Top of the Funnel | Macro Data, Policy Position Monitor & Earnings.
PCE | Return of Seasonality or Something Else? HCA (+/-), THC (+/-) UHS (+/-) Personal Consumption Expenditures for hospitals decelerated on a MoM basis while holding steady YoY. Pre-COVID that deceleration would be recognized as a normal, seasonal shifts as people take summer vacation or generally defer medical care to the more serious parts of the year – Q1, Q2 and Q4.
A recent Fitch report on non-profit hospitals and the July Hospital PMI do offer a case for vigilance. What is bound to emerge, though, is more consolidation in the industry. When you spend most of your day in the public equity markets it is easy to think of the American hospital system as consisting of HCA, THC and UHS. In fact, there are hundred of middling-type players. These hospitals will either be acquired, closed or become fantastically innovative unless and until labor and supply pressures ease.
No changes to the Policy Position Monitor here.
CONGRESS
Late August means one thing. Congress is at home, this year lauding the Inflation Reduction Act and hiding from student loan relief.
THE WHITE HOUSE
Surprise Billing Rule Final Will it Matter? (EVHC, (-), TeamHealth (-), HCA (+/-), UHS (-/+) The rule governing surprise billing was released and provided some relief for EVHC and TeamHealth. The new rules allow more flexibility for arbiters to determine the fair price for an out-of-network service. The original proposed rule required the arbiters to anchor the price to the median in-network rate, thus making arbitration pointless.
The final rule eliminates the direct relationship to the median in-network rate and allows the arbiter to consider it alongside a number of factors.
As a matter of practice, the bills that go to arbitration are probably going to be the outliers and, in most cases, the out-of-network rate will merge with the in-network one.
The recapitalization of EVHC in May seems to recognize that outcome. About $2.5B in collateral was moved into a new AmSurg subsidiary, leaving EmCare creditors to twist in the wind while the inevitable arrives.
No word yet on how HCA and UHS are navigating around their ER network rates.
Other Stuff.
AMZN Doesn’t Care. AMZN (+), TDOC (-), TALK (-) HIMS (-), LFMD (-). The internet’s behemoth announced it was closing Amazon Cares, which at one point was promising mobile health clinics that sounded more like modernized street drug operations. AMZN is also reportedly a bidder for SGFY and recently agreed to acquire ONEM.
The lesson learned is that virtual health care is not really a thing except in certain specific circumstances like post-visit check-in, certain behavioral consultations and pre-visit dermatology. In other words, it is a valuable modality but cannot exist in the absence of a brick and mortar solution.
A possible scenario to consider if AMZN gets its health care act together. They have made their way into virtually every home in the U.S. via delivery of goods, services and Alexa. If, as some project, half of all hospitalizations are conducted in the home (I am a bit dubious because that would be one helluva a lot of stranded capital), then AMZN might offer a great service. ONEM could be the brick and mortar solution when home care doesn’t work.
See also Tom Tobin’s great take here
More Vaccines. MRNA (+), PFE (+) Both MRNA and PFE submitted EUA applications for bivalent COVID-19 boosters meant to target the B.A.4/5 variants that was circulating this summer. FDA Commissioner, Robert Califf announced there would be no FDA AdComm meeting to discuss, citing the absence of staff questions. Of course, several AdComm members like Dr. Paul Offit at the Children’s Hospital of Philadelphia have questions but apparently Califf does not want to know those answers.
Meanwhile, MRNA has sued PFE and BNTX over patent infringement. Cases like this tend to get settle among pharmaceutical companies. An innovative way, I suppose to garner some of that federal largess that went disproportionately to PFE.
Upcoming Events
Covid Vaccine Evidence: What We Know, What We Don’t with Dr. Tracy Beth Hoeg.
Dr. Hoeg is a physician in private practice in Northern California. She holds a PhD in epidemiology and in addition to her other professional responsibilities, is a consultant to the Florida Department of Health.
This interview will be pre-recorded on Monday evening so feel free to send questions to me directly.
Searchable calendar of weekly events and notes can be found here.
Have a great weekend.
Emily Evans
Managing Director – Health Policy
Twitter
LinkedIn
