Top of the Funnel | Macro + Earnings
PCE. The PCE index rose 0.30 in January, more modest than what one would expect as some insurance contracts are reset and everyone adjusts for labor costs being higher for longer.
My back-up theory now moves to the front. The commercial insurance industry is swimming in so much money as a result of salting it away during the low utilization periods of COVID, that it sees no need to pressure its networks with reimbursement disputes.
For now, Medicare reimbursement is driving payments higher.
DVA reported Q4 adjusted earnings o $1.11 beating The Street's estimate of $0.98. As we expected, labor supply and wage rates have softened, although there is still considerable churn as demonstrated by the monthly BLS data. The structural problems remain. The company is forecasting flat to negative volume growth and hopes excess mortality - 900 patients in 4Q - will ease. The mortality data is not cooperating at this point, however.
A bigger question, one we are wrestling with more globally, is whether admits will return to their 2% annual growth rate? The company says they have picked up but we know excess mortality among diabetics is as notable as it is among dialysis patients.
CONGRESS.
Modern Suitcases of Cash. The ongoing legal troubles of Sam Bankman-Fried now includes campaign finance violations worthy of Richard Nixon. In an updated indictment, Bankman-Fried apparently asked high profile donors to put their name on campaign contributions that were loans from the Alameda Bank.
There is all kinds of wrong with that but the most important one is that a whole lot of money washed through the campaign finance system in ways that invite more regulation.
Hospice Oversight. (CHE (-), AMED (-)) Fraud in hospice is nothing new but the industry itself appears to be pressing its concerns with CMS. In the last couple of weeks, there has been a bipartisan letter of concen, a joint statement from the trade groups and a stakeholder meeting at CMS. That sort of choreography usually appears when changes are in the works.
In this case on the table appears to be additional oversight, a temporary moratorium on new facilities and perhaps changes to Medicare Conditions of Participation.
THE WHITE HOUSE.
Paxlovid Adcomm. (PFE (+)) The FDA’s antimicrobial adcomm will convene on March 10 to review PFE’s New Drug Applications for Paxlovid. Assuming the FDA ultimately approves the drug, PFE will be free to set a commercial price and sell outside the government channel. They will also be free to advertise but they have been doing so for months now.
SNF Three-Day Stay. (ENSG +/-) One of the most important policy waivers during the pandemic times was that for the three-night hospital stay preceding an SNF stay. The industry has been pressuring CMS to make the waiver permanent, but CMS insists Congress would need to act.
Other Stuff.
Recent Events
Venture View with Marcus Whitney: The Promise of Artificial Intelligence in Health Care
Upcoming Evans
CNC: Overcoming Medicaid Redetermination. March 1 @ 10am ET (Add to outlook calendar)
Have a great weekend.
Emily Evans
Managing Director – Health Policy
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