Kimberly Powell, Vice President & General Manager, NVIDIA Healthcare
Federated Learning: The clinical community will increase their use of federated learning approaches to build robust AI models across various institutions, geographies, patient demographics, and medical scanners. The sensitivity and selectivity of these models are outperforming AI models built at a single institution, even when there is copious data to train with. As an added bonus, researchers can collaborate on AI model creation without sharing confidential patient information. Federated learning is also beneficial for building AI models for areas where data is scarce, such as for pediatrics and rare diseases.
AI-Driven Drug Discovery: The COVID-19 pandemic has put a spotlight on drug discovery, which encompasses microscopic viewing of molecules and proteins, sorting through millions of chemical structures, in-silico methods for screening, protein-ligand interactions, genomic analysis, and assimilating data from structured and unstructured sources. Drug development typically takes over 10 years, however, in the wake of COVID, pharmaceutical companies, biotechs, and researchers realize that acceleration of traditional methods is paramount. Newly created AI-powered discovery labs with GPU-accelerated instruments and AI models will expedite time to insight — creating a computing time machine.
Smart Hospitals: The need for smart hospitals has never been more urgent. Similar to the experience at home, smart speakers and smart cameras help automate and inform activities. The technology, when used in hospitals, will help scale the work of nurses on the front lines, increase operational efficiency, and provide virtual patient monitoring to predict and prevent adverse patient events.
Omri Shor, CEO of Medisafe
Healthcare policy: Expect to see more moves on prescription drug prices, either through a collaborative effort among pharma groups or through importation efforts. Pre-existing conditions will still be covered for the 135 million Americans with pre-existing conditions.
The Biden administration has made this a central element of this platform, so coverage will remain for those covered under ACA. Look for expansion or revisions of the current ACA to be proposed, but stalled in Congress, so existing law will remain largely unchanged. Early feedback indicates the Supreme Court is unlikely to strike down the law entirely, providing relief to many during a pandemic.
Brent D. Lang, Chairman & Chief Executive Officer, Vocera Communications
The safety and well-being of healthcare workers will be a top priority in 2021. While there are promising headlines about coronavirus vaccines, we can be sure that nurses, doctors, and other care team members will still be on the frontlines fighting COVID-19 for many more months. We must focus on protecting and connecting these essential workers now and beyond the pandemic.
Modernized PPE Standards
Clinicians should not risk contamination to communicate with colleagues. Yet, this simple act can be risky without the right tools. To minimize exposure to infectious diseases, more hospitals will rethink personal protective equipment (PPE) and modernize standards to include hands-free communication technology. In addition to protecting people, hands-free communication can save valuable time and resources. Every time a nurse must leave an isolation room to answer a call, ask a question, or get supplies, he or she must remove PPE and don a fresh set to re-enter. With voice-controlled devices worn under PPE, the nurse can communicate without disrupting care or leaving the patient’s bedside.
Voice-controlled solutions can also help new or reassigned care team members who are unfamiliar with personnel, processes, or the location of supplies. Instead of worrying about knowing names or numbers, they can use simple voice commands to connect to the right person, group, or information quickly and safely. In addition to simplifying clinical workflows, an intelligent communication system can streamline operational efficiencies, improve triage and throughput, and increase capacity, which is all essential to hospitals seeking ways to recover from 2020 losses and accelerate growth.
Michael Byczkowski, Global Vice President, Head of Healthcare Industry at SAP,
New, targeted healthcare networks will collaborate and innovate to improve patient outcomes.
We will see many more touchpoints between different entities ranging from healthcare providers and life sciences companies to technology providers and other suppliers, fostering a sense of community within the healthcare industry. More organizations will collaborate based on existing data assets, perform analysis jointly, and begin adding innovative, data-driven software enhancements. With these networks positively influencing the efficacy of treatments while automatically managing adherence to local laws and regulations regarding data use and privacy, they are paving the way for software-defined healthcare.
Smart hospitals will create actionable insights for the entire organization out of existing data and information.
Medical records as well as operational data within a hospital will continue to be digitized and will be combined with experience data, third-party information, and data from non-traditional sources such as wearables and other Internet of Things devices. Hospitals that have embraced digital are leveraging their data to automate tasks and processes as well as enable decision support for their medical and administrative staff. In the near future, hospitals could add intelligence into their enterprise environments so they can use data to improve internal operations and reduce overhead.
Curt Medeiros, President and Chief Operating Officer of Ontrak
As health care costs continue to rise dramatically given the pandemic and its projected aftermath, I see a growing and critical sophistication in healthcare analytics taking root more broadly than ever before. Effective value-based care and network management depend on the ability of health plans and providers to understand what works, why, and where best to allocate resources to improve outcomes and lower costs. Tied to the need for better analytics, I see a tipping point approaching for finally achieving better data security and interoperability. Without the ability to securely share data, our industry is trying to solve the world’s health challenges with one hand tied behind our backs.
G. Cameron Deemer, President, DrFirst
Like many business issues, the question of whether to use single-vendor solutions or a best-of-breed approach swings back and forth in the healthcare space over time. Looking forward, the pace of technology change is likely to swing the pendulum to a new model: systems that are supplemental to the existing core platform. As healthcare IT matures, it’s often not a question of ‘can my vendor provide this?’ but ‘can my vendor provide this in the way I need it to maximize my business processes and revenues?
