comparing hospitals’ charity-care costs and net revenue from patient care to gauge how much help they give to patients struggling with medical bills. The Journal also reviewed dozens of hospitals’ published financial-aid policies. Veteran WSJ Healthcare industry reporters Matthews, McGinty and Evans wrote:
“These charitable organizations, which comprise the majority of hospitals in the U.S., wrote off in aggregate 2.3% of their patient revenue on financial aid for patients’ medical bills. Their for-profit competitors, a category including publicly traded giants such as HCA Healthcare Inc., wrote off 3.4%, the Journal found in an analysis of the most-recent annual reports hospitals file with the federal government.” Findings:
Big Hospitals Provide Skimpy Charity Care—Despite Billions in Tax Breaks Wall Street Journal July 25, 2022 www.wsj.com/articles/nonprofit-hospitals-vs-for-profit-charity-care-spending
USNWR 2022-2023 Best Hospitals: Expanded methodology, same results: In 2022-2023, U.S. News Best Hospitals ranked hospitals in the U.S. in 15 adult specialties as well as recognized hospitals by state, metro and regional areas for work in 20 more widely performed procedures and conditions. Of the nearly 5,000 hospitals analyzed and 30,000 physicians surveyed, 20 offering “exceptional treatment in specialties were listed as the Honor Roll led by Mayo Clinic (7th consecutive year), 164 hospitals ranked in at least one of the specialties and 493 were recognized as “Best Regional Hospitals”.
In specialty care rankings, the University of Texas MD Anderson Cancer Center in Houston ranked No. 1 in cancer, the Cleveland Clinic was #1 in cardiology and heart surgery, and NYU Langone Hospitals placed first in neurology and neurosurgery.
PK note: the “Best Hospitals” methodology uses measures, such as survival rates, complication rates, patient experience, level of nursing care, and the ability of hospitals to successfully help their patients get back home based on data provided by CMS, the American Hospital Association, and professional organizations and medical specialists. This year,3 new cancer ratings were added for ovarian, prostate, and uterine cancer surgeries plus health equity measures designed to highlight which hospitals provide more care to low-income patients as well as which ones have racial disparities in certain surgical outcomes.
Best Hospitals | U.S. News Hospital Rankings and Ratings | US News Best Hospitals
Leapfrog recommends diagnostic error attention by hospitals: Last week, Leapfrog Group released 29 recommendations for how hospitals can improve patient safety by decreasing diagnostic errors. Leapfrog defines a diagnostic error as either a diagnosis that is delayed, inaccurate, or missed, or a correct diagnosis that is not communicated to the patient and their family. Per Hopkins, 250,000 hospital patients experience diagnostic errors each year contributing to more than 40,000 deaths in adult intensive care units.. Diagnostic errors also account for one-third of severe harm malpractice claims. and 75%, are attributed to the categories of cancer, cardiovascular events and infection, according to research by the Society to Improve Diagnosis in Medicine.
Leapfrog www.leapfroggroup.org
Study: 1 in 7 households hit catastrophic spend for insulin: Researchers analyzed out-of-pocket spending on insulin from 2017-2018 and risk factors that could contribute to the likelihood of a person experiencing catastrophic spending (spending more than 40% of their post-subsistence family income on insulin alone). Findings:
· Among Americans who use insulin, 14.1% (1.2 million) reached catastrophic spending over the course of one year: Nearly two-thirds of these were Medicare beneficiaries.
· Catastrophic spending was 61% less likely among Medicaid beneficiaries than among Medicare beneficiaries, suggesting that factors other than income must be considered.
Bakilla et al Catastrophic Spending On Insulin In The United States, 2017–18 July 2022 https://doi.org/10.1377/hlthaff.2021.01788
Study: young children exiting urban markets: Per the Economic Innovation Analysis, from July 2020 to July 2021, the number of children under five years of age in large urban counties—those intersecting with an urban area of at least 250,000 people—fell by 238,000, a one-year drop of 3.7 %. Including the early months of the pandemic in 2020, this figure grows even larger. Between 2019 and July 2021, large urban counties saw their under-five population fall by 358,000 children, a decline of 5.4 %.
