Good morning Hospitalogists,
If you’re tired of the unrelenting, unstoppable bombardment of Taylor Swift and Travis Kelce since Sunday, you’ve come to the right place.
This is Hospitalogy. A safe space. Where all we talk about is crusty ‘ole healthcare.
…and maybe some golf.
- Today: My typical news-roundup (in coming weeks I’ll be toying with the format).
- Thursday: Some tidbits on CVS and Humana juicing senior clinic growth along with interesting notes from Tenet’s earnings blast-off.
PS – don’t forget to sign up for my upcoming virtual event. It’s this Thursday, so you can read Hospitalogy and then listen to us chat about behavioral health. Win-win.
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MA Rate notice leaves insurers in disarray:
As Medicare Advantage profitability declines from recent highs amid a multi-year phase-in of risk adjustment and elevated utilization trends, insurers are crying foul about the advance rate notice. You have to think CMS plays ball a bit given this commentary with the finalized rate releasing in April, but we’ll see:
- “Bearing in mind the continued expectation for the multiyear phase-in of the risk adjustment model change that was finalized in 2023, we view the preliminary rates as insufficient with respect to general medical cost trend expectations.” – Centene’s Sarah London
- “For us, the rate change as it sits today is approximately minus 1.3% before risk coding trend.” – Centene’s Andrew Asher
- “Last week, we received the proposed 2025 rate notice. The funding level was broadly consistent with our expectation, which we do not believe is sufficient to cover current medical cost trends.” – CVS’ Karen Lynch
- “And as I said earlier, we are anticipating that the rate notice in ’25 will look similar in terms of impact to ’24 as an initial assumption. If you remember, we cut about, on average, something close to $13 on average PMPM in that environment.” – Humana’s Susan Diamond, prior to rate notice release (Humana later disclosed the notice was a 1.6% margin headwind)
- “I think the way we’ve looked at the shift in the rate notice is a 3-year set of adjustments, and that’s why we’ve been very thoughtful about how we plan, not just, frankly, benefit design, but how we continue to accelerate our management of OpEx through the organization, how we’ve continued to focus on eliminating unnecessary care and waste within the system through our various medical management capabilities.” – UnitedHealth Group’s Andrew Witty, prior to rate notice release
$5B children’s hospital expansion planned for my backyard
I’m not a NIMBY: Two long-established, premier healthcare players in the Dallas area – UT Southwestern and Children’s Health (who have been collaborating for 60+ years) – are building a new Children’s hospital plaza in the Dallas medical district (right down the street from ya boi). If you haven’t ventured into the Dallas Medical District, you’re missing out on some scarily impressive healthcare structures.
And the price tag? A $5 billion capital investment, including 2 helicopter pads!!
The new 33-acre multi-tower build will replace the existing Children’s Medical Center Dallas to meet surging demand for high acuity pediatric care, research, and training, and will hold quite literally every pediatric healthcare service you can imagine. While the sticker shock is real, I’m not surprised to see more and more healthcare development in the Dallas area. DFW demographics are strong and can support the new build with significantly expanded capacity for pediatric healthcare services – one of the most worthy uses of capital in my mind. How about we see a bit of health tech come through, too?
“We know that 2.5 million kids call our neighborhood home today. That will grow to 3 million in less than 10 years, and it will double by 2050.” – Christopher Durovich, President & CEO Children’s Health, Beckers Interview
Children’s Hospital’s new Dallas campus will open in 6-7 years. Meanwhile, Intermountain opened its second Primary Children’s Hospital this week.
Strategy Updates:
Anything affecting decision making in healthcare – notable moves and strategies to keep on your radar.
Everside and Marathon Health Merger: Everside Health and Marathon Health are merging to form a comprehensive healthcare service provider, operating under the Marathon Health brand, aiming to serve 2.5 million patients across the U.S. More on this in an upcoming Hospitalogy send! (Link)
Amazon’s Healthcare Layoffs: Amazon has announced layoffs impacting hundreds of employees at One Medical and Amazon Pharmacy. Not sure whether there’s anything to read into here but I would have expected some layoffs in One Medical given unprofitability. (Link)
The Washington Post unveiled (paywall) a federal investigation involving a fraud scheme centered around ordering an obscene amount of catheters – potentially costing Medicare $2B. Over the span of two years, seven medical equipment companies ramped up billing for catheters from a measly order of 14 all the way up to 406,000. Patients’ insurers were billed for catheters that were never ordered or received, with no evidence found that patients had requested these catheters, suggesting a significant breach in the healthcare system.