This will be more clear with an example: An EHR may provide a medication history function, for instance, but does it include every source of medication history available? Does it provide a medication history that is easily understood and acted upon by the provider? Does it provide a medication history that works properly with all downstream functions in the EHR? When a provider first experiences medication history during a patient encounter, it seems like magic.
After a short time, the magic fades to irritation as the incompleteness of the solution becomes more obvious. Much of the newer healthcare technologies suffer this same incompleteness. Supplementing the underlying system’s capabilities with a strongly integrated third-party system is increasingly going to be the strategy of choice for providers.
Angie Franks, CEO of Central Logic
In 2021, we will see more health systems moving towards the goal of truly operating as one system of care. The pandemic has demonstrated in the starkest terms how crucial it is for health systems to have real-time visibility into available beds, providers, transport, and scarce resources such as ventilators and drugs, so patients with COVID-19 can receive the critical care they need without delay. The importance of fully aligning as a single integrated system that seamlessly shares data and resources with a centralized, real-time view of operations is a lesson that will resonate with many health systems.
Expect in 2021 for health systems to enhance their ability to orchestrate and navigate patient transitions across their facilities and through the continuum of care, including post-acute care. Ultimately, this efficient care access across all phases of care will help healthcare organizations regain revenue lost during the historic drop in elective care in 2020 due to COVID-19.
In addition to elevating revenue capture, improving system-wide orchestration and navigation will increase health systems’ bed availability and access for incoming patients, create more time for clinicians to operate at the top of their license, and reduce system leakage. This focus on creating an ‘operating as one’ mindset will not only help health systems recover from 2020 losses, it will foster sustainable and long-term growth in 2021 and well into the future.
John Danaher, MD, President, Global Clinical Solutions, Elsevier
COVID-19 has brought renewed attention to healthcare inequities in the U.S., with the disproportionate impact on people of color and minority populations. It’s no secret that there are indicative factors, such as socioeconomic level, education and literacy levels, and physical environments, that influence a patient’s health status. Understanding these social determinants of health (SDOH) better and unlocking this data on a wider scale is critical to the future of medicine as it allows us to connect vulnerable populations with interventions and services that can help improve treatment decisions and health outcomes. In 2021, I expect the health informatics industry to take a larger interest in developing technologies that provide these kinds of in-depth population health insights.
Jay Desai, CEO and co-founder of PatientPing
2021 will see an acceleration of care coordination across the continuum fueled by the Centers for Medicare and Medicaid Services (CMS) Interoperability and Patient Access rule’s e-notifications Condition of Participation (CoP), which goes into effect on May 1, 2021. The CoP requires all hospitals, psych hospitals, and critical access hospitals that have a certified electronic medical record system to provide notification of admit, discharge, and transfer, at both the emergency room and the inpatient setting, to the patient’s care team. Due to silos, both inside and outside of a provider’s organization, providers miss opportunities to best treat their patients simply due to lack of information on patients and their care events.
This especially impacts the most vulnerable patients, those that suffer from chronic conditions, comorbidities or mental illness, or patients with health disparities due to economic disadvantage or racial inequity. COVID-19 exacerbated the impact on these vulnerable populations. To solve for this, healthcare providers and organizations will continue to assess their care coordination strategies and expand their patient data interoperability initiatives in 2021, including becoming compliant with the e-notifications Condition of Participation.
Kuldeep Singh Rajput, CEO and founder of Biofourmis
Driven by CMS’ Acute Hospital at Home program announced in November 2020, we will begin to see more health systems delivering hospital-level care in the comfort of the patient’s home–supported by technologies such as clinical-grade wearables, remote patient monitoring, and artificial intelligence-based predictive analytics and machine learning.
A randomized controlled trial by Brigham Health published in Annals of Internal Medicine earlier this year demonstrated that when compared with usual hospital care, Home Hospital programs can reduce rehospitalizations by 70% while decreasing costs by nearly 40%. Other advantages of home hospital programs include a reduction in hospital-based staffing needs, increased capacity for those patients who do need inpatient care, decreased exposure to COVID-19 and other viruses such as influenza for patients and healthcare professionals, and improved patient and family member experience.
Jake Pyles, CEO, CipherHealth
The disappearance of the hospital monopoly will give rise to a new loyalty push
Healthcare consumerism was on the rise ahead of the pandemic, but the explosion of telehealth in 2020 has effectively eliminated the geographical constraints that moored patient populations to their local hospitals and providers. The fallout has come in the form of widespread network leakage and lost revenue. By October, in fact, revenue for hospitals in the U.S. was down 9.2% year-over-year. Able to select providers from the comfort of home and with an ever-increasing amount of personal health data at their convenience through the growing use of consumer-grade wearable devices, patients are more incentivized in 2021 to choose the provider that works for them.
After the pandemic fades, we’ll see some retrenchment from telehealth, but it will remain a mainstream care delivery model for large swaths of the population. In fact, post-pandemic, we believe telehealth will standardize and constitute a full 30% to 40% of interactions.
