17 quick notes on healthcare

By Scott Becker and Molly Gamble - Healthcare has a simple math problem. The population of the United States is more than 334 million people, and we have 1.1 million active physicians. We are hyper short on primary care physicians and specialists, with one of the lower counts of physicians per capita compared to other developed nations. Read Full Article…

HVBA Article Summary

1. Medical Education Crisis: The U.S. faces a critical shortage of physicians, exacerbated by an outdated and inadequate medical education system. With only about 28,000 graduates annually, the demand far outstrips supply, leading to a dearth of healthcare providers. Additionally, early retirements and part-time transitions further strain an already overwhelmed workforce.

2. Power Dynamics in Healthcare: The dominance of major health insurers creates a power imbalance, overshadowing health systems and provider groups. Concentrated power in the hands of insurers poses challenges for equitable healthcare delivery and pricing structures, affecting the entire industry's dynamics.

3. Tech and Human Balance: While technology plays a supportive role in healthcare, it cannot substitute for the depth of expertise and human touch provided by skilled professionals. As demand escalates, particularly with an aging population and rising chronic conditions, striking a balance between technological advancements and a well-trained, adequately staffed workforce becomes imperative for effective healthcare delivery.

Secrets From a Hospital CEO: How Big Hospital Chains Suck Money Out of Your Local Community

By Marshall Allen - I’ve always been fascinated by the mission statement of Dignity Health, which says the giant nonprofit hospital chain is “committed to furthering the healing ministry of Jesus.” Read Full Article…

HVBA Article Summary

1. Executive Compensation in Health Care: The disparity between executive salaries and patient care expenses in health care companies raises ethical questions. Dignity Health, for instance, pays its executives exorbitant amounts, including a CEO who made over $35 million in a year, contrasting starkly with the financial struggles of millions of Americans facing medical debt and lack of access to care.

2. Corporate Practices Impacting Communities: Former CEO Brian Brannman sheds light on corporate practices within health care giants like Dignity Health, emphasizing profit over the mission of providing affordable care. He highlights how diverting revenue to corporate offices hinders local programs for the underserved, contributing to the broader issue of health care becoming more about financial gain than patient well-being.

3. Challenges and Solutions: The interview with Brannman underscores the systemic flaws in the health care system, where financial interests often supersede patient care. He calls for better education for employers and patients to empower them in navigating the complexities of the health care landscape. Additionally, he advocates for collective action to address these issues and foster positive change in the industry.

Ascension faces 1st lawsuits over ransomware attack

By Giles Bruce - St. Louis-based Ascension is already facing two proposed class-action lawsuits just days after the cyberattack on the 140-hospital system. Read Full Article…

HVBA Article Summary

1. Legal Action Initiated: Katherine Negon and Ana Marie Turner filed separate complaints on May 12 and May 13, respectively, against Ascension in U.S. District Courts. These lawsuits, represented by the Law Offices of T. J. Jesky, allege negligence on Ascension's part for failing to encrypt patient data, which consequently led to a ransomware attack on May 8.

2. Allegations of Data Vulnerability: The complaints assert that Ascension's failure to encrypt patient data left individuals susceptible to identity theft. The lawsuits suggest that Ascension patients now face an extended period of heightened risk, emphasizing the importance of safeguarding sensitive information against cyber threats.

3. Legal Ramifications and Relief Sought: The plaintiffs are seeking monetary damages and injunctive relief from Ascension due to its purported failure to protect patients' personally identifiable information and protected health data. Each affected patient is estimated to incur an annual cost of $200 for credit and identity theft monitoring for at least five years, as stated in the lawsuits.

Investors 'cautiously optimistic' about the state of the digital health market

By Emma Beavins - At the American Telemedicine Association’s Nexus conference in Phoenix, three investors talked digital health investing trends they’ve observed so far this year. They talked about the state of the market, how artificial intelligence and value-based care models are faring and offered advice to entrepreneurs looking for investment dollars. Read Full Article…

HVBA Article Summary

1. Investor Landscape in 2024: Julianne Roseman represents Plug and Play, actively engaging in early-stage healthcare investments. Despite an improved market sentiment, valuations remain lower compared to previous years, with a stronger focus on AI over digital therapeutics, particularly in the U.S. Amil Kekic from Banner Innovation Group notes a resurgence in contracts and investments, driven by the pent-up capital from growth-stage companies. Witney McKiernan of HealthQuest Capital highlights a shift towards quality investments, emphasizing the importance of proven clinical outcomes and profitability.

