The murder of UnitedHealth Group executive Brian Thompson (aka BT) December 4 and prosecution of his alleged killer Luigi Mangione in Pennsylvania and New York will be in the media spotlight for months to come. The 26-year-old data scientist’ antipathy toward the health industry will be the sidebar in most coverage.
The details about what prompted this young man– born to privilege—to empty three 9MM shells from a homemade ghost gun into BT’s back remain unknown. What’s confirmed is he was not a member of a United Health plan but harbored intense animus toward “corporate healthcare” per NYPD investigators. Though extreme, his sentiment is shared by two out of three Americans whose discontent with how the system operates is mounting. They want less red-tape, transparent prices that are predictable and affordable, and simplification across the board. And they’d like to be treated as persons, not statistics.
Media coverage about insurers and the health system since the incident has been brutal. Health industry CEOs and trade groups have decried the killing. Insurers have pledged fresh attention to their coverage and denial policies and procedures. Every healthcare company has pledged added security for their executives and expressed sympathy to the families involved. But a promise to fix the widely-known systemic flaws in “corporate healthcare” has not been made. Instead, critics of corporate insurance have amped up calls for regulatory relief and higher reimbursement. That’s it.
Our system is fragmented by design, opaque by habit, resistant to change and considers criticism by outsiders unfair or ill-informed. Success and incentives in most healthcare organizations are based on short-term financial performance. Transparency is a threat and innovation is incremental. In the vast majority, Boards are rarely more than rubber stamps for management as long as “the numbers are hit.”
Tension between payers and providers, investor-owned and not-for-profit ownership and preventive health and specialty care has calcified and Executives are promoted as celebrities. In the process, the public’s attention is drawn to the industry where ministry and mission appear subordinate to corporatization and profit.
The killing of Brian Thompson is a tipping point for the industry. Public reaction about ‘corporate healthcare’ has been loud and uniformly negative. But none of the system’s major trade groups, coalitions and councils has offered a path forward for systemic transformation. Systemic reform is more talk than do.
Transformation isn’t theoretical. It’s not optional. It’s the imperative of now. Other systems of the world perform significantly better than ours. It’s an inconvenient truth. The most effective of these produce better outcomes and spend less because they are built on 1- a primary and preventive health front door, 2- spending limits and 3- financing schemes involving consumers, employers and governments. They’re not perfect, but they perform better than ours.
The incoming Trump administration and 119th Congress enjoy a public mandate to disrupt the status quo. Healthcare will be a key target. Streamlining HHS’ 13 operating agencies, overhauling the FDA and CMS, modernizing the healthcare workforce, enhancing value-based purchasing, facilitating AI-enabled self-care, cutting administrative overhead, integrating health and social services and expanding price transparency are its starting points. Transformation, not incrementalism and self-protection, is its aim. Corporate healthcare is not their enemy; rather, it’s the special interests that have metastasized mediocrity to protect themselves.
I believe transformational change is urgently needed. The public—our patients, members, users, enrollees, voters and communities—agrees. That process should focus first on defining its long-term aims, then structure and financing and finally the roles and capabilities necessary to its implementation. Regrettably, in the U.S. system, efforts toward transformation are shortcut because questions about who controls what are considered first, not third, to protect the institutions important to their status quo.
That’s not the future. The public expects more and they’re tired of industry pushback and excuses.
Paul
PS: References and additional support for my commentary today are included in the sections that follow. Pay particular attention to the Quotables this week. They reflect the gravity of attention now being directed toward the health system’s performance, players and need for change. Thanks for reading.
Sections in today’s report
- Quotables
- Aftermath of Brian Thompson Murder & health insurers
- Health system transformation
- Miscellaneous Industry
- Corporate
- Economy
- Employers
- Governance
- Hospitals
- Insurers
- Investors
- Legislation & Policy
- Physicians
Quotables: Aftermath of Brian Thompson’s murder & health insurers
Andrew Witty, UHG CEO, on BT murder: “Healthcare is both intensely personal and very complicated, and the reasons behind coverage decisions are not well understood. We share some of the responsibility for that.
We greatly appreciate the enormous outpouring of support for Brian. Yet we also are struggling to make sense of this unconscionable act and the vitriol that has been directed at our colleagues who have been barraged by threats. No employees — be they the people who answer customer calls or nurses who visit patients in their homes — should have to fear for their and their loved ones’ safety.”
Andrew Witty, CEO UnitedHealth Group UnitedHealthcare CEO’s killing lays bare rising security risks facing health care leaders
Elliott Fisher (Dartmouth) on insurer influence: “Decades ago, the health insurance business put in place a dike to hide and contain the public’s disdain for for-profit health insurers, and to keep reformers at bay. Now, that dike might collapse.