That means that to compete, as well as to begin to recover lost revenue, hospitals need to go beyond offering the same virtual health convenience as their competitors – Livango and Teladoc should have been a shot across the bow for every health system in 2020. Moreover, hospitals need to become marketing organizations. Like any for-profit brand, hospitals need to devote significant resources to building loyalty but have traditionally eschewed many of the cutting-edge marketing techniques used in other industries. Engagement and personalization at every step of the patient journey will be core to those efforts.
Marc Probst, former Intermountain Health System CIO, Advisor for SR Health by Solutionreach
Healthcare will fix what it’s lacking most–communication.
Because every patient and their health is unique, when it comes to patient care, decisions need to be customized to their specific situation and environment, yet done in a timely fashion. In my two decades at one of the most innovative health systems in the U.S., communication, both across teams and with patients continuously has been less than optimal. I believe we will finally address both the interpersonal and interface communication issues that organizations have faced since the digitization of healthcare.”
Rich Miller, Chief Strategy Officer, Qgenda
2021 – The year of reforming healthcare: We’ve been looking at ways to ease healthcare burdens for patients for so long that we haven’t realized the onus we’ve put on providers in doing so. Adding to that burden, in 2020 we had to throw out all of our playbooks and become masters of being reactive. Now, it’s time to think through the lessons learned and think through how to be proactive. I believe provider-based data will allow us to reformulate our priorities and processes. By analyzing providers’ biggest pain points in real-time, we can evaporate the workflow and financial troubles that have been bothering organizations while also relieving providers of their biggest problems.”
Robert Hanscom, JD, Vice President of Risk Management and Analytics at Coverys
Data Becomes the Fix, Not the Headache for Healthcare
The past 10 years have been challenging for an already overextended healthcare workforce. Rising litigation costs, higher severity claims, and more stringent reimbursement mandates put pressure on the bottom line. Continued crises in combination with less-than-optimal interoperability and design of health information systems, physician burnout, and loss of patient trust, have put front-line clinicians and staff under tremendous pressure.
Looking to the future, it is critical to engage beyond the day to day to rise above the persistent risks that challenge safe, high-quality care on the frontline. The good news is healthcare leaders can take advantage of tools that are available to generate, package, and learn from data – and use them to motivate action.
Steve Betts, Chief of Operations and Products at Gray Matter Analytics
Analytics Divide Intensifies: Just like the digital divide is widening in society, the analytics divide will continue to intensify in healthcare. The role of data in healthcare has shifted rapidly, as the industry has wrestled with an unsustainable rate of increasing healthcare costs. The transition to value-based care means that it is now table stakes to effectively manage clinical quality measures, patient/member experience measures, provider performance measures, and much more. In 2021, as the volume of data increases and the intelligence of the models improves, the gap between the haves and have nots will significantly widen at an ever-increasing rate.
Substantial Investment in Predictive Solutions: The large health systems and payors will continue to invest tens of millions of dollars in 2021. This will go toward building predictive models to infuse intelligent “next best actions” into their workflows that will help them grow and manage the health of their patient/member populations more effectively than the small and mid-market players.
Jennifer Price, Executive Director of Data & Analytics at THREAD
The Rise of Home-based and Decentralized Clinical Trial Participation
In 2020, we saw a significant rise in home-based activities such as online shopping, virtual school classes and working from home. Out of necessity to continue important clinical research, home health services and decentralized technologies also moved into the home. In 2021, we expect to see this trend continue to accelerate, with participants receiving clinical trial treatments at home, home health care providers administering procedures and tests from the participant’s home, and telehealth virtual visits as a key approach for sites and participants to communicate. Hybrid decentralized studies that include a mix of on-site visits, home health appointments and telehealth virtual visits will become a standard option for a range of clinical trials across therapeutic areas. Technological advances and increased regulatory support will continue to enable the industry to move out of the clinic and into the home.
Doug Duskin, President of the Technology Division at Equality Health
Value-based care has been a watchword of the healthcare industry for many years now, but advancement into more sophisticated VBC models has been slower than anticipated. As we enter 2021, providers – particularly those in fee-for-service models who have struggled financially due to COVID-19 – and payers will accelerate this shift away from fee-for-service medicine and turn to technology that can facilitate and ease the transition to more risk-bearing contracts. Value-based care, which has proven to be a more stable and sustainable model throughout the pandemic, will seem much more appealing to providers that were once reluctant to enter into risk-bearing contracts. They will no longer be wondering if they should consider value-based contracting, but how best to engage.
Brian Robertson, CEO of VisiQuate
Continued digitization and integration of information assets: In 2021, this will lead to better performance outcomes and clearer, more measurable examples of “return on data, analytics, and automation.
Digitizing healthcare’s complex clinical, financial, and operational information assets: I believe that providers who are further in the digital transformation journey will make better use of their interconnected assets, and put the healthcare consumer in the center of that highly integrated universe. Healthcare consumer data will be studied, better analyzed, and better predicted to drive improved performance outcomes that benefit the patient both clinically and financially.
