Volume 24

#1 End of the COVID Public Health Emergency

The U.S. Department of Health and Human Services will terminate the national public health emergency (PHE) for COVID-19 today on May 11, 2023, due to a decrease in recent cases. This move means numerous COVID-related policies that broadened access to information, healthcare, and prolonged paid leave for businesses could soon be invalidated. While the conclusion of the public health crisis should not significantly alter daily operations, it does present an opportunity to evaluate COVID policies and decide if they are worth keeping.

So What’s the Big Deal? The end of the PHE already has had consequences, and could lead to more:

1. A significant portion of the expenses associated with treating COVID patients is transferred to private insurance providers, which insure the majority of the U.S. population. Americans without insurance may face substantial charges if they become critically ill, although the Biden administration has pledged to maintain access to vaccines and treatments without any out-of-pocket expenses for the uninsured until 2024.

2. Beneficiaries of Medicare, Medicaid, and the Children's Health Insurance Program might experience increased cost-sharing for testing and antiviral medications.

3. The longstanding mandate preventing states from removing individuals from Medicaid lists has recently been terminated, putting millions at risk of losing their coverage nationwide.

4. The vaccine mandate for federal employees imposed by the White House is set to expire next Thursday.

#2 United Healthcare Exposed for Underpayments

Envision Healthcare, a KKR-owned firm that provides doctors for emergency rooms and anesthesiology departments in numerous U.S. hospitals, filed a lawsuit against UnitedHealthcare in 2018 concerning disagreements over billing methods. The case went out of the public eye when it shifted from a federal court to a confidential arbitration panel, but an undisclosed ruling earlier this year showed three arbitrators agreed with Envision's assertion that UnitedHealthcare had violated the contract between the two companies by independently lowering payment rates. The arbitrators decided United Healthcare is required to compensate Envision with $91 million in overdue payments.

So What’s the Big Deal?

The country's biggest health insurance provider has gone unmonitored for a long time, resulting in underpayments. The legal victory for Envision may mean United Healthcare is drawn into more lawsuits from various doctor groups. Still, considering United Healthcare had revenues totaling more than $300 billion and more than $20 billion in profits in 2022, the sum awarded to Envision is merely a blip for the insurer..

#3 VC Deals Rebounding

Startup funding is rebounding. Between 2010 and 2015, investors found late-stage deals more appealing than early-stage ones. Since 2015, there has been a surge of startup-friendly deals across all stages, particularly after mid-2020. This pattern took an especially dramatic turn, however, in 2022, mainly due to the anticipated need for capital by startups that have secured substantial funding over the previous two years.

So What’s the Big Deal? The initiation of COVID-19 led to a significant rise in capital investment in the healthcare sector, marking the beginning of a new phase in funding. In the initial stages of the pandemic, as people across the globe became accustomed to obtaining virtual medical care, investments in telehealth rose. In more recent months, however, concerns about waning virtual health usage, combined with worries about interest rates, tempered the rise in investor interest in virtual health. Instead, funders flocked to startups in biomedical sciences, artificial intelligence, and therapeutics, which helped to push overall investment higher.

#4 The DEA Extends Telehealth Prescribing

The Drug Enforcement Agency has provisionally prolonged the telehealth adjustments made during the pandemic, enabling doctors to maintain virtual prescriptions of controlled substances such as Adderall, oxycodone, and medications for opioid use disorder. These adaptations were initially scheduled to terminate on May 11, in conjunction with the conclusion of the COVID-19 public health emergency.

So What’s the Big Deal? The increased adoption of telehealth solutions amid the pandemic has been demonstrated to lower the likelihood of opioid overdose, as per a 2022 research paper in JAMA Psychiatry. We hope this decision will lessen interruptions in care for family doctors and their patients once the PHE concludes next week. However, it is still uncertain for healthcare providers how long the provisional telehealth allowances will continue and when the DEA will release a new regulation that is expected to reintroduce stricter limits around telehealth prescribing.

#5 Hospital Margins Stabilize, But Still Strained

According to Kaufman Hall’s national hospital flash report, hospital margins maintained stability in March, though they were still extremely narrow due to rising supply and medication expenses caused by inflation. Kaufman indicated hospitals experienced a steady median year-to-date operating margin, which is an enhancement compared to nearly a year of negative margins.