As the former VP of corporate communications at Cigna, I played a role in building and fortifying that dike. Every year, my colleagues and I across the industry devoted massive amounts of the money — money our customers paid us to cover their medical care — on lobbying, campaign contributions, deceptive PR campaigns, and even charitable donations to buy goodwill. All of that was spent for the sole purpose of maximizing shareholder return. Restricting patients’ access to needed care made UnitedHealth, Cigna and a handful of other big insurers Wall Street darlings, and made lots of people lots of money while doing little to enhance care.
Much of that spending was to create the illusion that we Americans are happy with our health care system and don’t want politicians to get any bright ideas about changing it…”.
Insurance companies like United Healthcare are not the only ones to blame for a broken system
Wendell Potter on UHG profit focus: “An argument could be made that the medical loss ratio provision of the ACA has contributed to or even fueled the vertical integration of the big insurers, UnitedHealth especially. UnitedHealth is massively bigger and more profitable than it was on the day I first testified as a whistleblower, June 24, 2009, when it ranked 21st on the Fortune 500 list of U.S. companies. Its share price at the close of trading that day was $24.81. Hundreds of acquisitions later, UnitedHealth is now the fourth largest U.S. company — just behind Walmart, Amazon, and Apple. At the end of trading on Monday of this week, the share price was $560.62. That’s an increase of more than 2,100% since June 24, 2009. By comparison, the Dow Jones average has increased 438%.
In the years since then, UnitedHealth, Cigna, and a handful of other New York Stock Exchange corporations have cemented their roles as unelected gatekeepers to care, and Americans are now waking up as they never have before to the consequences of that. If their rage can be harnessed and channeled, that dike the industry built might just give way.”
Wendell Potter, former VP, corporate communications, Cigna, and publisher of HEALTH CARE un-covered Dec. 11, 2024 “I used to do health insurance company PR. Here’s what I think the backlash is missing Don’t overlook Wall Street’s role in the broken system” https://www.statnews.com/2024/12/11/wall-street-unitedhealthcare-ceo-shooting-brian-thompson
Bob Herman on insurance industry and murder of Brian Thompson: “…The reactions were pretty morbid. Pretty grim. The dancing on the death of somebody was pretty vile. But anyone who covers health care knows that people are fed up with the system. This is not new. This has been going on for decades. Even when the Affordable Care Act, or Obamacare, came into play 15 years ago, people still hated the system and it’s persisted since then. So, people’s frustrations have been bubbling under the surface for so long. To say you were surprised by all the reactions, then I think maybe you had your head buried in the sand a little bit…
This is systemic. This is not isolated to just UnitedHealthcare. UnitedHealthcare gets the most criticism and heat for this because they are the largest and they’re a very common provider for any workplace plan. But there are other large insurers: Cigna, Aetna, all the Blue Cross Blue Shield plans, Humana. This is just how US health insurance works. This is a systemic issue, especially for the insurance companies that are on the stock market. They have a duty to make money for shareholders. And one of the ways that they do that is by making sure that they pay out fewer claims. The most-watched number on every earnings call for an insurer is what’s called the “medical loss ratio.” That’s a number that says how much money from our premiums we spend on medical care, and lower is better. If it’s higher than expected, Wall Street freaks out. I think that kind of tells you a lot.”
Veteran healthcare journalist Bob Herman quoted in “How UnitedHealthcare became the face of a broken health care system” Vox December 11, 2024 https://www.vox.com/today-explained-podcast/390553/unitedhealthcare-shooting-luigi-mangione-health-insurance
Quotables: Health industry transformation
David Johnson on health system’s ‘original sin’: “Slavery was the nation’s original sin. American society continues to struggle with race in its aftermath. As with slavery, U.S. healthcare contains fundamental and foundational flaws that have caused incalculable physical, emotional and financial harm to the American people.
The healthcare system’s artificial economic model and its capture by special interests make U.S. healthcare grotesquely expensive, breathtakingly inequitable, ridiculously fragmented, almost impossible to navigate and dangerously imbalanced. All resources flow into treatment. Little flows into prevention and health promotion.
In essence, U.S. healthcare pays for treatment volume, not health outcomes. A vast network of intermediaries parries payment back and forth as all parties seek to optimize revenues and profits. Healthcare’s original sin is that its practitioners and their enablers do not see a human being at the receiving end of its transactions. Instead, they see a diagnostic, a treatment, a bill, a referral and/or a cost.
The result is that U.S. healthcare is in a class by itself in terms of underperformance. It contributes to the increasing fragility of the American populace. Examples of this are manifold. Overall life expectancy is declining. A recent Pentagon study found that 77% of young adults would not be fit for military service.