Some providers will have leapfrog moments: These transformations will be so significant that consumers will easily recognize that they are receiving higher value. Lower acuity telemedicine and other virtual care settings are great examples that lead to improved patient engagement, experience and satisfaction. Device connectedness and IoT will continue to mature, and better enable chronic disease management, wellness, and other healthy lifestyle habits for consumers.
Kermit S. Randa, CEO of Syntellis Performance Solutions
Healthcare CEOs and CFOs will partner closely with their CIOs on data governance and data distribution planning. With the massive impact of COVID-19 still very much in play in 2021, healthcare executives will need to make frequent data-driven – and often ad-hoc — decisions from more enterprise data streams than ever before. Syntellis research shows that healthcare executives are already laser-focused on cost reduction and optimization, with decreased attention to capital planning and strategic growth. In 2021, there will be a strong trend in healthcare organizations toward new initiatives, including clinical and quality analytics, operational budgeting, and reporting and analysis for decision support.
Dr. Calum Yacoubian, Associate Director of Healthcare Product & Strategy at Linguamatics
As payers and providers look to recover from the damage done by the pandemic, the ability to deliver value from data assets they already own will be key. The pandemic has displayed the siloed nature of healthcare data, and the difficulty in extracting vital information, particularly from unstructured data, that exists. Therefore, technologies and solutions that can normalize these data to deliver deeper and faster insights will be key to driving economic recovery. Adopting technologies such as natural language processing (NLP) will not only offer better population health management, ensuring the patients most in need are identified and triaged but will open new avenues to advance innovations in treatments and improve operational efficiencies.
Prior to the pandemic, there was already an increasing level of focus on the use of real-world data (RWD) to advance the discovery and development of new therapies and understand the efficacy of existing therapies. The disruption caused by COVID-19 has sharpened the focus on RWD as pharma looks to mitigate the effect of the virus on conventional trial recruitment and data collection. One such example of this is the use of secondary data collection from providers to build real-world cohorts which can serve as external comparator arms.
This convergence on seeking value from existing RWD potentially affords healthcare providers a powerful opportunity to engage in more clinical research and accelerate the work to develop life-saving therapies. By mobilizing the vast amount of data, they will offer pharmaceutical companies a mechanism to positively address some of the disruption caused by COVID-19. This movement is one strategy that is key to driving provider recovery in 2021.
Rose Higgins, Chief Executive Officer of HealthMyne
Precision imaging analytics technology, called radiomics, will increasingly be adopted and incorporated into drug development strategies and clinical trials management. These AI-powered analytics will enable drug developers to gain deeper insights from medical images than previously capable, driving accelerated therapy development, greater personalization of treatment, and the discovery of new biomarkers that will enhance clinical decision-making and treatment.
Dharmesh Godha, President and CTO of Advaiya
Greater adoption and creative implementation of remote healthcare will be the biggest trend for the year 2021, along with the continuous adoption of cloud-enabled digital technologies for increased workloads. Remote healthcare is a very open field. The possibilities to innovate in this area are huge. This is the time where we can see the beginning of the convergence of personal health aware IoT devices (smartwatches/ temp sensors/ BP monitors/etc.) with the advanced capabilities of the healthcare technologies available with the monitoring and intervention capabilities for the providers.
Simon Wu, Investment Director, Cathay Innovation
Healthcare Data Proves its Weight in Gold in 2021
Real-world evidence or routinely stored data from hospitals and claims, being leveraged by healthcare providers and biopharma companies along with those that can improve access to data will grow exponentially in the coming year. There are many trying to build in-house, but similar to autonomous technology, there will be a separate set of companies emerge in 2021 to provide regulated infrastructure and have their “AWS” moment.
Kyle Raffaniello, CEO of Sapphire Digital
2021 is a clear year for healthcare price transparency
Over the past year, healthcare price transparency has been a key topic for the Trump administration in an effort to lower healthcare costs for Americans. In recent months, COVID-19 has made the topic more important to patients than ever before. Starting in January, we can expect the incoming Biden administration to not only support the existing federal transparency regulations but also continue to push for more transparency and innovation within Medicare. I anticipate that healthcare price transparency will continue its momentum in 2021 as one of two Price Transparency rules takes effect and the Biden administration supports this movement.
Dennis McLaughlin VP of Omni Operations + Product at ibi
Social Determinants of Health Goes Mainstream: Understanding more about the patient and their personal environment has a hot topic the past two years. Providers and payers’ ability to inject this knowledge and insight into the clinical process has been limited. 2021 is the year it gets real. It’s not just about calling an uber anymore. The organizations that broadly factor SDOH into the servicing model especially with virtualized medicine expanding broadly will be able to more effectively reach vulnerable patients and maximize the effectiveness of care.
Joe Partlow, CTO at ReliaQuest
The biggest threat to personal privacy will be healthcare information: Researchers are rushing to pool resources and data sets to tackle the pandemic, but this new era of openness comes with concerns around privacy, ownership, and ethics. Now, you will be asked to share your medical status and contact information, not just with your doctors, but everywhere you go, from workplaces to gyms to restaurants. Your personal health information is being put in the hands of businesses that may not know how to safeguard it. In 2021, cybercriminals will capitalize on rapid U.S. telehealth adoption. Sharing this information will have major privacy implications that span beyond keeping medical data safe from cybercriminals to wider ethics issues and insurance implications.