2. Focus on Clinical Outcomes: Investors prioritize companies with defined and proven clinical outcomes. A critical analysis on digital diabetes management solutions has intensified the demand for measurable outcomes and return on investment in digital health tools. Companies are urged to be specific about the outcomes they target and how those outcomes align with financial metrics that CFOs care about.

3. Challenges in Artificial Intelligence and Value-Based Care: The application of AI in healthcare pitches is widespread but lacks clarity and differentiation. Companies need to articulate how AI enhances efficiency and benefits patients or providers. While value-based care holds potential, few companies excel in its implementation. Startups must navigate complexities and secure payer buy-in to demonstrate actual cost savings and effectiveness. Additional advice includes transparency about failures, openness to feedback, strategic selection of investors, and leveraging past investors for support and introductions.

Kaiser rides completed Geisinger acquisition to $7.4B income in Q1

By Susanna Vogel - Kaiser operates 40 hospitals, according to its website, and serves nearly 12.6 million health plan members as of the first quarter. Read Full Article…

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1. Significant Financial Growth: Kaiser Permanente, a nonprofit hospital and health plan giant, reported a substantial net gain of $7.4 billion for the first quarter of the fiscal year, a stark increase from $1.2 billion in the same period last year. This remarkable growth was largely attributed to the completed acquisition of Geisinger Health, resulting in a one-time operating gain of $4.6 billion.

2. Operational Performance and Challenges: Despite the impressive earnings, Kaiser's operating income for the quarter, excluding the Geisinger transaction, stood at $2.7 billion, showcasing a remarkable increase of over 300% year over year but still falling short of pre-pandemic levels. The organization faces continued cost pressures due to high utilization, care acuity, and rising prices of goods and services, with quarterly expenses rising by 6% to reach $26.5 billion.

3. Workforce Adjustments and Financial Strategy: Kaiser's efforts to streamline operations included at least three rounds of layoffs since the fall, with the most recent round affecting 76 employees primarily in information technology and marketing roles. Despite these cost-cutting measures, Kaiser has not implemented a hiring freeze and has even increased headcount by 5% since 2022. Additionally, reports suggest that Kaiser is exploring the sale of $3.5 billion of its private investment holdings to address liquidity issues, potentially signaling further financial adjustments in the near future.

The cost of unnecessary hospital days in 8 numbers

By Laura Dyrda - Hospitals across the U.S. are having capacity issues, leading to unnecessary stays and higher costs overall. Kaufman Hall reported in a February 2024 analysis associated lower length of stay as one of with top financial performance because patients are able to move through the hospital more efficiently and incur lower unnecessary costs. Read Full Article…

HVBA Article Summary

1. Financial Impact of Reducing Length of Stay: According to Kaufman Hall, a 5% reduction in average length of stay since 2021 could save an average 425-bed hospital more than $20 million annually in operating expenses, highlighting the significant financial benefits associated with minimizing unnecessary patient stays.

2. Increased Operational Efficiency: Shortening patient stays not only saves costs but also optimizes hospital resources. For instance, reducing length of stay by just one day in a 425-bed hospital with an average margin per admission of $4,500 could potentially generate an additional $20 million in margin, as the hospital can accommodate more patients, as per the Kaufman Hall's report.

3. Costs of Inefficient Length of Stay: Inefficient discharge processes contribute to unnecessary costs, with expenses per inpatient day averaging $3,025 according to Kaiser Family Foundation data. Additionally, delay days can result in significant financial burdens, such as the Healthcare Association of New York State's estimation of $169 million in associated costs from 60,000 delay days from April to June 2022.

The 340B Drug Discount Program Grew to $124B in 2023

By Rory Martin, Ph.D. and Harish Karne, MS - This study is part of an ongoing series of annual reports on the size and growth of the 340B Drug Discount Program (“340B program”). In 2023, 340B sales were $124.1B in wholesale acquisition cost (WAC) dollars, representing year-over-year growth of 16.5%. Indexed to 2018, five year growth of the 340B program was 129.4%, more than triple the growth rate of non-340B sales. Read Full Article…

HVBA Article Summary

1. Significant Growth Trends: The 340B Drug Discount Program witnessed notable expansion in 2023, with sales reaching $124.1B, a 16.5% increase from the previous year. Notably, sales in hospitals and clinics surged by 18.9%, while the retail and mail channels experienced a 10.2% growth, reflecting a shifting landscape despite ongoing contract pharmacy restriction policies.