America likes to think of itself as the land of the free and the home of the brave. It’s well on its way to becoming the land of the sick and the home of the frail…
Mission statements for healthcare organizations extoll their commitments to putting patients first and building healthy communities. As with the Declaration of Independence, these statements do not align with reality. The gulf between rhetoric and performance is profound…. Forces for revolutionary change build gradually before unleashing suddenly. Trigger events can accelerate their onset and impact. Brian Thompson’s assassination has the potential to become this type of trigger event for system transformation.”
David Johnson “Social Media’s Assassination of Brian Thompson” 4Sight Health December 10, 2024: https://mcusercontent.com
David Jarrard on anger against health system: “Anger at Everything, Everyone. This mistake for healthcare writ large is to assume today’s howls of complaints are reserved for insurers alone.
Hospitals are not safely shielded from the public’s frustration with healthcare. Recall the finding above, with the majority of people across the country saying both providers and payers put profits over patients…Providers. Payers. Pharma. We insiders differentiate defensively into tribal units and, sometimes, rightly so. But, to the public, it’s the system of care, the cost of care and the experience of care that is failing to serve the community. It’s all of it all together that’s enraging.”
A wave of fury: The anger under the numbers
Comparison: US health system vs. Portugal.: “…This recycling of a timeworn campus that somehow survived Lisbon’s devastating 1755 earthquake exemplifies Portugal’s health system: Instead of spending money on gleaming new hospitals and expensive drug therapies, the country focuses on old fashioned primary care and public health.
It’s a strategy that has served Portugal well, and one that health care experts point to as a model the United States might learn from as it confronts soaring medical costs and, by many measures, deteriorating health.
Consider these numbers: Portugal has a life expectancy nearly four years longer than the U.S. despite spending 20% of what the U.S. does on health care per person. According to the 2021 Global Security Index, which measures the ability to respond to pandemics, Portugal ranked third out of 195 countries in providing access to affordable health care. The United States ranked 183rd.”
Spending less, living longer: What the U.S. can learn from Portugal’s innovative health StatNews December 10, 2024 systemhttps://www.statnews.com/2024/12/10/us-health-care-system-reform-how-portugal-spend-less-increased-life-expectancy
AMA on widening gap between healthspan and lifespan::” People in the US live with illness for 12.4 years on average – up from 10.9 years in 2000…The US offers the starkest illustration of a so-called healthspan-lifespan gap that is widening around the world, as chronic illnesses take up larger portions of people’s lives…A direct comparison of the two metrics shows increases in people’s healthspans are lagging longevity gains…
In the US, mental and substance-use disorders are the biggest factors to blame, along with musculoskeletal diseases that affect joints, bones and muscles. The discrepancy is even higher for American women, whose healthspan-lifespan gap is, on average, 2.6 years wider than their male counterparts’ – because they tend to live longer and are also more likely to have musculoskeletal conditions.”
American Medical Association www.ama.org
Quotables: Miscellaneous industry
Brian Blasé on potential Federal healthcare spending cuts: “We have two dozen or more health options for Congress to consider that would reduce overpayments to hospitals, reduce overpayments to insurers, reduce overpayments to states — there’s so many inefficiencies in our health sector, if you want to reduce federal spending, the health care entitlement programs are where you have to go.”
Brian Blase, a former Trump administration official who now leads Paragon Health. Axios December 14, 2024 https://www.axios.com/newsletters/axios-hill-leaders
NEJM commentary on physician independence: “Hospitals, health systems, and other corporate entities — such as insurers, private equity firms, and retailers — now employ about 80% of U.S. physicians…
Ultimately, if policymakers and regulators believe there is inherent value in preserving forms of independent practice in the health care system, physician-led alternatives to corporate consolidation should be facilitated, not hampered…Without thoughtful policy reinforcements, independent practices seeking a bulwark against a rising tide of corporate control may find it more difficult to survive.”
Independent Physician Associations — A Bulwark against Corporate Control? December 14, 2024 NEJM https://www.nejm.org/doi/full/10.1056/NEJMp2406792?query=WB
46 Brooklyn on unintended consequence of PBM legislation:” The complexity of the issues at hand cannot be overstated. If PBMs lose their rebates on these drugs, they may indeed shift their focus to favor rebated drugs over those negotiated under the Inflation Reduction Act (IRA), risking a system where premium costs rise as the rebate savings once used to stabilize premiums dwindle. CMS has already stepped in to offset potential premium hikes, but without that rebate support, we could see further financial strain across the system. This reduced cash flow may also exacerbate financial challenges for pharmacies, who could struggle to meet their obligations to wholesalers on time, adding another layer of financial vulnerability.