Jimmy Nguyen, Founding President at Bitcoin Association
Blockchain solutions in the healthcare space will bring about massive improvements in two primary ways in 2021.
Firstly, blockchain applications will for the first time facilitate patients owning, managing, and even monetizing their personal health data. Today’s healthcare information systems are incredibly fragmented, with patient data from different sources – be they physicians, pharmacies, labs, or otherwise – kept in different silos, eliminating the ability to generate a holistic view of patient information and restricting healthcare providers from producing the best health outcomes.
Healthcare organizations are growing increasingly aware of the ways in which blockchain technology can be used to eliminate data silos, enable real-time access to patient information, and return control to patients for the use of their personal data – all in a highly-secure digital environment. 2021 will be the year that patient data goes blockchain.
Secondly, blockchain solutions can ensure more honesty and transparency in the development of pharmaceutical products. Clinical research data is often subject to questions of integrity or ‘hygiene’ if data is not properly recorded, or worse, is deliberately fabricated. Blockchain technology enables easy, auditable tracking of datasets generated by clinical researchers, benefitting government agencies tasked with approving drugs while producing better health outcomes for healthcare providers and patients. In 2021, I expect to see a rise in the use and uptake of applications that use public blockchain systems to incentivize greater honesty in clinical research.
Alex Lazarow, Investment Director, Cathay Innovation
The Future of US Healthcare is Transparent, Fair, Open and Consumer-Driven
In the last year, the pandemic put a spotlight on the major gaps in healthcare in the US, highlighting a broken system that is one of the most expensive and least distributed in the world. While we’ve already seen many boutique healthcare companies emerge to address issues around personalization, quality and convenience, the next few years will be focused on giving the power back to consumers, specifically with the rise of insurtechs, in fixing the transparency, affordability, and incentive issues that have plagued the private-based US healthcare system until now.
Lisa Romano, RN, Chief Nursing Officer, CipherHealth
Hospitals will need to counter the staff wellness fallout
The pandemic has placed unthinkable stress on frontline healthcare workers. Since it began, they’ve been working under conditions that are fundamentally more dangerous, with fewer resources, and in many cases under the heavy emotional burden of seeing several patients lose their battle with COVID-19. The fallout from that is already beginning – doctors and nurses are leaving the profession, or getting sick, or battling mental health struggles. Nursing programs are struggling to fill classes. As a new wave of the pandemic rolls across the country, that fallout will only increase. If they haven’t already, hospitals in 2021 will place new premiums upon staff wellness and staff health, tapping into the same type of outreach and purposeful rounding solutions they use to round on patients.
Kris Fitzgerald, CTO, NTT DATA Services
Quality metrics for health plans – like data that measures performance – was turned on its head in 2020 due to delayed procedures. In the coming year, we will see a lot of plans interpret these delayed procedures flexibly so they honor their plans without impacting providers. However, for so long, the payer’s use of data and the provider’s use of data has been disconnected. Moving forward the need for providers to have a more specific understanding of what drives the value and if the cost is reasonable for care from the payer perspective is paramount. Data will ensure that this collaboration will be enhanced and the concept of bundle payments and aligning incentives will be improved. As the data captured becomes even richer, it will help people plan and manage their care better. The addition of artificial intelligence (AI) to this data will also play a huge role in both dialog and negotiation when it comes to cost structure. This movement will lead to a spike in value-based care adoption
Some of the biggest legal stories of the year include patients attempting to mount a class action lawsuit against Mayo Clinic after an employee improperly viewed more than 1,600 health records and the Supreme Court hearing opening arguments in a case challenging the constitutionality of the ACA’s individual mandate.
By JEFF GOLDSMITH
The Trump administration’s health care journey began with a trillion dollar near miss–the failed Repeal and Replacement of ObamaCare- and ended with a full-on train wreck, the catastrophically mismanaged COVID epidemic that will have claimed 300,000 lives by the time he leaves office. After four years of posturing and lethal incompetence, it will be a relief to see caring and professionalism return to the White House health policy under President-Elect Joe Biden.
Like Inheriting a Badly Managed World War
Like Barack Obama, Joe Biden will be saddled at the beginning of his regime with a damaged national economy. He will also walk in the door to the immediate need to manage the greatest public health catastrophe in a century as well as its economic consequences–a deep and enduring recession. Biden will be inheriting the equivalent of a badly managed World War we are presently losing.
Public health professionals who were marginalized by Trump will be challenged not only to craft coherent policy to contain and extinguish COVID but also to sell it to a frightened and polarized general public, many of whom reject the need for basic public safety measures.
Controlling COVID and rebuilding the critical public health agencies–CDC and FDA–that have damaged by political meddling will consume the lion’s share of the administration’s health policy bandwidth in its first year. It will be pressed to address a huge readiness gap–from critical PPE supplies to the development and deployment of testing and tracing capability to public health co-ordination and messaging–for the next pandemic. Increasing the presently inadequate level of public health funding (less than $100 billion a year in a $21 trillion economy) seems inevitable.
