Top of the Funnel | Macro Data + Policy Position Monitor+ Earnings.
Earnings.
HCA. Despite lower admissions, HCA once again proved itself more than capable of controlling costs, something that separates it from the hospital business writ large. Surveys, industry reports that take the pulse of non-profit hospitals frequently miss that bifurcation. Non-profit hospitals, especially academic medical centers have not had to deal with inflation since the early 1980s when they were paid on a cost-plus basis. For-profits, on the other hand, have made it a focus for years.
Also noteworthy is the extension of average LOS and the corresponding revenue per admission.
CONGRESS
Drug Pricing. ((ABBV (+/-), PFE (+/-) LLY (+/-) BMY (+/-)) As expected, the inflation-linked drug rebates in the Democrats drug pricing framework is creating some problems. Employer-based ERISA plans have predicated their support of that provision on using drug sales to Medicare and commercial plans. ERISA plans fear that if sales to commercial plans are not included in the inflation calculation, then pharmaceutical companies will shift their price increases to commercial plans.
If the parliamentarian rules the inflation provision out of order so long as it includes commercial plans, employer sponsored insurers will pivot to opposition. Their opposition could sink the entire section with a cost of $40B to the budgetary offsets.
ACA Exchange Credits. ((HCA (+), THC (+), ACHC (+)) Another Manchin-approved component of the pending reconciliation is an extension of the American Rescue Plan Act’s enhanced tax credits. Sen. Manchin is supportive of a 2-year extension but there is some pressure to push it to three.
The expansion of the tax credits to people making 400%+ of the federal poverty level has resulted in a positive mix shift to commercial for many providers.
The cost to the federal treasury is $34B a price with which Sen. Richard Burr has taken issue.
THE WHITE HOUSE.
CDC v. ASPR. According to Politico, HHS plans to make the Office of the Assistant Secretary for Preparedness and Response into an operating agency and a rival, if you will, of the CDC.
The CDC is generally regarded as unable to meet the moment of a pandemic. Early missteps on understanding the spread and genomic make-up of the SARS-CoV-2 virus certainly did not instill confidence. Their poor communication and ancient data systems did not help.
However, also possible is that some scientists at the CDC had reservation or did not fully appreciate the swift conversion of the COVID pandemic from a health problem to a political problem in early 2020.
Elevating the ASPR is not likely to help. They did not exactly cover themselves in glory during COVID either. The fundamental problem, we are beginning to recognize, is that the scientific community is increasingly not on board with the political approach to what the Biden White House expects are never ending pandemics.
Other Stuff.
WHO Throws in the Towel. In October 2021, the World Health Organization released “Strategy to Achieve Global COVID-19 Vaccination by mid-2022.” The policy paper called for a strategy to minimize deaths, severe disease, overall disease burden and reduce the risk of new variant. The answer, back in October 2021, was to vaccinate 70% the world’s population by June 2022.
Yeah, right.
This week, WHO, issued an updated report, acknowledging some of the on-the-ground reality:
The 4th strategy goal of transmission reduction through vaccination has been difficult to attain. Both vaccine and viral characteristics have contributed to the challenges in achieving this goal, in addition to incomplete vaccination. Current COVID-19 vaccines provide modest protection of limited duration against SARS-CoV-2 infection. Furthermore, increasingly transmissible variants have emerged (resulting in part from immune evasion), thus reinforcing the relevance of PHSMs.
The new strategic vision now recognizes vaccines should be used for high priority groups including the elderly and health care workers while the scientific community develops vaccines that limited transmission and more durable efficacy.
In effect, the World Health Organization is adopting the talking points (18:23) of their second largest benefactor, the Bill and Melinda Gates Foundation.
Where that leaves hundreds of millions of mRNA doses pledged to the US and other governments is now an open question.
Recent Events
U.S. Medical Economy Macro update.
West Virginia v. Environmental Protection Agency with JT Taylor & Paul Glenchur
Upcoming Events
PFE: Bad for America (joking, but only kind of). Tuesday July 27 @ 10am ET. Event link here. Invite link here.
Have a great weekend.
Emily Evans
Managing Director – Health Policy
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