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Summa wrestling for physician buy-in
General Catalyst finally has the hospital system it wants. But there’s some skepticism that the venture capital firm will live up to its promises and get the required buy-in from physicians and other medical staff, my colleague Tara Bannow reports.
GC is buying Summa Health, a $2 billion system in Ohio that includes two general hospitals and its own health insurance company, my colleague Mohana Ravindranath reported last week. GC made waves last year when it said it wanted to buy a health system.
Hospitals aren’t usually the targets of venture capital firms (they have, often unsuccessfully, tried to start their own VC firms). But GC is trying to prove that it can use its own integrated system as a customer of more mature technology to make patient care better.
But clinicians, especially doctors, aren’t keen on being forced to switch to new technologies and devices. With this deal, there at least appears to be an opening for adopting technologies that make electronic health record documentation less miserable. “Our clinicians are incredibly excited about the opportunity to participate in removing those barriers that [information technology] has created,” Ben Sutton, Summa’s chief operating officer, told Tara. Read the rest of Tara’s story on the challenges of top-down tech changes within a hospital.
Wall Street’s MA reset button
Humana’s extremely bad update last week has forced investors to completely re-evaluate how they view the Medicare Advantage market this year, and going forward.
Wall Street has landed on two conclusions: 1.) Medicare Advantage is going to be less profitable, at least for 2024. 2.) Enrollment is not going to grow as much as expected.
The first conclusion has become clear over the course of the year, as insurers repeatedly said hospitalizations and outpatient care were up a lot for their MA members, which inevitably means more money coming out of their coffers into the banks of providers. New coding changes also are going into effect. But Humana said it didn’t fully account for medical costs to be this high in 2024.
The second conclusion is a little squishy. The federal government will release MA enrollment data that fully encapsulates the latest enrollment period in the middle of February, so stay tuned for a more official growth rate. But last year, MA enrollment increased 7% — a sizable amount, but still the slowest annual growth rate since 2016. Investors now believe this year’s increase will be even lower, perhaps around 5-6%.
However, these new expectations shouldn’t detract from the fact that Medicare Advantage remains a cash cow for the entire insurance industry — and a program filled with pitfalls for the seniors who enroll in it.
People loathe Medicare’s enrollment period
Of course, investors’ dismay toward Medicare does not translate into consumers’ joy. If anything, Medicare beneficiaries are more annoyed with the decision-making process than ever.
The Center for Medicare Advocacy, a nonprofit legal group that works to help Medicare beneficiaries, held a webinar last week talking about the 2024 open enrollment window that just ended in December (and which we previewed in October). They spoke with dozens of enrollees and independent brokers to get a sense of what went right and what went wrong. Well, the most commonly used words to describe the enrollment period were “confusing, complicated, misleading, stressful,” according to Kathy Holt, the CMA’s associate director.
The most cutting quote from respondents: “The entire process of the annual election period is frustrating and frightening.”
Take a dip in health care’s profit pool
Earlier this month, Tara Bannow and Brittany Trang broke down which sectors within health care have the highest profit margins. Pharmaceutical companies and medical device firms continue to head that list.
A recent analysis from the consulting firm McKinsey serves as a nice complement to that story. It gives a sense of the entire pool of profits that are up for grabs in health care — an estimated $580 billion of earnings before interest, taxes, depreciation and amortization in 2022.
What everyone needs to keep in mind: This pool is keeping every subsector well-hydrated, even if some individual companies and organizations have struggled for a snapshot in time. That’s relevant when considering that 45% of all adjusted earnings go to hospitals, doctors, and other providers — the groups that have been loudly proclaiming they are on the brink of financial collapse.
The conference pumping problem
It turns out that Tara isn’t the only mom who has pumped breastmilk in the bathroom stall of an industry conference. After writing about her experience at this year’s J.P. Morgan Healthcare Conference, nearly 100 other people reached out to her. Many CEOs, executives, and other professionals have endured the lack of a lactation room in silence “for fear of jeopardizing their careers,” Tara writes in a follow-up story.
“There’s this thing about being a female: You just want to show that you’re on par with the guys and so asking for any sort of accommodation just feels like a weakness,” Aoife Brennan, CEO of the biotech firm Synlogic who has pumped in a bathroom stall, told Tara. Read Tara’s story here, and reach out to her with more of your thoughts: [email protected].
Industry odds and ends
- Health care’s Q4 earnings are officially starting to roll out in earnest this week: Intuitive Surgical (Tuesday), Johnson & Johnson (Tuesday), and Elevance Health (Wednesday).
- The government’s long-simmering rule that attempts to address prior authorization in federally funded health insurance programs finally came out last week, Brittany reports. Among the finalized provisions: Insurers in those programs will have to complete “urgent” prior auth requests within 72 hours. Three days doesn’t strike me as … quick … for an urgent request.
- Lawmakers’ push to fund a Medicare pay increase for physicians and other health care programs within a government funding bill fell flat last week, my colleague Rachel Cohrs reports. Keep an eye on this, as Rachel says this is probably the only route for major health care policy before this year’s elections.
- Entire small towns, like this one profiled by KFF Health News, can be devastated when a hospital aggressively pursues medical debt lawsuits. A retired judge who heard a lot of the lawsuits by the hospital profiled in the story sits on the hospital’s board, and the hospital’s CEO apparently had no idea his organization sued patients.
- The average American family was fleeced to the tune of $125,000 between 1988 and 2019 — all because their employer-based health insurance got more expensive and consumed a bigger proportion of their compensation packages, according to a study in JAMA Network Open.
- The now-infamous “dummy code” case — which alleges Aetna and Optum worked together to bury extra fees within health insurance billing codes that were paid by an employer — may be close to a resolution. “The parties have continued to discuss the structure and content of a potential settlement agreement,” and initial settlement demand is expected this week, according to a new court filing.
The Meme Ward