Overall, between 2010 and 2021, the population of children under five fell by more than 1.3 million, or 6.8%, and in 2019 alone, it fell by 207,000, or 1%. Further, large urban areas saw a greater loss of under-five population than other county types before the pandemic. In 2019, large urban areas had seen their under-five growth rates fall to -1.5%; however, this change was relatively close to the nationwide average of -1% and close to other county types’ growth rate
Economic Innovation Institute Analysis | July 27, 2022
Economy
Second quarter GDP down, recession inflation draw attention from feds: Three key indicators reported from federal agencies last week:
· Wednesday, the Federal Reserve raised the interest rate hike of three-quarters of a percentage point. Members voted unanimously in favor of the aggressive move to tackle white-hot inflation. Friday, the Commerce Department reported that U.S. households’ spending rose more rapidly in June as annual inflation hit a new four-decade high, outpacing income growth: seasonally adjusted spending increased 1.1% in June, up from a revised 0.3% increase in May, personal income rose by 0.6% last month, the same as May. After taxes and adjusting for inflation, incomes fell by 0.3%. In the second quarter, Worker pay and benefits rose 1.3% in the second quarter—a near record pace—and consumer spending rose 1.1% in June, accelerating from May. The biggest increases in spending on services came partly from food in the form of hotels and restaurants, which added 0.6 percentage points to the annualized G.D.P. number. The biggest decrease in spending also came from food, in the form of groceries and meals meant to be eaten at home, which subtracted 0.65 percentage points from growth. Spending on health care also increased, adding 0.4 percentage points to the annual rate of economic growth.
· Major stock indexes rose Friday in 9 of the S&P 500’s 11 sectors advancing. The energy group led with a gain of 4.5%, while the consumer staples segment brought up the rear with a decline of 0.7 to end their best month since 2020, clawing back some of their losses from a dismal first half. The S&P 500 gained 9.1% in July, while the Dow Jones Industrial Average rose 6.7%, the strongest monthly showing for each index since November 2020. The tech-heavy Nasdaq Composite climbed 12% for its best month since April 2020.The major indexes are deep in negative territory for 2022, after the S&P 500 ended June with its worst first half since 1970. The benchmark is now down 13% for the year
· As of Friday, 56% of S&P 500 companies have reported earnings for their recently ended quarter, according to FactSet. Nearly 75% have reported per-share earnings ahead of expectations, lifting the projected growth rate for the period. Overall, earnings are on track to rise 6% this period, FactSet said, which would still mark the slowest rate since the end of 2020. Revenue for the period is on track to grow 12%. Notable healthcare companies reporting this week: CVS, Moderna, Amgen, Pfizer, Apollo Global Management
Dan Seal Starbucks, Uber, CVS to Report Earnings Amid Shrinking Economy WSJ July 30, 2022www.wsj.com/articles/starbucks-uber-cvs-to-report-earnings-amid-shrinking-economy
Altarum: health spending down in 1Q unprecedented: In 2021, real health care spending growth was flat, and in the first quarter of 2022, real health care spending actually declined by 1.7% year over year. This is 7 full percentage points lower than the long-term average (+5.3%). As a result, we have also seen health spending decline as a percentage of US GDP (falling from a peak of over 20% in mid-2020 to 18.0% in May 2022) as overall US economic growth has rebounded much faster than health spending in the post-2020 period.
June 2022 Health Sector Economic Indicators Briefs | Altarum www.altarum.org
Courts
ACA preventive care requirement challenged in Texas court: Last week, arguments began in a Texas court trial over (Kelley v. Becerra),on the Affordable Care Act provision that requires payers to cover preventive services with no cost sharing: included are vaccinations, cancer screenings, HIV prevention drugs, smoking-cessation services, vaccinations, contraception, maternal and postpartum services and youth developmental support with no cost sharing. The plaintiffs represent a coalition of employers who object to the requirement arguing that the provision is unconstitutional in several ways because it violates the Religious Freedom Restoration Act because it requires coverage of pre-exposure prophylaxis, a preventive HIV medication. If the plaintiffs win, payers would not have to cover preventive care for members. Providers oppose ending the provision: the American Medical Association released a statement July 25 in conjunction with 61 medical associations to condemn the lawsuit. The provision is also supported by the Justice Department and 21 state attorneys general.