The inability of Congress to produce a fall round of COVID relief will create pressure on Biden to take immediate action to help struggling sectors of the economy, like airlines, restaurants and hospitals, as well as further help for the long term unemployed. Only a little more than half of the 22 million jobs lost in the spring have returned by November. Twenty million Americans were stranded by the July expiration of supplemental unemployment benefits as well as countless millions more “free agents” and contractors not eligible for traditional unemployment that are losing coverage at the end of the year. Mortgage, credit card and consumer loan forbearance are ending, and unless Congress acts, acres of rotten credit will turn rapidly into a banking and bond market crisis which the Federal Reserve cannot fix by itself.
State governments face FY21 deficits equaling $500 billion over the next two years , against a current annual spending base of about $900 billion. Further assistance to state and local governments will almost certainly include an additional increase in the federal match for Medicaid (FMAP), beyond the 6.2% temporary increase passed in March). Medicaid enrollment will likely top 80 million by mid 2021, almost one-quarter of the US population. Some states will have upwards of 40% of their population on Medicaid by mid-2021.
States laboring under severe revenue shortfalls will be unable to afford the expanded Medicaid program that was part of ObamaCare without a further increase in the FMAP rate. President Trump and Senate Republicans blamed the state and local government fiscal crisis on profligate Democratic mismanagement, and blocked aid to them during 2020. But Texas, Florida, Georgia and other red states have the same problems New York and California do.
Serious Fiscal Limitations Push the Health Policy Agenda Away from Coverage Expansion
Barack Obama entered office with a FY08 federal deficit of $420 billion. Joe Biden enters with a FY20 deficit of $3.1 trillion and a baseline FY21 deficit of $1.8 trillion, before adding the cost of the likely additional trillion dollar-plus stimulus package early next year. It will be passed over the dead bodies of Republican Congressional leadership suddenly recommitted to deficit reduction after racking up $8 trillion in deficit spending during the four years they controlled the federal government.
Coverage Expansion via Medicare and Public Option Unlikely
That deficit will significantly constrain a further expansion of health coverage. Not only will “Medicare for All” be off the table. Severe fiscal pressures will cause the new administration to “slow walk” a public option (which would require federal subsidies to implement) and Medicare expansion to people over age 60. These expansions were going to be controversial and politically costly because they would be fiercely contested by hospitals and other care providers concerned about the erosion of their commercial insured customer base (the source of perhaps 130% of their bottom lines) as well as the use of Medicare as a de facto price control lever.
By the time Biden addresses the first two problems–COVID and the economic crisis–he will probably have expended his limited stock of political capital and be weakened enough to be unable to take on the large messy issues of health coverage expansion and cost control. The Affordable Care Act exhausted Obama’s store of political capital, by early 2010. His administration’s failure to turn the economy cost the Democrats control of the House of Representatives and 20 (!) state legislatures in 2010.
What Can Biden Do in Health that Does Not Require Federal Spending?
Thus, the focus of Biden health policy is likely to be on items not requiring fresh spending.
Two major candidates for Biden policy activism: facilitating unionization of health care workers and antitrust enforcement. Labor unions were major Democratic supporters in this election cycle. Moreover, they were extremely active this spring and summer as advocates for the safety of health workers. They ran a very effective orchestrated press campaign to pressure large health systems such as HCA and Providence Health. Union leaders were prominent in health policy working groups for the Biden campaign after the conclusion of the primary season. Aggressively pro-union appointments to the National Labor Relations Board and legislation to facilitate union elections are almost certain to be early Biden initiatives.
Antitrust action to slow down or unwind hospital and health insurance mergers are also likely. The California Attorney General Xavier Becerra’s settlement of his aggressive anti-trust action against Sutter Health not only resulted in a huge financial payment (useful for reducing California’s budget deficit) but also forbade Sutter from “all or nothing” rate negotiations with health insurers. Spreading this approach nationally would significantly damage the financial position of large multi-hospital systems and complicate the forthcoming rate negotiation cycle with health insurers.
It is also likely that the Biden administration will continue the push begun during Trump for price transparency and disclosure of patient financial responsibility prior to service, further complicating rate negotiations with health insurers. Resolution of the deadlock over surprise billing is also likely.
Finally, Biden is likely to attack the 5% margins generated by Medicare Advantage carriers who now control 37% of all Medicare lives, and are getting a 50% share of each year’s worth of baby boomers enrolling in the program. Only half of boomers are yet enrolled in Medicare, and cutting Medicare Advantage cap rates will be a juicy target for Biden’s OMB in attempting to control the exploding federal deficit. Cutting health insurer profits is not the same as “cutting Medicare”.
Health care’s corporate sector is presently basking in record valuations and a largely favorable regulatory climate from the outgoing Trump administration, even as the care system has reeled from COVID. Financial pressures from the COVID health economy and continued slack demand for care will certainly challenge the care system, as it faces renewed regulatory and political pressures from the new administration.
Jeff Goldsmith is the President of Health Futures, Inc
Episode 30 of “The THCB Gang” was live-streamed on Thursday, October 28th! Tune in below!
