Healthcare’s 5 Biggest Stories, week of May 6, 2019 | The Healthy Muse

20 Different Healthcare plans, all with the same name.

With 2020 looming, Bernie’s Medicare for All rallying cries, and Joe Biden’s presidential announcement, there are a lot of candidates — and a lot of healthcare policies — floating out there right now. Luckily for us common folk, Axios put together a handy article listing the 20 some-odd presidential candidates and where they stand on healthcare policy. Most Democratic candidates are in favor of single-payor options, or, at the very least, want to expand Medicaid and Medicare to more individuals. Notable candidate policy positions include Bernie — the most extreme — who wants to obliterate private insurance in lieu of a completely public, universal healthcare option. In a more moderate position, Joe Biden favors an optional Medicare buy-in that expands the pool of individuals and employers that could participate in Medicare. Finally, let’s not forget about Mr. President, who doesn’t really have any solid healthcare policy yet — but he does want to repeal the ACA and replace it.P

What do all of these policies even mean?

In case you wanted a refresher on healthcare policy vocabulary, Kaiser compiled the different healthcare proposals into one useful list. And we touched on the different healthcare terms in our February 18th first story.

What about that CBO report?

Now you’re getting ahead of me. This week, the Congressional Budget Office released its long-awaited report regarding the issues, challenges, and opportunities that would come along with creating a single-payor health care system. The report noted that a single payor system could potentially reach $32 trillion over a decade (which might not be that different from the current U.S. healthcare spending), incentivize providers to invest in preventive care, and result in better population health management. However, the report also mentioned that lower Medicare rates (as opposed to higher commercial insurance rates) could lead to poor financial performance for providers, and thus reduced quality and amount of care. Conclusion: it’s somewhat of a mixed bag.

2. Centene / WellCare Deal Gets Challenged

AHA: “Not so fast, Centene.”

In our April 1st edition 4th story, we touched on the Centene / WellCare $17 billion merger and discussed that the horizontal nature of the transaction (i.e., both companies compete in the same markets in many states) would raise eyebrows and antitrust concerns. Well, this week, the American Hospital Association (AHA) affirmed those concerns in a report, stating that the merger, if approved, would significantly reduce competition and thus reduce quality and cost of care. The report went on to claim that allowing the merger to stand would give the newly combined company significant pricing leverage over providers in the Medicaid market. Centene has acknowledged that the firm would need to sell some of its plans in those overlapping areas, but the company does not believe that there is antitrust concern beyond those divestitures due to the fact that Medicaid rates are set by individual states — not by them.

3. Smartphones as Medical Devices, and Machine Learning in Biotech

A new kind of medical device. Your smartphone.

Scientists at the Michigan Kellogg Eye Center may have found an innovative new way to detect and diagnose Diabetic retinopathy in patients. The solution? Attaching an AI-enabled device to your smartphone, and screening often. The AI-enabled device sends pictures of patients’ eyes remotely to ophthalmologists and recommends whether or not they should come in for additional screening. This promising sort of mobile medical device innovation could have widespread use in the early detection of diseases that are otherwise highly debilitating if left unchecked.

The Golden Age of Drug Discovery — Using Machine Learning.

Not to be outdone by the folks at Michigan, Y Combinator is developing a machine learning biotech platform through partnering with its promising startup,Atomwise. Atomwise developed an artificial intelligence interface called AIMS, which assists with computational drug discovery, and plans to make AIMS open-source software for academics. Y Combinator wants to incentivize all academics to use Atomwise’s software (called AIMS) for drug discovery. The startup incubator is providing an expedited path to creating new biotech firms for those academics that use AIMS and find new promising drug therapies. Under this platform, the firm believes that AI — specifically, machine learning — can lead to increased scientific discovery and potential therapies.

Flashy Headlines.

In our third ‘Healthcare Innovation’ story of the day, AstraZeneca, a large drugmaker, announced its partnership with BenevolentAI this week to — guess what — find new relationships and biomedical insights through the use of AI and machine learning programs. The partnership aims to begin with targeting new treatments for kidney diseases and pulmonary fibrosis, but the implications are clear: AI has found its place in biotech. Just be careful about the potential bias it brings along, too.

4. Recession-Proof and Recession-Exposed Healthcare Companies

What happens in a recession?

S&P Global Ratings issued its latest report on the healthcare sector this week and made several notable observations regarding the potential viability of various healthcare sub-sectors given an economic downturn. Although S&P maintained that healthcare is a more defensive investment (given that demand is generally constant), the firm cautioned that healthcare companies have increasingly worse credit ratings, meaning it’s harder for these companies to borrow money. Couple that with the regulatory uncertainty surrounding 2020, and healthcare companies are having a harder time raising capital than in year past.

Who’s at risk?

S&P noted hospitals like HCA and Tenet as among the sectors most vulnerable to an economic slowdown due to a rise in people who might be unable to pay for the care that they received. With the recent pressure on drug pricing and the potential elimination of rebates, PBMs such as CVS and Express Scripts were cited in the report as well. Of all the healthcare services firms, temporary staffing companies were listed as the riskiest, given the cyclical nature of employment. Interestingly enough, drug-makers like Pfizer and medical device companies such as Cardinal Health were on the lower end of the risk spectrum given the consistent demand that these companies serve.

5. Healthcare First Quarter Earnings Roundup

Earnings Palooza.

Last week was a big week for earnings, and healthcare companies were no exception. Here are some of the highlights:

CVS’ acquisition of Aetna helped offset struggling retail margins this quarter. The companyraised its full year guidance based on Aetna’s solid performance.

Similarly, Cigna bragged big time about its Express Scripts acquisition during the firm’s first quarter earnings parade, touting the innovative programs the combined companies can now create given the merger.

Teladoc passed the 1 million quarterly visits milestone during the first quarter, but shares slid in trading due to the company’s high valuation and growth expectations. On a positive note, the company expects to be cash-flow positive soon.

Amedysis reported a strong 6.0% same-store sales growth figure, but the company’s sharessold off almost 6% shortly afterwards. A notable development: the home health and hospice firm is working with members of Congress to pass theHome Health Innovation Act, which would make reimbursement modifications to thePDGM legislation going into effect in 2020.

Overall, the S&P 500 Healthcare Sector returned -2.6% in the month of April, which was….the worst performing sector over the month. Notable outperformers included Cerner (+16.2%), Quest Diagnostics (+7.8%), CVS (+1.8%), McKesson (+1.9%), and LabCorp (+4.5%). Notable decliners included Anthem (-8.3%), Eli Lilly (-9.8%), and Intuitive Surgical (-10.5%).

You can view our full Q1 2019 healthcare earnings summary here.

Quick Hits

Some healthcare startups are great. Some might not live up to their fancy marketing. Physicians might beUNDER-prescribing painkillers now amid the opioid crisis. Kansas legislationkills its Medicaid expansion plans. Florida legislaturerepealed its Certificate of Need Laws. Kaiser Health’s bill of the month:a $142,938 snake bite. And did you miss any regulatory changes in the first quarter? GHAhas your back there.

Epic and Cerner, two huge electronic health record providers, apparently control 85% of the large hospital (i.e., over 500 beds) market. Blackstone is getting into the ‘gambling on pharmaceuticals’ market. And HealthEquity just made a$2 billion bid for WageWorks, the other major H S A money manager in the market.

Originally published at https://www.healthymuse.email on May 6, 2019.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store