2. Potential Accelerators: Various factors have the potential to further propel the growth of the 340B program. State bills aiming to restrict manufacturers’ contract pharmacy policies, identified in 22 states, could foster accelerated growth by removing barriers. Additionally, recent court findings regarding eligibility expansion, as exemplified by the Genesis Health Care case, challenge restrictive definitions and may lead to significant program expansion.

3. Impact on Disease Areas: The impact of the 340B program varies across disease areas, with certain segments experiencing substantial growth and revenue. Targeted oncology and anti-viral products, for instance, demonstrate high 340B exposure and growth, significantly impacting gross to net behavior. Conversely, products treating psychiatric conditions and respiratory diseases show lower 340B exposure and growth, reflecting differing program effects across therapeutic categories.

Health tech startup Dandelion Health launches data library to advance insights into GLP-1 drugs

By Heather Landi - The growing popularity of glucagon-like peptide 1 (GLP-1) drugs opens up massive opportunities for biopharma companies, life sciences firms and researchers and represents a massive shift in how health systems approach obesity and diabetes treatment. Read Full Article…

HVBA Article Summary

1. Industry Demand for Data-Driven Insights: With the pharmaceutical industry exploring GLP-1 agonists for various conditions and populations, there's a pressing need for comprehensive data and AI technology to understand their effects and potential secondary indications, particularly in treating cardiovascular diseases and liver disorders.

2. Dandelion Health's Innovative Approach: Dandelion Health recognized an opportunity to utilize its extensive, de-identified dataset to advance precision medicine in the realm of GLP-1s. Through collaborations with major health systems, Dandelion has curated a multimodal real-world clinical data library specifically tailored to extract insights related to GLP-1 receptor agonists.

3. Advancing Precision Medicine and Research: By bridging the gap between structured and unstructured clinical data, Dandelion's GLP-1 data library empowers researchers, life sciences companies, and healthcare organizations to delve into nuanced questions surrounding GLP-1 treatments. Through AI-driven analysis, these stakeholders can explore GLP-1s' impact on various health parameters, evaluate treatment efficacy, and potentially uncover new therapeutic avenues, fostering a more personalized approach to healthcare.

Employers facing rising health care costs get tough on providers

By Tina Reed - Employers trying to rein in rising health costs are also taking the fight directly to health care providers. Read Full Article…

HVBA Article Summary

1. Employer Empowerment: Increasing transparency in healthcare pricing is empowering employers to take a tougher stance in negotiations with hospitals and provider groups. With mounting frustration over rising costs, employers are seeking explanations for pricing disparities and are willing to drop providers from their networks to achieve fairer deals.

2. Quality and Efficiency: As Guy D'Andrea emphasizes, the focus should be on improving quality and efficiency in healthcare delivery. However, significant increases in unit prices hinder these efforts, making it challenging for employers to provide comprehensive health benefits to their employees.

3. Strategic Shifts: Employers, both large and small, are implementing strategic shifts to tackle escalating healthcare costs. From dropping entire health systems to engaging in direct contracting with providers, businesses are exploring alternative approaches to ensure cost-effectiveness while maintaining quality care. However, these strategies may face limitations in smaller cities or rural areas with limited provider options, highlighting the complexity of navigating the healthcare landscape.

Mapping the Vertical Integration of Insurers, PBMs, Specialty Pharmacies, and Providers: A May 2024 Update

By Adam J. Fein, Ph.D. - It's time for Drug Channels’ annual update of vertical integration among insurers, PBMs, specialty pharmacies, and providers within U.S. drug channels. Read Full Article…

HVBA Article Summary

1. Growing Vertical Integration: Major players in the U.S. healthcare system are increasingly integrating vertically, consolidating control over patient access, care sites, and pricing. Notable activities include acquisitions, minority investments, and the formation of new health service segments, exemplified by CVS Health's acquisitions of Signify Health and Oak Street Health, and UnitedHealth Group's acquisition of LHC Group.

2. Interconnected Business Ecosystems: Within vertically integrated organizations, businesses are becoming significant customers of other affiliated entities, fostering synergies. For instance, Optum Rx derives 62% of its revenues from other UnitedHealthcare Group affiliates. CVS Health saw over $49 billion in transactions between its pharmacy and healthcare services segments in 2023, showcasing the depth of internal commercial relationships.

3. Regulatory Scrutiny and Potential Implications: Despite the expansion of vertical integration, these companies face increased scrutiny from regulatory bodies such as the Federal Trade Commission (FTC), the Office of Inspector General, and Congress. The FTC's ongoing study on pharmacy benefit managers (PBMs) and potential upcoming releases of findings, along with audits on the effects of vertical integration on Medicare Part D sponsors, may influence future regulatory actions and industry dynamics.