So What’s the Big Deal? Even though margins are gradually stabilizing, they still fall short of the levels seen prior to the pandemic, leaving healthcare facilities susceptible to the potential impact of an economic downturn or another public health crisis.

#6 Kaiser Permanente Acquires Geisinger

Kaiser Permanente revealed a bold strategy to purchase the 10-hospital Geisinger Health, a move that positions Kaiser as the foundation for a new multisystem, value-based care organization. This new entity, named Risant Health, will function as a nonprofit organization, operating "independently and uniquely from Kaiser Permanente's central integrated care and coverage model." It is expected to incorporate an additional 5 or 6 "nonprofit, value-focused community-based health systems" into its network. The financial details and timeframe for the acquisition of Geisinger have not been disclosed.

So What’s the Big Deal? There is still much to discover regarding the agreement, yet fundamentally, both Kaiser and Geisinger hold substantial regional importance in value-based care due to their high integration. As a result of this union, individual nonprofit hospitals or smaller healthcare systems may become part of their network, broadening their scope and providing additional value-based care possibilities to communities.

#7 Health Insurers Continue to Boost Profits

Last week, Cigna Group announced a $1.3 billion profit for the first quarter of 2023. This figure is up slightly from the $1.2 billion profit Cigna earned in the last quarter of 2022. Year-over-year revenue rose, increasing from $44 billion in the first quarter of 2022 to $46.5 billion during the same period this year. According to Zacks Investment Research, both revenue and profit results exceeded Wall Street analysts’ expectations..

So What’s the Big Deal? Private payer mergers and falling reimbursements have complicated negotiations and negatively impacted the income of provider groups. Reimbursement reductions from both governmental and non-governmental payers have been consistently happening over the past few years. We must ask ourselves: is it acceptable to witness private payer-provider conglomerates accumulate influence as hospitals shut down, healthcare results deteriorate, provider groups close, and doctors experience burnout?

#8 Physician Pays Slumps

According to the sixth annual Physician Compensation Report by Doximity, a professional medical network, inflation is eating away at clinician earnings. Between 2021 and 2022, the average physician salary fell 2.4%. The decline coincided with a period when U.S. healthcare professionals were (and still are) dealing with substantial difficulties such as economic stress, a physician shortage, and elevated levels of job-related exhaustion.

So What’s the Big Deal? With a decline in revenues from the Centers for Medicare and Medicaid Services and private payers, this trend is not surprising. We may see greater pressure placed on provider groups and hospitals to raise physician salaries, especially in the wake of unprecedented burnout.

#9 Telehealth Use Continues to Decline

In the United States, telehealth accounted for 5.5% of medical claims in February, representing a 6.8% decrease from January, as reported by Fair Health's monthly telehealth monitoring. In the four major U.S. census areas, telehealth usage experienced a decline: the midwest saw an 8.7% decrease, the south a 8.3% drop, the west a 6.2% reduction, and the northeast a 1.5% dip. COVID-19 was no longer among the top five telehealth diagnoses in the country. Mental health conditions emerged as the leading diagnosis on telehealth claim lines.

So What’s the Big Deal? Telehealth remains popular, but utilization continues a decline especially as COVID cases wane. While telehealth use ballooned during COVID, partially due to the flexibilities granted during the PHE, many provider groups are seeing telehealth as an adjunct versus a full replacement for in-person/in-office services. Furthermore, patients and providers are now more aware of where telehealth can be useful (in mental healthcare, for example) and where it is less helpful (comprehensive exams).

#10 Staffing Firm AMN Beats Wall Street Expectations

On Thursday, AMN Healthcare Services Inc. announced a net income of $84.1 million for the first quarter of 2023. The company, based in Dallas, reported a profit of $2.02 per share. After adjusting for one-time gains and expenses, earnings amounted to $2.49 per share. These figures surpassed Wall Street analysts’ expectations. The healthcare staffing firm also recorded $1.13 billion in revenue during this period, exceeding predictions.

So What’s the Big Deal? Despite the stronger than expected results, AMN’s stock prices have continued to slide. Part of the reason is a softening of the contingent labor market as hospitals continue to identify ways to control costs. It’s unclear if this softening will continue as nurse and physician staffing shortages persist.

Follow me on social:

Thanks for reading the Top 10 Big Deals in Healthcare and be sure to share with your network:

Adam Brown