Further compounding this is the lack of transparency and the troubling inconsistency in drug pricing, where a single manufacturer’s price can generate hundreds of PBM-negotiated rates with vast price discrepancies. In short, stakeholders across the pharmaceutical ecosystem are bracing for potentially turbulent shifts.”
Same drug, thousands of prices: Crossing Medicare’s Catastrophic Coverage finish line 46Brooklyn December 10, 2024 https://www.46brooklyn.com/research/121024-crossing-the-catastrophic-coverage-finish-line-feioj095
Newsweek on population shift to red states: “For the past 30 years, progressive policies have fueled a mass exodus of the citizens of California, Illinois, New Jersey, New York, and Massachusetts, whether with high-, middle-, or blue-collar incomes. From 1990 to 2021, net domestic migration fleeing their states has totaled 13 million, as reported by the IRS.
Meanwhile, the red states of Florida, Texas, North Carolina, Arizona, Tennessee, Nevada, and South Carolina have had net in-migration of 13 million over the same period.
The trend is undeniable: Americans are fleeing progressive states for conservative ones, and they are bringing their incomes with them.
If these blue state governors want to reverse this mass out migration, time is of the essence. They should focus on enacting the kinds of policies that drew their erstwhile residents to Florida and Texas: lowering taxes, getting tough on crime, promoting deregulation, reforming public pensions, enacting school choice, enforcing immigration laws, helping blue-collar workers find good paying jobs, ending rent control where prevalent, and adopting light-touch density (LTD) and livable urban villages (LUV). LTD and LUV legalize homes built by the free market that are affordable and inclusionary.
Failure to take these actions will mean that with all their talk of “resistance,” their states will face a doom loop of permanent decline due to shrinking populations, rising subsidies, diminished economic vitality, increasing poverty, and a less prosperous future for their children and grandchildren.”
Americans Are Fleeing Progressive Governors Vowing #Resistance—to Red States Edward Pinto November 25, 2024 https://www.newsweek.com/americans-are-fleeing-progressive-governors-vowing-resistance-red-states-opinion-1991039
New York Times on workplace wellness: “Business leaders have also become more candid about wellness at work.
Many have deemed mental health not just an appropriate office conversation, but a necessary one. The pandemic sent anxiety skyrocketing and prompted business leaders to make sure their employees felt comfortable discussing stress. Firms spend tens of thousands on therapy apps, meditation classes and stress management workshops. Some offer quarterly or annual mental health days.
As business leaders encourage employees to talk forthrightly about mental health, some are becoming more open about their own struggles — and the unorthodox tools they’re using. Most scientists agree, though, that more research is needed on the possible side effects of psychedelics. There is risk when taking any unregulated drug, especially unsupervised.”
“CEOs are Tripping” New York Times December 12, 2024 Emma Goldberg www. nytimes.com/dynamic –
Corporate News
Walgreens is reportedly in talks to sell itself to private equity firm Sycamore Partners. Walgreens and Sycamore have been discussing a deal that could close in early 2025. “Walgreens has struggled with profitability due to pressures on its pharmacy business and less consumer demand on the retail side. The company’s market value exceeded $100 billion in 2015, following its full merger with Europe-based Alliance Boots in late 2014. Its value has since plummeted to less than $8 billion.”
The retail pharmacy chain implemented a $1 billion cost-cutting program just over a year ago and brought in former insurance executive Tim Wentworth as CEO…
Walgreens invested $5.2 billion in 2021 to take a majority stake in VillageMD, with plans to open hundreds of primary care clinics. However, those plans soon soured. Walgreens took a $6 billion hit on its VillageMD investment and is now looking to sell at least part of its ownership stake. Former VillageMD CEO Tim Barry stepped down late last month. Walgreens reported an $8.6 billion net loss in fiscal 2024 and said it would close 1,200 stores over the next three years, including 500 in the next year. Its U.S. healthcare services division reported $14.2 billion in operating losses in 2024. Wentworth brought in Mary Langowski in March to lead U.S. healthcare services, ousting former head John Driscoll.
Walgreens may be sold to private equity firm Sycamore Partners | Modern Healthcare
McKinsey & Company has agreed to pay $650 million to settle a Justice Department investigation of its work with the opioid maker Purdue Pharma. A former senior partner has also agreed to plead guilty to obstruction of justice for destroying internal company records in connection with that work.
At the center of the government’s case was the global consulting giant’s recommendation that Purdue Pharma “turbocharge” sales of Purdue’s flagship OxyContin painkiller in the midst of an opioid addiction epidemic that was killing hundreds of thousands of Americans.
