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- Weekly Health Tech Reads | 6/18/23
Weekly Health Tech Reads | 6/18/23
MA insurer stocks slide, AdventHealth's CEO on the future, MA risk adjustment, and more!
Amanda DiTrolio
June 18, 2023
Welcome to this week’s free weekly newsletter, where we share our perspectives on some of the key healthcare related news of the week.
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NEWS OF THE WEEK
Sharing our perspective on the news, opinions, and data that made us think the most this week
News
Summary: Elevance stock fell 6%, Humana fell over 10%, and UHG fell 7% on Wednesday as UHG shared at Goldman's annual conference that MLR is coming in higher than anticipated as it is seeing higher than expected outpatient utilization in the senior population. On Friday, Humana also issued an 8-K suggesting it is also seeing similar MLR pressure, caused both by increased utilization, as well as new member growth in MA.
UHG indicated that it’s MLR for the quarter coming in around the high end of the range, or above, and for the year coming in the top half of guidance. UHG noted repeatedly this wasn't a change in acuity or cost of delivery, but rather increased outpatient surgeries from people catching up on care post-COVID, in particular hip and knee replacements.
Elevance also presented at the Goldman conference, noting that it has seen nothing unexpected for MLR, with pharmacy in commercial as the one headwind it sees. Elevance mentioned that it is not seeing any catch-up care and does not expect to see any increase in that this year.
Our Reaction:
You can tell the respect analysts and investors have for UHG‘s ability to understand its business when its MLR reporting impacts the other major players in the space, even before those players have reported similar results. Of course, when Humana issues an 8-K days after UHC, you can see why. Elevance is a more interesting case though, given it explicitly said that it is not seeing the same trend as UHG or Humana. It'll be interesting to watch whether Elevance has somehow indeed avoided this issue while UHC and Humana are seeing it, or whether Elevance just isn't aware of the issue yet. I’m hard pressed to understand how Elevance would have avoided this issue if both UHC and Humana have noticed it.
It's worth listening to the recordings of the Q&A sessions as these comments were brief ones in otherwise interesting conversations. UHG Is full steam ahead moving members into VBC relationships, even in a more challenging MA rate environment. UHG also share some commentary around how financial services is a big opportunity for UHG moving forward, reminding it of the care delivery opportunity 15 years ago. At one point, UHG noted how it feels like it is in a unique position to finance the growth of providers’ businesses moving forward, referencing that it could help a small physician office looking to add infusion beds. It’ll be super interesting to watch how UHG grows in this arena, and the response those efforts get from providers.
Join the HTN Slack Convo (h/t Duncan Reece)
Opinion
Summary: In a Modern Healthcare interview, AdventHealth's CEO Terry Shaw expressed confidence in the future of his health system. The article notes that the system has grown from $11 billion in 2018 to a $16 billion organization today, across 51 hospitals in ten states. The article also notes that Advent will have opened 10 senior care clinics by the end of the year, presumably part of Well 65+. Shaw anticipates that Advent will grow to a $20 billion org by 2025, and notes that he expects to hit 13% EBITDA margins.
Our Reaction:
In a period where the news cycle seems to be doom-and-gloom for health systems, this article feels decidedly different. This quote from Advent's CEO caught our attention:
“I’ve been in the business long enough to go through three cycles of ‘hospitals are going away,’ and they’re not,” Shaw said. “Do I still believe in hospitals? I do. Do I believe we’re going to be building more as the population moves? Yes, I do.”
It reminds us that for all the strategic headwinds that health systems are facing, some still have a quite strong strategic position.
Summary: More than 140,000 people have lost Medicaid coverage in Arkansas since it began redeterminations in April. 70% of those people have had their coverage terminated for administrative reasons. Arkansas is planning on completing its redetermination process in about six months, half the time of many other states. Arkansas is touting the quick process as a fiscally responsible move for the state, but the article also highlights serious concerns about people falling through the cracks in the process.
Our Reaction:
This article does a good job putting some of the challenges in very human terms. It certainly feels like we collectively have an obligation to do better than some states that are seeing over 80% of people losing coverage for administrative reasons.
Related:
HHS Secretary Becerra penned a letter to State governors this week imploring states to do better.
Rock Health shared a nice report this week looking at opportunities for digital health startups to support the Medicaid market, focusing in on how they can: 1. extend provider capacity; 2. optimize member engagement; 3. provide data-driven insights.
Elevance, in its Goldman call, referenced the above challenges that states have had in preparation and staffing to oversee the redetermination process. They mentioned the "boomerang" effect that we'll see a few months from now when people will try to use care, realize they've been dis-enrolled and seek to re-enroll in Medicaid.
CHARTS OF THE WEEK
Sharing a chart or two that caught our attention this week
A new paper suggests that MA plans receive up to $75 billion in overpayments when you factor in favorable selection. It finds that MA plans were overpaid by 14.4% due to this favorable selection, because people who switched from Medicare FFS to Medicare Advantage plans "had substantially lower risk-score-adjusted expenditures in the year that they made the election to switch than beneficiaries who remained in FFS."
According to a KFF survey, nearly 60% of American's had a problem with their health insurance in the past twelve months. It is wild to see how employer plans are actually the biggest culprit at 60%, while Medicare is only 51%. In particular, 35% of people said their employer insurance paid less than they expected, versus only 11% for Medicaid plans. Is that just a function of people having different expectations as to how much insurance should pay for?
OTHER NEWS
A round-up of other newsworthy items we noticed during the week
Thirty Madison purchased the assets of The Pill Club for $32.3 million. What are the assets you ask? According to the Axios article, it's 100,000+ patient files. So essentially, it appears Thirty Madison is choosing to acquire 100,000 patients for $323 per patient.
Link / Slack (h/t Shani Bocian)
Human Rights Watch takes aim at medical bills from not-for-profit systems, suggesting medical debt is a human rights issue and regulators need to make changes to ensure access to care.
Link
Apixio has merged with ClaimLogiq. Apixio was just divested by Centene to New Mountain Healthcare, which funded the merger here, along with Eir Partners, the private equity group behind ClaimLogiq.
Link / Slack (h/t Samir Unni)
Katie Jennings highlights the story of Hippocratic AI's founder, highlighting how his previous company, Health IQ, has been facing a number of lawsuits over the past several months. Andreessen Horowitz invested $50 million in Hippocratic AI, despite also being an investor in Health IQ, inviting some reasonable skepticism about what is happening here.
Link / Slack (h/t Rik Renard)
The Colorado Division of Insurance released a report looking at the state of Health Sharing Ministries, showing that 1.7 million Americans turn to Health Sharing Ministries in lieu of insurance.
Link
Panda Health did a survey of health system executives and finds that there's going to be a lot of churn in digital health contracts over the next 18 months as pandemic-fueled adoption has resulted in dissatisfied clients.
Link / Slack
A CDC report looks at the characteristics of US adults who did not take their prescribed medications in order to reduce costs.
Link / Slack (h/t Paulius Mui)
Octave, a behavioral health startup, raised $52 million led by Cigna Ventures and others, to expand to all 50 states by 2024.
Link
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