Another Legal Challenge to the ACA Managed Healthcare Executive July 26, 2022 www.managedhealthcareexecutive.com/view/another-legal-challenge-to-the-aca
Justice department challenge to United acquisition of Change starts today: Today at the federal courthouse in Washington, D.C., the Justice department trial begins as it seeks to block UnitedHealth Group Inc., UNH 0.16%▲ the parent of the nation’s largest insurer, from acquiring health-technology firm Change Healthcare, CHNG -0.45%▼ a deal valued at $13 billion. In its litigation, the department argues UnitedHealth’s acquisition would give it access to sensitive industry data that it could use to harm competitors. The companies in both matters deny the allegations and say the government misunderstands their industries.
UnitedHealth has said the combined company could improve care by providing better information to doctors and reduce waste by making the healthcare payment process more efficient. “The Department of Justice’s highly speculative theories on our combination are simply wrong and do not reflect the realities of how our business or the health system works,” Optum said.
The Justice Department argues the deal will give UnitedHealth a virtual monopoly on a key tool that health insurers use to determine when a claim should be paid. And it says the company shouldn’t be allowed to own Change Healthcare’s data clearinghouse, which rival insurers use to compete with UnitedHealth.
Justice Department Sues to Block UnitedHealth Group’s Acquisition of Change Healthcare US Department of Justice Feb 24, 2022 www.justice.gov/opa/pr/justice-department-sues-block-unitedhealth-group-s-acquisition-change-healthcare
Telehealth fraud gets fed’s attention: On July 20, 2022, the Office of Inspector General (OIG) of the U.S. Department of Health & Human Services (HHS) released a Special Fraud Alert on telemedicine. On the same day, the U.S. Department of Justice (DOJ) announced a “nationwide coordinated law enforcement action” against 36 defendants, and the Centers for Medicare & Medicaid Services (CMS) Center for Program Integrity announced administrative actions against 52 providers, related to alleged telemedicine arrangements.
Coordinated Actions Indicate Growing Scrutiny of Telemedicine Health Capital Topics July 2022 www.healthcapital.com
HCA faces SEC challenge over Mission acquisition: On July 27, the city of Asheville, N.C., and Buncombe County filed a lawsuit against HCA and Mission Health, which is owned by HCA. The lawsuit alleges the health systems have engaged in anti-competitive practices. It is the third lawsuit of its kind filed against HCA and Mission in less than a year by entities in Western North Carolina, according to the Citizen Times.
On July 28, a union-backed investment group filed a Securities and Exchange Commission complaint against HCA. The complaint alleges the company failed to disclose information regarding risks related to allegations of Medicare fraud.
Asheville, Buncombe file lawsuit against HCA/Mission Health, which vows to fight back Asheville Citizen Times July 31, 2022 https://www.yahoo.com/lifestyle/asheville-buncombe-file-joint-class
Teva reaches opioid settlement deal: Last week, Jerusalem-based Teva Pharmaceuticals, one of the country’s biggest manufacturers of generic opioids, announced a $4.25 billion settlement in principle with some 2,500 local governments, states and tribes over the company’s role in the opioid epidemic.
Though much lesser-known, Teva, an Israeli company, and its affiliates produced more prescription opioids during the peak years of the crisis than marquee-name opioid manufacturers such as Johnson & Johnson did. Its production of both generic and branded painkillers dwarfed the output of Purdue Pharma, the maker of OxyContin, the medication most immediately linked to overdoses. The 13-year payout includes $550 million in settlements the company had already struck as trials got underway in San Francisco as well as in Florida, West Virginia, Texas, as well as up to 12% in lawyers’ fees.
Jan Hoffman Teva Reaches Tentative $4.25 Billion Settlement Over Opioids NYT July 26www.nytimes.com/2022/07/26/health/teva-opioids-settlement
Investing
KHN Report: Private equity active in hospice market: “Hospice care, once provided primarily by nonprofit agencies, has seen a remarkable shift over the past decade, with more than two-thirds of hospices nationwide now operating as for-profit entities. The ability to turn a quick profit in caring for people in their last days of life is attracting a new breed of hospice owners: private equity firms. According to a 2021 analysis, the number of hospice agencies owned by private equity firms soared from 106 of a total of 3,162 hospices in 2011 to 409 of the 5,615 hospices operating in 2019. Over that time, 72% of hospices acquired by private equity were nonprofits. And those trends have only accelerated into 2022.”