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- What I found hilarious about this (in my messed up healthcare brain) was the first reply to Dan Diamond’s investigative journalism thread on Twitter: “Can we please call the catheters foleys. Nobody says urinary catheter. Great investigation.” Talk about missing the forest for the trees!! (just poking fun)
HCA developed a correction plan for Mission Health with lots of emphasis on staffing. (Link)
MA Projected: MA enrollment projections from the CBO and presented by KFF are projected to top out at 60% of Medicare enrollees. (Link)
- Adding to Medicare Advantage data, The Commonwealth Fund had a nice primer on everything Medicare Advantage, if you’re looking to get caught up quick. (Link)
Partnership, Products, and Pilot Announcements:
Maven Clinic employees now have access to WellTheory’s autoimmune disease care platform, marking WellTheory’s first enterprise partnership. (Link)
myPlace Health, focusing on PACE (Program of All-Inclusive Care for the Elderly), has opened its first care center in Los Angeles. (Link)
Frame establishes a partnership with Privia, aiming to enhance healthcare delivery and patient engagement. (Link)
Papa introduces new impact programs designed to add value for health plans, focusing on improving member engagement and outcomes. (Link)
Florida Blue collaborates with Sanitas to establish a value-based primary care center in Jacksonville, aiming to improve healthcare access and quality. (Link)
Finance and M&A Updates:
Anything related to the financial side of healthcare and M&A.
Kaufman Hall’s January Hospital Flash report noted:
- Improved margins
- Declining length of stay (good; signals there’s more post-acute capacity)
- Significant growth in outpatient revenues
UCSF Health has expanded its network by integrating two of San Francisco’s longest-serving hospitals. It acquired the two hospitals from CommonSpirit’s Dignity Health, likely (my speculation) as part of a broader initiative for the NFP to tighten up its portfolio. (Link)
HCA Healthcare subsidiary Surgery Ventures acquired two surgery centers in Texas, broadening its surgical services footprint. (Link)
Following a $3 billion merger, Virgin Pulse and HealthComp have rebranded as Personify Health, combining care navigation and health plan administration services. (Link)
Akumin completed its take-private transaction on February 6, becoming a private company wholly owned by Stonepeak. (Link)
Kaiser’s preliminary financial results indicate a trend we’ll see play out for much of 2024: razor thin operating margins, but massive turnarounds in net margins led by growth in investment returns – non-cash marked-to-market investments. (Link)
Innovation Spotlight
Reason for optimism
Fierce Healthcare released its Fierce 15 list of innovative and notable startups, including Ophelia Health, Abridge, Yuvo Health, Oshi Health, and Thyme Care. (Link)
Fundraising Spotlight
One interesting startup to bring to your attention
Ambience raised $70M, bringing its total funding to a whopping $100M as the land grab in AI ambient documentation continues. Nabla raised $24M in early January while Abridge raised $30M in late 2023 – all in very recent memory. Meanwhile, there are plenty of low-quality dupes on the market. As you can probably tell, I’d expect to see significant consolidation in this space. (Link)
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Miscellaneous Maddenings
Fun, random stories & updates from Blake
I recently got fit for a new hybrid to fill out the top end of my golf bag. You’re looking at the proud owner of a new Ping G430 3 hybrid providing me a solid safety net 240-250 yard fairway finder baby!! Can’t wait to take it out on the course.
I just finished my latest foray into Brandon Sanderson’s Cosmere, Yumi and the Nightmare Painter. For my fellow Cosmere fantasy fans, I recommend it, with some fun easter eggs involved.
For my gamers – I’m itching to play the new season of Apex chock full of crazy legend, weapon, and perk changes. Ironically I’m most looking forward to the console 120hz upgrade. Finally!! Between everything else, it’s hard to make time for video games right now.
Hospitalogy Top Reads
My favorite healthcare essays from the week
- Oscar’s Pirate Ship: How the insurtech is reinventing itself in 2024
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