Matthew Holt (@boltyboy) will be joined by some of our regulars and this episode will be a COSTUME PARTY! Come join some of our gang and see the crazy costumes we have in store! Joining us tomorrow are data privacy expert Deven McGraw (@healthprivacy), writer Kim Bellard (@kimbbellard), health economist Jane Sarasohn-Kahn (@healthythinker), CTO of Carium Health Lygeia Ricciardi (@Lygeia), MD & hospital system exec Rajesh Aggarwal (@docaggarwal), policy & tech expert Vince Kuraitis (@VinceKuraitis) it will definitely be a ‘spooky’ one with the looming election, the ACA hanging by a thread, and all of the nerves that await the results of November 3rd.
Cautionary tales are timeless. Take for example Aesop’s Fables, from 620 BC, which included the advisory, “Be careful what you wish for lest it come true.”
Trump and the Republicans who oppose the ACA take heed. You may be inadvertently taking the entire collusive Medical-Industrial Complex down a rabbit hole.
In the opening salvo to the Amy Coney Barrett hearings, House Speaker Nancy Pelosi seemed to be anxious for the fight. Her view of Trump’s strategy? “The president is rushing to make some kind of a decision because … Nov. 10 is when the arguments begin on the Affordable Care Act…He doesn’t want to crush the virus. He wants to crush the Affordable Care Act.”
With no health plan replacement on the shelf, death star Republicans have been struggling to bury this ever more popular piece of legislation for ten years.
In the process, they’ve alienated not only those who believe health care is a right rather than a privilege, and those who support protections for pre-existing conditions, but also those against deceptive skimpy health insurance, those who believe transgender Americans deserve care guarantees, those who demand access to affordable drugs, those who have their under age 26 adult children covered on their family plan, those opposed to cuts in coverage of contraceptives, and those in favor of federal funding of Planned Parenthood clinics.
As Kaiser Health News Washington correspondent, Julie Rovner, recently wrote, “With the death of Ruth Bader Ginsburg, the ACA’s future is in doubt.” In a case now known as California v. Texas, set for presentation to the Supreme Court in just a few weeks, 21 attorneys general (AGs) led by California are seeking clarity on a challenge by Texas led Republican AGs to declare the ACA unconstitutional based on a weak technicality.
Experts like University of Michigan law professor Nicholas Bagley have sounded the alarm that Barrett’s confirmation could mean the deciding swing vote on the case. He writes, “Among other things, the Affordable Care Act now dangles by a thread.”
But charter members of the Medical-Industrial Complex (MIC) aren’t lining up with Mitch McConnell. America’s Health Insurance Plan (AHIP), the lobbying arm for the big insurance companies, says a Trump win here would cast “a long shadow of uncertainty over ACA-based investments and denies health insurance providers, states, individuals, and other stakeholders of much needed clarity.”
The AARP, with its own proprietary Part D pharmaceutical plan, says a bad decision here “plunges millions of Americans into an abyss of prolonged uncertainty because they do not know if they will lose access to life-sustaining health care coverage and consumer protections.”
The American Hospital Association, the Catholic Health Association of the United States, and the Association of American Medical Colleges issued a joint warning that a Trump/McConnell victory here could “have serious, perhaps irreparable, consequences for hospitals and the patients they serve.”
Why would charter members of the MIC be spurred to such progressive, public-spirited action against their very own free-market allies, you might ask.
The answer lies in the “What if?” What if Republicans actions in the Supreme Court on November 10th succeed in throwing American health care into full-throttled chaos in the middle of a pandemic now slated to result in 400,00 plus American casualties by February, 2021…and Joe Biden wins control of the executive and legislative branches of government?
Here are two possible scenarios:
1.Biden rolls back the Trump regulatory actions thus far enacted, and the Democratic Congress reinstates the ACA mandate (the technicality that led to the claims of unconstitutionality of the ACA) thus negating the effects of the negative Supreme Court decision. Medicaid extensions in the 12 remaining purple (formerly red) states proceed. At the same time Biden approves extended eligibility to enroll in a voluntary public option.
2. Biden takes a good hard look at the ACA, and at the Republican led legal challenges that will continue unabated with tacit support for the MIC status quo – and says, “Screw it. I’m going Medicare for All.”
Mike Magee MD is a Medical Historian and Journalist at the University of Hartford. He is the author of Code Blue: Inside the Medical Industrial Complex. ((Grove Atlantic/2019)
On Episode 154 of Health in 2 Point 00, follow @barkyboy (a dog wearing a Health in 2 Point 00 shirt!) on Twitter! Jess also asks me about Papa getting $18M in a Series B for their matching platform for college students, Optimize.health raising $15.6M in a Series A for their RPM platform, Joint Academy raising $23M for their physical therapy platform, and Maple Corp raising $75M for their Canadian telehealth platform in socialized medicine. Also, Matthew talks about his new piece on THCB where he wrote about what Biden should say to the Supreme Court Justices on the ACA. – Matthew Holt
Subscribe to our channel and tweet us your questions using the hashtag #healthin2point00!