More than two dozen McKinsey partners consulted for Purdue over roughly 15 years, earning the firm $93 million.
The settlement, which the government said ended its investigation of McKinsey, stemmed from charges brought by the U.S. attorney’s offices in Massachusetts and the Western District of Virginia. The case is unrelated to Purdue Pharma’s multibillion-dollar bankruptcy plan, now in legal limbo, that would have offered compensation to tens of thousands of families. Still, the McKinsey settlement brings closure to one strand of a broad legal effort to grapple with the industry behind the opioid epidemic.
“We should have appreciated the harm opioids were causing in our society and we should not have undertaken sales and marketing work for Purdue Pharma,” McKinsey said in a statement Friday. “This terrible public health crisis and our past work for opioid manufacturers will always be a source of profound regret for our firm… Earlier this month, McKinsey reached a separate $122 million settlement with the Justice Department to resolve allegations that the firm had paid bribes to officials at two South Africa state-owned companies to help it win consulting work. A McKinsey partner said that settling the South Africa and opioid-related Justice Department matters will resolve the two main legal problems that the firm faced and help it turn a new leaf.”
McKinsey Apologizes for Its Opioid Consulting in $650 Million Federal Settlement – WSJ
Economy
BLS’ CPI Report: November 2024: Per the Consumer Price Index for All Urban Consumers (CPI-U) report for November:
- Overall CPI increased 0.3% on a seasonally adjusted basis in November after rising 0.2% in each of the previous 4 month.
- Over the last 12 months, the all-items index increased 2.7% before seasonal adjustment.
- The index for shelter rose 0.3% in November, accounting for nearly 40% of the monthly all items increase. The food index also increased over the month, rising 0.4% as the food at home index increased 0.5% and the food away from home index rose 0.3%. The energy index rose 0.2% over the month, after being unchanged in October.
- The medical care index increased 0.3 percent over the month, the same as it did in October and up 3.7% for LTM. The index for physicians’ services increased 0.3% in November, while the prescription drugs index fell 0.4% over the month. The hospital services index was unchanged in November
Consumer Price Index Summary – 2024 M11 Results
Employers
Trilliant: Employer health costs: “From 2012 to 2024, the average annual contribution for family coverage increased by 45.3% for workers and 68.7% for employers. In response to rising costs, employers are increasingly adopting the self-funded health plan model, with 63% of covered workers enrolled in self-insured plans in 2024.
Rising healthcare costs affect every health economy stakeholder, with the 121.3% increase in medical care prices since 2000 outpacing the 86.1% rise in prices for all other consumer goods and services over the same period. However, employer healthcare costs have risen more sharply, with the percentage growth in employer expenditures for health insurance premiums outpacing growth in total U.S. health expenditures… From 2012 to 2024, the average annual contribution for family coverage increased by 45.3% for employees and 68.7% for employers.”
Employers Are Better Equipped to Demand Value for Money Trilliant Health https://www.trillianthealth.com/market-research/studies/employers-demand-value-healthcare
Governance
West Monroe: Changing titles in C suites: West Monroe asked 1,000 directors, vice presidents, and senior vice presidents aged 25 to 45 about the C-suite roles they expect to be phased in and out. Results:
| Roles that will phase out: | Roles that will phase in: |
| Chief transformation officer: 29% Chief diversity officer: 13% Chief digital officer: 9% |
Chief AI officer: 40% Chief information/data officer: 11% Chief digital officer: 9% |
“Many companies designated a chief transformation officer role to oversee large-scale, long-term change. Now, nearly one-third of respondents see this role going away. To me, this is compelling. Companies aren’t done transforming, but today’s leaders have less patience for intensive efforts that take months or years.
As physical and digital worlds become increasingly intertwined, companies must be able to test and learn, fail fast, and pivot quickly. This mindset shift, combined with new technology and volatile economic conditions, drives leaders, boards, and investors to expect an impact in weeks rather than months. With this emphasis on rapid and continuous innovation, accountability for change cannot reside in one role. All C-suite leaders must be fully focused on—and equally accountable for—transforming the business. “
Millennials and Gen Z predict the future of the c-suite for 2025 – Fast Company
Hospitals
Hospital financial outlook for 2925: S&P, Fitch, Kaufman Hall
S&P Global: Stable:
- In 2024, a quarter of hospitals received an ‘AA’ rating, and 44% more received an ‘A’ rating. Both ‘AA’ and ‘A’ ratings were down slightly year over year. There were 3.7 downgrades to every upgrade this year.
- Government and private payers have increased reimbursement rates, but in many markets, growth hasn’t kept pace with inflation; in 2024, reimbursement growth dropped from 9.4% the year prior to 4.7%.
