Volume 9

Whether you’re an investor, physician, healthcare executive, it’s impossible to keep up with all the research, policy, information – and misinformation! – that will impact patients and our industry. This newsletter provides actionable intelligence to help payers, investors, practitioners, and thought leaders to solve the big problems in healthcare.

This week we cover what Medicare Advantage premiums will look like in 2023, investment in telehealth, physician burnout, and Medicare reimbursement for biosimilars and more.

1: Medicare Advantage Premiums Fall for 2023

Big Synopsis: The Centers for Medicare and Medicaid Services revealed the average premium for 2023 Medicare Advantage (MA) plans will shrink 8% from from 2022 to 2023. The average basic monthly premium for standard Part D drug coverage will fall 58 cents. Prescription drug coverage also will come with a $35 cost-sharing limit on a month's supply of insulin.

So What’s The Big Deal: As premiums fall, beneficiaries are more likely to remain in Medicare Advantage plans or switch out of traditional Medicare and enroll in MA. With expansion of the program, growth will likely continue. 

So What’s Next: Annual enrollment for Medicare and Medicare Advantage starts on October 15th. If eligible, enroll!

2:  The Medicare Advantage Footprint Expands in 2023

Big Synopsis: Aetna will go big on Medicare Advantage in 2023. The insurer, which is owned by CVS Health, said it will offer more affordable medical and prescription drug coverage and will expand other benefits next year. 

So What’s The Big Deal: Medicare Advantage plans are proving to be an attractive offering for patients, private payers and for Medicare. With declining premiums and expanded services, more patients will want to participate in MA plans.   

So What’s Next: MA plans will continue to grow in 2023 and beyond. As CMS incentivizes participation from both beneficiaries and other private companies, innovators and investors must consider products and services that can reduce the cost of care while maintaining quality. That said, investors should consider how their investments (portfolio companies, products) could be a critical component of an MA plan, augmenting their offerings.  As demand rises, this space will grow.

3: Physician Burnout Worsens

Big Synopsis: A new study published in Mayo Clinic Proceedings found nearly 63 percent of U.S. physicians said they were burnout in 2021, a number that was significantly higher than the 38.2% who reported in 2020 that they were burnt out. 

So What’s The Big Deal: Burnout leads to depression and, for the medical community, the problem is worsening. Burnout doesn't just affect the physician, there are serious implications to the entire healthcare system: patient safety, quality of care, suicide, employee retention, just to name a few. Despite increased talk about “wellness” over the past year or so, the fundamentals of physician workload and healthcare infrastructure have not changed.

So What’s Next: Red flags are waving, and pizza parties and coffee shop gift cards will not solve this problem. Lawmakers, employers, experts, and health systems must critically evaluate their wellness programs and identify necessary steps to improve the lives of their workers. With physicians having the highest risk of suicide of any other job, the rationale is there for action.

4: Investors Exercise More Caution with Telehealth

Big Synopsis: Are investors falling out of love with telehealth? According to Rock Health, in the third quarter digital health companies suffered through their worst three months since 2019. Year-to-date investment so far totals $12.6 billion, a number that is on track to be just half of what it was in 2021.

So What’s The Big Deal: Investors exercise more caution and skepticism as macroeconomic and political/regulatory trends cool funding interests in digital health. Inflation, pending regulatory changes (end of the public health emergency), supply chain woes, and rising healthcare costs all have a ripple effect on the potential growth (and appeal) of digital health.

So What’s Next: We still will need to see if the trend line continues into 2023. But regardless, a decline in funding could force companies to build responsibly, improving their current product offerings.

5: Labor Costs Lead to Big Losses for Trinity Health

Big Synopsis: Trinity Health lost $1.4 billion in its last fiscal year. The health system blamed exploding labor costs for the deficit. Labor costs were up 8.2% and Trinity still had 3,900 openings for registered nurses and a 14% vacancy rate for critical support staff. 

So What’s The Big Deal: Hospitals and hospital-based provider groups continue to face significant financial headwinds as labor costs continue to bleed hospitals’ bank accounts. Those financial losses have led to more than 50% of hospitals ending 2022 in the red – a trend that portends a rocking 2023. The ripple effects can be dramatic in the healthcare industry as poorer hospitals close or cut services and reduce investments in innovations and infrastructure. 

So What’s Next: More hardship for hospitals. Hospitals and provider groups will continue to face expense challenges related to staffing shortages and inflation over the upcoming quarters.  Reimbursements are also on the decline from governmental and private payers. With a challenging flu and COVID season on the horizon, staff illness and subsequent shortages are likely to continue. Hospitals will need to continue to identify ways to reduce costs while maintaining services.

