Volume 40

PREDICTION #1: Technology – AI Will Be Everywhere, but Don’t Expect to See Major Legislation Enacted

This prediction will surprise no one: The use of AI in healthcare will accelerate since it holds a ton of promise. Despite public trust concerns, this tool could improve operational efficiency, scheduling, diagnoses, and help address a host of other issues. What is less known, however, is how policymakers will try to control or oversee this tool.

In December alone, we saw lawsuits against Medicare insurers who were accused of using the tool to deny care. Policymakers are not going to put up with such shenanigans and will bring CEOs in for hearings if things get out of control.

President Joe Biden has called for AI regulations, but will Congress legislate? The House Energy and Commerce Committee held a hearing on AI and healthcare last November. The accompanying memo from staff said, “Congress must understand how the technology is currently being used, and the potential applications that future innovations may have. Congress must also understand how the technology interacts with existing regulations and evaluate those paradigms to ensure AI does not cause harm.”

Congress does have a lot to learn … which is why we think that, while Americans will hear a lot from Washington lawmakers regarding AI in healthcare this year, they will likely take 2024 as a learning year before proposing, much less approving, anything big.

PREDICTION #2: Providers – A Reckoning for Private Equity

Speaking of Washington... In December, Sens. Chuck Grassley (R-Iowa) and Sheldon Whitehouse (D-R.I.) sent letters to the CEOs of some private equity (PE) firms and a for-profit hospital. The pair demanded “documents and detailed answers” about the organizations’ operational involvement in hospitals. The same week, the Biden administration announced initiatives to halt anti-competitive practices in the healthcare industry.

The announcements came as new studies emerged that indicate PE increases costs for healthcare.

Questions about PE will plague providers, but that is not all that is ailing them.

Burnout remains a persistent shadow over physicians, resident physicians, nurses, and clinicians and will lead to increased strikes, unionization, and lawsuits. Structural financial challenges also continue to besiege private equity-backed provider groups in radiology, anesthesia, and emergency medicine. These challenges, coupled with the complexities of the No Surprises Act and fluctuating reimbursement scenarios, are likely to fuel ongoing debt restructuring, mergers, and even bankruptcies.

PREDICTION #3: Hospital Mergers Could Take Center Stage

Hospital consolidation is on the rise, with significant cross-market mergers (think Atrium and Advocate) and local systems like Jefferson and Lehigh Valley, combining. While the Federal Trade Commission (FTC) focuses on regional mergers, its response to cross-market mergers remains muted.

The agency is under pressure to do more, however. According to Fierce Healthcare, the FTC and U.S. Department of Justice received more than 5,000 comments highlighting “excessive market consolidation across industries” and “overwhelmingly” calling for stronger merger enforcement. Attendees at four listening sessions reportedly also “highlighted the potential for mergers and acquisitions to undermine open, vibrant, and competitive markets, in industries ranging from food and agriculture to healthcare.”

Studies show that big mergers do not always mean bigger is better. As more and more communities struggle with healthcare access, especially in rural areas, this issue feels like one that could, and should, capture the attention of voters in certain communities. It’s a good one for smart candidates to pay attention to.

PREDICTION #4: Payers Will Continue to Reap Record Profits and Expand Influence

Payers like Optum and Kaiser continue to hit high-profit margins and increasingly encroach into the provider space. (According to Becker’s Hospital Review, UnitedHealthCare with Optum is the largest employer of doctors in the country.) This trend will strain the traditional practice of medicine and impact physician autonomy. In fact, it already has. In March of last year, the nonprofit news source ProPublica released an investigative piece that revealed how Cigna doctors denied patient claims without even reading them.

A March 2023 New York Times story reported, “The absorption of doctor practices is part of a vast, accelerating consolidation of medical care, leaving patients in the hands of a shrinking number of giant companies or hospital groups.” That article cited statistics that indicate almost 7 in 10 of all doctors are employed by a hospital or a corporation.

There is nothing stopping insurers, frankly, but there should be. This issue is one we could hear more about if articles like these two proliferate.

PREDICTION #5: A Slowdown May Be in Sight for Vertical Integration

Okay, I’m going to hedge a bit here and say a slowdown may be in the cards. I know that is not satisfying, but here is the issue: Large insurers and healthcare companies (think: United Healthcare, CVS/Aetna, Amazon) are beginning to digest their recent acquisitions of provider groups. Even with minimal FTC oversight, these acquisitions may undergo “right-sizing” adjustments in response to market dynamics. That said, there will likely be acquisitions of provider groups by Optum and Amazon via OneMedical that will expand those companies’ reach.

PREDICTION #6: Regarding Pharmacy Benefit Managers (PBMs), Look to States for All the Action

To date, every U.S. state has approved legislation to regulate pharmacy benefit managers (PBMs). States will continue to provide plenty of oversight, and maybe even more legislation, in 2024 as well.

U.S. lawmakers have been trying to keep up, meanwhile. Even if a federal bill passes offering some oversight, however, changes will be incremental. Given the fact that Congress has so much on its plate in the coming year, large-scale federal change is unlikely in the immediate future.

PREDICTION #7: The Cigna-Humana Merger May Have Gone South, but Expect Others

If hospitals and other providers are consolidating market share, don't we need bigger, more powerful insurers to negotiate on behalf of consumers?

That’s what insurers will try to argue, but, according to Becker’s Hospital Review, the largest payers are 10 times the size of the largest health systems. As I wrote in a recent column for MedPage, Cigna and Humana will not be the last payers to attempt to consolidate or to try to evade the prying eyes of regulators.

Policymakers should not be fooled by insurers’ claims, however. A 2012 paper by the American Economic Association examined Aetna's 1999 acquisition of Prudential Health Care. It found the average health insurance customer was paying about $200 per year more by 2006 than if market concentration had remained at lower, 1998 level. The merger also resulted in substituting nurses for physicians in highly affected markets.

PREDICTION #8: You Haven’t Heard the Last of Ozempic

Semaglutide, with trade formulations like Ozempic and Weygovy, is going to grow in popularity and availability, marking a significant pharmaceutical trend. But watch for disparities to grow in semaglutide access… and watch for problems to capture the attention of the media and policymakers. For example, as CNN reported, from January to November 2023, the U.S. Poison Centers reported nearly 3,000 calls involving semaglutide, an increase of more than 15-fold since 2019. In 94% of calls, this medication was the only substance reported. Some people overdosed.. (And I’ve seen patients myself who have overdosed on the medication.) Fortunately, most patients doe well, but they are uncomfortable and some remain hospitalized for days.

Follow me on social:

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

Adam Brown