- Management concerns: cybersecurity, physical security, workforce hiring and retention.
- Growth strategy: consolidation, partnerships
Fitch: neutral
- 2025 forecast: a median operating margin of 1% to 2% for NFP hospitals
- Hospital margins rise to 6.5%, challenges persist: 5 notes
Kaufman Hall: Stable
- Revenue, operating margins, and the average length of patient stay generally holding steady
- Management concerns: supply chain costs, operating cost containment
S&P Global www,spglobal.com
Fitch Ratings www.fitchratings.com
National Hospital Flash Report: October 2024 Data https://www.kaufmanhall.com/insights/research-report/national-hospital-flash-report-october-2024-data
Study: Hospital upcoding: “…. We estimated the increase in Medicare Severity Diagnosis-Related Group (MS-DRG) upcoding during the period 2011–19, using all-payer discharge-level data from five states. During this period, the number of discharges with the highest MS-DRG coding intensity increased by 41%. Adjusting for changes in patient characteristics, length-of-stay, and hospital characteristics, we estimated that the increase would have been 13% in the absence of changes in coding behavior. We estimated that in 2019, the increase in upcoding (relative to 2011 coding practices) was associated with $14.6 billion in hospital payments, including $5.8 billion from private health plans, $4.6 billion from Medicare, and $1.8 billion from Medicaid. These findings can contribute to the growing body of evidence supporting the design of payment models that limit distortions in payment and resource allocation.”
AON Report: AON’s 2024 Benefits Survey of Hospitals. Highlights:
- 7% of hospitals reported increased turnover among nurses (compared to 62% in 2023) and 5% experienced higher departures among non-physician clinical positions (compared to 41% in 2023) and 9% said that physicians are leaving more often (compared to 22% in 2023) than the prior 12 months.
- 84% percent of hospitals still report shortages in nurse staff and almost half report shortages in clinical technicians.70% of hospitals during the past year have increased new hire pay, 69% have implemented or bolstered sign-on bonuses, 61% have increased their minimum wage scales, 46% offered higher-than-market wages to employees and 44% have modified their total rewards offering for all employees.
- The report also shows average health plan expenses per hospital beneficiary per year increased 8.5 % from $16,151 in 2023 to $17,520 in 2024. 65% of hospitals aim to pay 80% or more of their employees’ health care costs and 13% offer a no-cost health plan option to some segment of their employee population. 88% percent of health systems also provide a discount to employees to access their own facilities and providers.
2024 Benefits Survey of Hospitals file:///C:/Users/Owner/Downloads/24195%20Benefits%20Survey%20of%20Hospitals%202024-6%20Nov_excerpt.pdf
Insurers
KFF report: MA Disenrollment population characteristics: “More than half (54%) of eligible Medicare beneficiaries are enrolled in a private Medicare Advantage plan in 2024…
This analysis looks at traditional Medicare spending among people who choose to disenroll from Medicare Advantage and obtain coverage under traditional Medicare during the annual Medicare open enrollment period… Findings”
- Medicare spent 27% more, on average, for people who were covered by traditional Medicare after disenrolling from Medicare Advantage than for people who were continuously covered by traditional Medicare, after adjusting for differences in health status and other characteristics. This is a difference of $2,585 in Medicare spending per person, on average, between the two groups in 2022.
- Differences in Medicare spending between people who disenrolled from Medicare Advantage and beneficiaries continuously in traditional Medicare varied by health condition, ranging from 15% for people with pneumonia to 34% for people with diabetes. For example, among people with certain cancers, Medicare spending was 28% ($4,907) higher, on average, among those who disenrolled from Medicare Advantage than among people continuously covered by traditional Medicare.
- Differences in Medicare spending between people who disenrolled from Medicare Advantage and those continuously in traditional Medicare increased with age for Medicare beneficiaries and were larger for Blacks and dual eligibles
- Skilled nursing facility spending accounted for the largest share of the difference in average Medicare spending per person between people who disenrolled from Medicare Advantage and those continuously in traditional Medicare (34%), followed by outpatient hospital spending (23%), and inpatient hospital spending (20%), with some variation by chronic conditions and other beneficiary characteristics
Kaiser Family Foundation www.kff.org
Study: Medicare Advantage market shift to large payers: “This study examined the evolving landscape of insurer competition in the Medicare Advantage (MA) program from both national and local perspectives. National carriers expanded their national market share significantly from 2012 to 2023, whereas the collective market share of regional carriers without affiliation to Blue Cross and Blue Shield organizations declined because of acquisitions. For example, the combined national market share of national carriers increased from 46% in 2012 to 66% in 2023, while the combined national market share of non-Blue regional carriers decreased from 25% to 6%. Conversely, concentration in local markets has declined but remains highly concentrated, and evidence suggests that further declines may be unlikely. Specifically, declines in local market concentration have been limited to markets with low MA penetration. Once MA penetration exceeds 20%, further MA growth is not associated with further drops in concentration, on average. Thus, policy makers should be aware that MA program reforms that assume MA markets are competitive are unlikely to achieve program goals without ensuring the competitiveness of those markets.” Related findings:
- Non-Blue Cross Blue Shield regional insurers not affiliated with a health system accounted for 25% of the MA market in 2012. This percentage shrank to 6% by 2023.
