CVS has a bad day, the Healthcare Bill of Rights, & free medical school | 5 Big Healthcare Stories, Week of February 25
Want some young blood? Some sketchy companies can hook ya up.
5 Big Stories
I’m disappointed in you.
After reporting full year results, the newly invigorated CVS Health vastly disappointed investors by announcing lowered earnings guidance for 2019. Same store sales of about 6% were a bright spot, but CVS wrote down a MAJOR impairment loss related to their long term care operations, Omnicare (mainly skilled nursing facilities). To make matters slightly worse, CVS is losing Centene corporation’s book of business as the managed care firm migrates to its own pharmacy benefit management company. Not to mention the regulatory headache that CVS’ pharmacy operations are currently facing.
It’s all about the long-term horizon!!
Noting 2019 as a year of “transition” for the firm, CVS’ goals for the year will include aggressively paying down debt (they’ve already frozen their dividend, which investors didn’t seem to like), further integrating and realizing cost synergies from the Aetna acquisition, and bracing for potential regulatory changes to the pharmacy benefit management rebate model. Wall Street can be a fickle friend, though. The stock is down around 13% since its earnings report
Disclosure: The Healthy Muse is long CVS. Be chill on the roasts.
2. The U.S. spends major dough on healthcare
And it’s not pizza dough.
From a report released by CMS, The U.S. spent an estimated $3.65 trillion (TRILLION) on healthcare in 2018, enough to comprise about 18.0% of GDP. Actuaries are projecting healthcare spending to expand to 19.4% of GDP by 2027 (or about $6 trillion), citing the U.S.’ aging population (shout-out, Baby Boomers, we’re footin’ your bill) and generally rising prices — but not necessarily higher utilization of healthcare services. Of course, the aging population demographic means that Medicare enrollee growth will explode — in fact, spending on Medicare spending (7.4% annually) is expected to outpace both Medicaid (5.5%) and private insurance (4.8%) over the 10 year time period.
Where does all that money go, though?
Glad you asked! Of that $3.65 trillion in 2018, 33% of the payments went to hospitals, 20% to physicians, 10% to prescriptions, 5% to nursing care, 4% to dental care, 3% to home health care, and 27% to other health services, probably including some post acute care facilities (think LTACHs, inpatient rehabilitation). As more care is serviced in the home, the home health spending growth rate is actually projected to surpass all other categories over the next 10 years. Finally, the insured population is expected to stay constant at around 90% over the next 10 years.
3. Hospitals are scooping up physicians
The trend of health systems’ employment of physicians (and physician consolidation in general) has continued in 2019. Over 40% of physicians are now employed by hospitals, which is up from about 25% in 2012. There are no signs of slowing down, either, as hospitals aren’t the only guys buying up physician groups: private equity firms and healthcare companies like UnitedHealth and Mednax snatch up physician practices, too.
Why all the physician practice activity?
Physicians are a key point of contact with patients in the healthcare industry. They diagnose and transfer patients to other healthcare services, which is why all types of healthcare companies want to employ them.
Can’t keep everyone happy.
It’s not all rosy, though. Some physicians are finding that they don’t like being told what to do and when to work. Physicians might feel limited by their employer as to where they can send patients, too. It remains to be seen whether or not this might turn into a widespread issue. Good news though! Doctors feel less burnt out than they have in the past, so maybe that’s something?
4. Facebook does bad things and the Healthcare Bill of Rights
Stop me if you’ve heard this before.
Facebook is in trouble for how they’re handling their data…again. This time it’s in the healthcare sector (because duh, why else would it be covered in this newsletter?). Apparently Facebook tiptoed into potential breaches of HIPAA, disclosing some personal health information about some users when they were told the private disclosure of health data would be private.
The Healthcare Bill of Rights.
All of the recent hub-hub about health data privacy has led to some Stanford hot shots coming up with guidelines when handling health data. The Healthy Muse proudly presents to you…the Healthcare Bill of Rights!!!
5. Free medical school tuition!!
Ending on a good note!
Kaiser Permanente is opening a medical school in 2020. What’s so special about that, you ask? Well, their first 5 classes of students won’t be paying a cent in tuition. The school plans to have a more pointed focus on health data and some virtual reality, so that’s pretty cool.
Johnson & Johnson is getting sent to court by the gov over its potentially cancerous and conspiratorial baby powder. The U.S. judge presiding over the UnitedHealth vs. Amazon/JP Morgan/Berkshire employee fiasco is letting the employee slide over to the unnamed company. Speaking of the U.S., they may owe billions of dollars to insurers.
States have a variety of options when it comes to Medicaid expansion. People admitted to hospitals don’t like being told what to do (they prefer listening ears). And finally, maybe think twice before you villainize the biopharma industry?
Community Health Systems lost less money! Baylor Scott & White’s net income fell 55%. Mayo Clinic’s revenue increased 5%, to a whopping $12.6 billion in 2018. Dignity Health reported a $33 million operating loss in the 4th quarter, mostly driven by California’s ever-changing payment models and investment losses. And Medtronic did pretty well in Q4.
Spread the Love.
Originally published at maddenmusings.com on February 26, 2019.