6: Staffing Disparities with Home Health Workers in Rural Areas

Big Synopsis: According to a new report in Health Affairs, rural areas of the United States, particularly in the south, lack an adequate supply of home health workers. The researchers recommend wage and benefit increases, improved training, more flexibility in state Medicaid policies on paid family caregiving, and other options to close the gap. 

So What’s The Big Deal: A growing divide exists with the need for personal care works to support a growing number of patients with disabilities. While labor shortages for personal care assistants exist nationwide, the disparity is much greater in the south. A lack of state Medicaid expansion in those areas is one of the drivers of this problem.

So What’s Next: The gap will continue to widen without state and federal government intervention. Even with expanding Medicaid in states like  North Carolina, policymakers and home healthcare service providers need innovative solutions to address this widening gap.

7: Outpatient Bio-similars Get a Payment Boost

Big Synopsis: Medicare will get a new Manufacturer Discount Program in 2025. The new discount program will require drug manufacturers to pay discounts on certain brand-name drugs and other types of drugs called biologics and biosimilars, both in the initial coverage phase and in the catastrophic phase of the Medicare prescription drug benefit. 

So What’s The Big Deal: Under the current CMS payment structure, biosimilar reimbursements were paid to providers based on a percentage of cost. This payment scheme incentivized the utilization of higher cost biosimilars since the reimbursement would be higher. With this change, CMS increases the reimbursement on lower cost biosimilars, incentivizing providers to use the most appropriate biosimilar (not just the most expensive one). 

So What’s Next: This change will bring more questions than answers. While this payment increase targets outpatient administration, will the move push even more patients out of the inpatient setting to receive this medication? Will the reimbursement change be enough to shift provider behavior?

8: Google Integrates Patient Health Records

Big Synopsis: Care Studio, Google’s health records venture, will allow Desert Oasis Healthcare to let their clinicians test Care Studio’s search and summarization capabilities, which leverage artificial intelligence to bring context to physicians' clinical notes. Desert Oasis Healthcare offers primary care, immediate care, home health, palliative care, clinical research studies and other services in southern California.

So What’s The Big Deal:  Information fragmentation and data silos have long plagued  the U.S. healthcare system. And with lack of healthcare record integration, unnecessary testing, waste, and even poor outcomes have continued. If Google is successful with a technology-enabled solution that integrates important (disparate) healthcare information for patients, this could revolutionize patient care especially in a value-based, integrated care setting. 

So What’s Next: If successful, this venture will spur interest in determining how these tools could be used across non-integrated health systems and physician practices since many patients cross systems. That said, there will likely be hurdles around patient privacy and health system IT security firewalls–especially since Google is involved and its privacy practices are under intense scrutiny by lawmakers and regulators.

9: Cerebral Needs to Think About Their Future

Big Synopsis: As more Americans seek mental health care, Cerebral says it can serve them more quickly and affordably. The company has had some success, but the U.S. Department of Justice is looking into  "possible violations" of the Controlled Substances Act and the Federal Trade Commission is examining whether the firm engaged in deceptive marketing. 

So What’s The Big Deal:  While this story focuses heavily on the safety and quality report released by Cerebral, the bigger story is about the legal and media scrutiny the company is under. Cerebral had to cease controlled-substance prescribing – that’s a big deal, and a warning for other firms. Telehealth’s explosive growth and lack of regulation in 2020 and 2021 will likely slow significantly with the end of the public health emergency. Other regulations will follow. This could push investors to further limit funding to telehealth start-ups. 

So what’s next: With the end of the public health emergency likely occurring at the end of 2022 or early 2023., telehealth regulations will revert back to pre-pandemic days. This could dramatically change workflows and revenues for some telehealth companies.

10: Twindemics Have Been Feared Before. Is this year different?

Big Synopsis: Clinicians, hospitals, and insurance companies are preparing for a difficult flu season combined with the rise of new COVID variants. Data from Australia’s flu season indicate it peaked earlier and hit children particularly hard. 

So What’s The Big Deal: The media focused a lot last year on twindemic concerns as well. While Omicron did take over last year, the flu remained mild. Scientists believe this year could be different. While it’s still too early to predict whether the flu season is going to be severe, we do know that COVID immunity is waning fast and few Americans have been boosted with the new bivalent. That could mean another bad COVID winter. Not only are there implications on the health of the population but how another round of severe illnesses could affect the hospital workforce.

So What’s Next: The time is now to get the bivalent COVID vaccination and the annual flu shot. 

Thanks for reading the Top 10 Big Deals in Healthcare!

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Have a wonderful rest of the week!

-Dr. N. Adam Brown

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