- The five largest national insurers grew their market share from 46% in 2012 to 66% in 2023.
- The market shares of BCBS plans and integrated health-system plans remained stable between 2012 and 2023.
- Though the number of small insurers shrank, the average number of MA carriers per county increased. The average number of MA insurers per county in 2023 was 9.9, up from 6.4 in 2012.
Medicare Advantage: National Carriers Expand Market Share While Regional Carriers Without Affiliation Decline, 2012–23 https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2024.00577
Study: pricing for non-group plans: “Numerous studies show that employer plans pay providers significantly more than Medicare, but less is known about prices in nongroup plans sold both on and off the Marketplaces established by the Affordable Care Act (ACA), where narrow networks and low-cost insurers are more prevalent. Researchers analyzed 3 non-group plan populations: Marketplace nongroup, off-Marketplace nongroup, and employer small group for 2021. Findings:
“In aggregate, in 2021, Marketplace prices were 152% of Medicare prices, whereas the prices paid in small-group employer plans were 179% of Medicare prices. Comparing across market segments, relative to employer small-group plans, Marketplace professional prices were 6.9% lower, inpatient prices were 13.3%lower, and outpatient prices were 26.3% lower. Off-Marketplace prices fell between Marketplace and employer small-group prices. The finding that nongroup prices were significantly lower than prices paid by employer small-group plans—more so than indicated by prior research—is important for understanding federal subsidies and affordability for nongroup coverage and evaluating policies such as a nongroup public option with prices capped at a percentage of Medicare prices.”
Investing
Pitchbook on PE Exit values: “GP-led secondary exit value has more than doubled over the past five years while exit counts have risen by even more, from 16 transactions in 2020 to 89 so far in 2024. Over the past two years, we have seen valuation multiples drop, resulting in GPs not wanting to sell some of their most prized assets and instead rolling them into continuation vehicles. GP-led secondaries are on track for a record year, pacing to finish the year with an exit value between $50 billion and $60 billion…
Over the past five years of GP-led secondary exits, over 50% of companies have been held for five to seven years. This is consistent with the notion of trophy assets, as GPs start looking to crystallize their distributions from years five to seven. Certain GP-leds occur at later stages of a fund’s life, with roughly 25% happening after year 10.
…Extrapolating for GP-leds only, we expect they will be a $70 billion market by 2028. In our base-case scenario that assumes a 10% market share, this represents a roughly 5.8% CAGR between 2022 and 2028. In our bull case, assuming 15% market share, GP-led secondaries AUM reaches $105 billion by 2028 at a 13.2% CAGR.”
Q4_2024_PitchBook_Analyst_Note_GP-Led_Secondaries.pdf
CB Insights on Digital Health investing in 2024: Four major themes:
- “AI will become foundational to infrastructure across healthcare, as evidenced by 36 of the 50 companies building AI products, from insurance claim copilots (Alaffia Health) to specialized healthcare LLMs (Hippocratic AI). These startups reflect the start of a broader shift for AI from powering point solutions to becoming an essential part of healthcare delivery for patients.
- Diagnostic innovations continue to dominate, representing the most crowded category on last year’s list and tying for the largest category this year, with 11 companies developing tools across imaging (Airs Medical), pathology (Proscia), and non-invasive diagnostics (Alimetry). These next-generation diagnostics look to make testing more accessible and non-invasive while prioritizing early detection.
- Virtual and hybrid care companies more than doubled in this year’s cohort, with 11 companies in this category, up from 5 last year. The increase reflects the growing number of specialized platforms in areas including mental health (Talkiatry) and cancer care (Resilience), signaling the shift from general telemedicine toward condition-specific virtual care models.