Background: Studies have shown that For-profit hospices tend to hire fewer employees than nonprofits and expect them to see more patients. They utilize more licensed practical nurses (LPNs) and nurses aides than registered nurses (RNs) to cut costs. According to the Medicare Payment Advisory Commission, for-profit hospices had Medicare profit margins of 19% in 2019, compared with 6% for nonprofit hospices. And private sponsors have seen strong returns on their hospice investments: example: In 2017, Webster Equity Partners bought Bristol Hospice, with 45 locations in 13 states, for $70 million. Last year, the firm reportedly entertained purchase offers for the hospice chain as high as $1 billion.
Markian Hawryluk Hospices Have Become Big Business for Private Equity Firms, Raising Concerns About End-of-Life Care Wall Street Journal July 29, 2022 https://khn.org/news/article/hospices-private-equity-firms-end-of-life-care
Private equity deals face added scrutiny from regulators: FTC Chairman Lina Khan in June stated that “private equity firms’ business models may in some instances distort incentives in ways that strip productive capacity, degrade the quality of goods and services, and hinder competition.” In a recent address, Deputy Assistant Attorney General Andrew Forman said that because of concerns about private equity, the Justice Department’s Antitrust Division “often looks more favorably on a market participant as a buyer of assets than a private equity firm.”
This skepticism has spurred enforcers to scrutinize private-equity deals more than those involving other market participants. The FTC recently subjected a private-equity firm to “heightened legal obligations,” beyond the scope of real-world competition concerns, as a condition of approving an acquisition. This included a rare obligation to seek FTC permission to engage in certain future merger activity in the same industry, predicated on the acquirer’s status as a private-equity firm.
Wall Street Journal July 30, 2022 www.wsj.com/articles/antitrust-attacks-on-private-equity-hurt-consumers-lina-khan-ftc-recession-competition-management-expertise-capital
Abortion
Kansas voters weigh in on abortion: Tomorrow, Kansas voters will determine if the Republican-dominated legislature can re-write the state’s constitution which guarantees abortion services. It will be the nation’s first direct electoral test of abortion rights since the Supreme Court’s ruling in Dobbs v. Jackson Women’s Health Organization. Note: since the primary features tight Republican races and few Democratic contests, GOP voter turnout is expected to be high virtually guaranteeing the change will pass.
Peter Slevin The First Post-Roe Vote on Abortion New Yorker July 30, 2022 www.newyorker.com/news/dispatch/the-first-post-roe-vote-on-abortion
Covid
Study: Paxlovid not reaching communities with highest need: Background: Clinical trials for Paxlovid, an antiviral drug that fights covid-19 and is produced by Pfizer, were halted in November once it was shown to reduce deaths by 89% among high-risk patients. The Economist analyzed its use to date: “Nationwide data from America, where 2.4m courses have been prescribed, do not show a clear effect. After doses of the drug ramped up in May, the case-fatality rate (cfr) has been flat and the case-hospitalization rate (chr) has increased…Instead, the drug may not be reaching those who need it most. The counties prescribing Paxlovid the most tend to have high vaccination rates and few comorbidities, such as diabetes. On average, people in these areas are unusually likely to survive covid even without Paxlovid’s help…Paxlovid is rare in counties that have low vaccination rates, and where many are poor and unhealthy. People with covid in these areas may be less likely to seek out and obtain the drug when it is effective, during the first five days of illness.”
Paxlovid appears to be reaching the Americans who need it least The Economist July 28, 2022 www.economist.com/graphic-detail/2022/07/28/paxlovid-appears-to-be-reaching-the-americans-who-need-it-least
Data Privacy
STAT Investigation: IQVIA mishandling of data: Investigative Reporter Casey Ross discovered privacy lapses in the company’s secretive and long-running relationship with the credit reporting firm Experian, whose detailed consumer data it buys and then links with Americans’ health records — all to deliver marketing insights to drug companies and device makers.