- Workflow efficiency emerges as a key priority heading into 2025, with 19 companies streamlining administrative and clinical tasks, from medical document processing (Tennr) to ambient documentation (Abridge). The surge of automation solutions here signals that healthcare organizations will prioritize efficiency amid staffing shortages to help shift provider time from paperwork to patient care. “
The Digital Health 50 is CB Insights’ annual list of the most promising digital health startups in the world” CB Insights https://www.cbinsights.com/research/report/digital-health-startups-redefining-healthcare-2024
Legislation & Policy
CMMI Report to Congress: Last week, the CMSs Center for Medicare and Medicaid Innovation submitted its 7th report to Congress highlighting what it considers major accomplishments over the 10-year history and $493 billion spent. Highlights:
“Recent Progress and Plans for the Future Since our last biennial Report to Congress in 2022, the CMS Innovation Center has made substantial progress executing on our strategy. This progress includes announcing nine new models: Making Care Primary (MCP), Guiding an Improved Dementia Experience (GUIDE), States Advancing Health Equity and Development (AHEAD), Transforming Maternal Health (TMaH), Innovation in Behavioral Health (IBH), Cell and Gene Therapy Access Model (CGT Access), ACO Primary Care Flex (ACO PC Flex), Transforming Episode Accountability Model (TEAM), and Increasing Organ Transplant Access (IOTA). Each model includes specific features and requirements to deliver on our five strategic objectives—driving accountable care, advancing health equity, supporting innovation, addressing affordability, and partnering to achieve system transformation…
Equipped with the experience of the first 10 years of testing models, the CMS Innovation Center continues to prioritize model tests that fill critical gaps in care delivery; are feasible; are aligned with broader CMS efforts; have the potential to improve the quality of care and care experience for people with Medicare, Medicaid, and CHIP; and reduce spending in these programs. Beyond reducing costs and improving quality, a model’s success must also be measured by how it impacts existing CMS programs, beneficiaries and families, providers, payers, states, and the broader health care system to ensure they all benefit from and participate in this vision.
CMS estimates that, during the period of this report, more than 57 million Medicare and Medicaid beneficiaries and individuals with private insurance in multi-payer model tests have been impacted by or received care furnished by the more than 192,000 health care providers and/or plans participating in the CMS Innovation Center models and initiatives across the United States. …”
2024 CMMI Report to Congress https://www.cms.gov/priorities/innovation/data-and-reports/2024/rtc-2024 https://www.cms.gov/priorities/innovation/data-and-reports/2024/rtc-2024
PBM legislation introduced: A bipartisan group of lawmakers are set to introduce legislation to break up pharmacy-benefit managers, the drug middlemen that have now faced yearslong scrutiny from Congress and the Federal Trade Commission.
A Senate bill, sponsored by Sens. Elizabeth Warren (D., Mass.) and Josh Hawley (R., Mo.), would force the companies that own health insurers or pharmacy-benefit managers to divest their pharmacy businesses within three years.
A companion bill, which sponsors say draws on a history of government prohibitions on joint ownership within industries, was also scheduled to be introduced in the House on Wednesday.
Lawmakers Plot to Force Health Insurers to Sell Off Pharmacies: bills would make healthcare companies with pharmacy-benefit managers divest their pharmacies https://www.wsj.com/politics/policy/warren-hawley-health-insurers-pbm-bill-c8cdeb85?mod=latest_headlines
Physicians
New Yorker Op Ed: Physician employment concerns: “2024 was arguably the year that the mortal dangers of corporate medicine finally became undeniable and inescapable. A study published in JAMA found that, after hospitals were acquired by private-equity firms, Medicare patients were more likely to suffer falls and contract bloodstream infections; another study found that if private equity acquired a nursing home its residents became 11% more likely to die…
Increasingly, health insurers, private hospitals, and even nonprofits are behaving as though they aim first to extract revenue, and only second to care for people. Patients often are viewed less as humans in need of care than consumers who generate profit.
It would be nice if nonprofit health care were the antidote to corporate health care. Instead, each year, it seems to look more like for-profit medicine…
One of the things I love most about medicine is its peculiar professional ethic: a norm, taken as given, that physicians will provide counsel and care independent of self-interest, and treat patients equally, regardless of their biography, condition, or ability to pay. It is because doctors are understood to place patients’ interests above commercial ones that they have long enjoyed professional autonomy and public trust. The history of medicine is too littered with incompetence and immorality to believe that doctors have always been worthy of this status. Still, something profound is lost when we submit to the jaundiced view that medicine is a business like any other. There is value in striving for something higher.
Today, medicine is awash in the language of economics. Patients are consumers; doctors are providers; health care is a commodity…”
The Gilded Age of Medicine Is Here: Health insurers and hospitals increasingly treat patients less as humans in need of care than consumers who generate profit. New Yorker December12, 2024 https://www.newyorker.com/culture/2024-in-review/the-gilded-age-of-medicine-is-here