Casey Ross Internal documents show privacy lapses at a data powerhouse that holds health records and consumer information on millions of Americans STAT July 28, 2022 www.statnews.com/2022/07/28/health-data-privacy-iqvia-experian
Prescription drugs
Manchin, Schumer strike $740B deal, next stop Senate vote: Senator Joe Manchin (D-WV) and Senate Majority Leader Chuck Schumer (D-NY) agreed to the Inflation Reduction Act of 2022 bill which gives Medicare the ability to negotiate drug prices starting in 2026 and caps seniors’ out-of-pocket costs at $2,000 per year. It also includes $64B to extend the enhanced tax credits for Affordable Care Act exchange plans through 2025, avoiding health plan rate increases for millions of Americans.
Government price negotiation and the inflation rebate would reduce U.S. drug spending by $202.5 billion over a decade, according to the Congressional Budget Office. The U.S. is projected to spend $380.4 billion on prescription drugs this year, excluding those used in hospitals and outpatient clinics, and $567.1 billion in 2030, according to Medicare actuaries.
U.S. Would Gain Power to Negotiate Drug Prices Under Manchin-Schumer Bill WSJ July 29, 2022www.wsj.com/articles/u-s-would-gain-power-to-negotiate-drug-prices-under-manchin-schumer-bill
Consumers
Study: Credit, debit card use increased in 2Q: U.S. credit-card dollar payment volume at Mastercard MA 0.38%▲ and Visa collectively V 0.36%▲ grew about 22% year-over-year in the most recent quarter, while U.S. debit payments grew around 3%, according to recent reports by both companies. Mastercard’s Spending Pulse survey, which also tracks cash and checks, showed U.S. retail sales excluding automotive and gas purchases were up 6% in the second quarter versus the prior year. Payment-network providers such as Mastercard and Visa, as well as merchant payment providers such as Fidelity National Information Services and Fiserv, have outperformed the S&P 500 this year despite worries about the impact of inflation on the consumer. There is no data yet to suggest that is the wrong call.
Payments Companies Don’t Mind If You Buy Generic Wall Street Journal July 30, 2022 www.wsj.com/articles/payments-companies-dont-mind-if-you-buy-generic
Primary Care
Amazon-One Med deal: “The size of the US primary care market is estimated to be worth more than $266 billion in revenue, according to IBISWorld, an industry research company. For now, a good chunk of patients in the US are still served by legacy practices, where it can take weeks to get an appointment, forms must be filled out by hand, and billing is arcane and inefficient.”
Amazon’s interest in healthcare includes PillPack, an online pharmacy, in 2018 for $753 million and established Amazon Care, a health clinic for its employees. Carbon Health, Oak HC/FT Cityblock, Forward and Carbon Health.
Marina Temkin Paging Dr. Amazon: How the tech giant’s One Medical deal will shake up patient care July 29, 2022
Primary care groups organize effort to address whole person care: The Health Affairs Opinion asserts “…existing systems are failing to meet the need for whole-person care, including addressing the impact of life stressors and trauma, which have only intensified during the COVID-19 pandemic.” To help enable such efforts, eight of the nation’s leading physician organizations…established the BHI Collaborative. Per the BHI:
· Although many US adults reported a behavioral health condition prior to the COVID-19 pandemic, less than half received treatment in 2019.
· As many as 50%t of behavioral health disorders begin by age 14. Between 13% and 20% of US children and adolescents—or approximately 15 million youth—experience a behavioral health disorder in any given year with suicide as the second leading cause of death among 10- to 24-year-olds. Individuals with co-occurring physical and behavioral health conditions also tend to incur higher health care costs and experience worse overall health outcomes.
· up to 70% of all primary care visits include a behavioral health component.
· Across the US, behavioral health conditions affect about 17% of commercial beneficiaries, 41% of traditional Medicare, 26% of Medicare Advantage beneficiaries, and about 20% of Medicaid beneficiaries.
· According to a 2018 Milliman Report, BHI has the potential to save about $38 billion to $68 billion annually across all payer types with the majority of savings to be gained in the commercial space ($19.3 billion to $38.6 billion). Yet, persistent underpayment or lack of payment to primary care clinicians for behavioral health services are at least in part fueling the access crisis.
Harmon et al Combating A Crisis By Integrating Mental Health Services And Primary Care July 8, 2022 10.1377/forefront.20220706.603540 www.healthaffairs.org