By MATTHEW HOLT
The new Supreme Court, in all likelihood including just nominated Justice Amy Coney Barrett, will be hearing the California v Texas suit against the ACA on November 10th, seven days after the election. The lower courts have already ruled the ACA unconstitutional. Some hopeful moderates among my Democratic friends seem to believe that the justices will show cool heads, and not throw out the ACA. But it’s worth remembering that in the NFIB vs. Sebelius decision which confirmed the legitimacy of most of the ACA back in 2011 all the conservative justices with the exception of John Roberts voted to overturn the whole thing. With Ginsburg being replaced by Barrett there’s no reason to suppose that she won’t join Thomas, Alito, Kavanagh & Gorsuch and that Robert’s vote won’t be enough to stop them this time. The betting odds must be that the whole of the ACA will be overturned.
There is nothing the Democrats can realistically do to prevent Barrett filling RBG’s seat on the court, but assuming Biden wins and the Democrats take back the Senate, the incoming Administration can give the Supremes something to think about regarding the ACA. I would not suggest this level of confrontation before the election but, if Biden wins, the gloves must come off.
Assuming he wins and that the Dems win the Senate, this is the speech Biden should give on November 9th. (The TL:DR spoiler is, “Keep the ACA or I’ll extend Medicare to all ages”)
“I’m directing this speech to an extremely select number of people, just the Supreme Court Justices appointed by Republican Presidents. It is obviously no secret that we have political differences on many issues and we find ourselves in the strange situation in which I am the incoming President with an incoming Democratic Senate majority and yet you are considering overturning the signature bill of the administration in which I was Vice-President. You may recall that at the time of its signing I told President Obama that it was a “big f****** deal” and, although many of my colleagues in the more progressive wing of the Democratic Party have criticized the ACA since its passage, it turns out that I was right.
I am not referring here to the apoplexy that the ACA created amongst the Republican Party including not only the current and outgoing President but also almost all Republican members of Congress between 2010 and 2018. Instead I’m referring to the ACA’s impact on the nation and its health care system.
Since 2010 there have been many changes to the way our nation’s health care system operates; almost all of them have their roots in the ACA.
First, the ACA gave access to health insurance coverage to many people who had great trouble getting it before. That includes young people moving between their parent’s home, college and getting into the workforce; small business owners; freelance workers; the unemployed; people with low incomes; and people with underlying “pre-existing” health conditions. I remind you that due both to the pandemic and changes in our economy, there are many, many more of these people now than there were in 2009.
Before the ACA these people were either not well served by the private health insurance industry or literally were unable to buy coverage at all. This not only caused extreme personal and financial suffering and in some cases death to the people affected, but also impacted the economy. It restrained innovation and entrepreneurship, and it meant that the participants in the health care system–including very many well meaning clinicians and provider organizations–had to play very inefficient games in order to try to provide those people with much-needed care, which drove up the cost of care to everyone else. Warren Buffet calls that the tapeworm in the US economy.
The ACA changed this in two main ways.
First it created a system of standardized insurance benefits and mandated insurers to provide those benefits to anybody regardless of health status. It also directly subsidized the cost of insurance for people of low to moderate-incomes. Given that median household income is around $63,000 in the US and the current cost of family insurance is around $28,000, these subsidies are essential. Otherwise people who do not have employment-based insurance would not be able to purchase coverage.
Second, the ACA expanded Medicaid coverage for the poor, creating a standardized set of benefits for those earning up to 133% of poverty. Sadly, the conservative majority on the court, joined (in my view to their everlasting shame) by Justices Breyer and Kagan, decided that the federal government did not have the right to force states to expand Medicaid even though the federal government paid 100% of the cost. It turned out that many states with Republican governors chose not to expand Medicaid, even though this meant that many rural hospitals in their states were forced to close. Numerous studies have shown that Medicaid expansion has improved the financial and emotional health of the poor, and other work has shown that the current Administration’s policy of allowing states to restrict access to Medicaid, by using such tricks as work requirements, have been cruel and counterproductive–and that they have not reduced health care costs or increased employment. States that have not expanded Medicaid have left their most vulnerable and poor populations in an extremely difficult state. For example in Texas a single parent with two children is only eligible for Medicaid if the children are on Medicaid and total household income doesn’t exceed $230 a month, which would barely cover your clerks’ daily lunch bill. Some estimates suggest that nearly three-quarters of a million people in Texas are in the coverage gap between Medicaid and qualifying for the ACA.
However, the ACA was not just about expanding insurance for those who had trouble getting it before. It also closed several loopholes that had confronted many other people who needed to use the health care system. This included closing the donut hole in the drug coverage for seniors provided by the Medicare Modernization Act in 2003. It also did away with maximum coverage benefits which severely compromised the care received by extremely sick people–often children or those with very rare diseases. And, in a great benefit to many, many young Americans from middle class and even wealthy families, the ACA allowed parents to keep their children on their insurance up until the age of 26, when they were usually established in the workforce.
Many of you on the Supreme Court believe that private delivery of insurance and health care services are superior to those delivered by the government. For you the ACA should indeed have been a very welcome piece of legislation. All of the new enrollment coming through the ACA exchanges went through private health insurance companies, and the vast majority of Medicaid expansion is also managed by private health insurers. While federal tax dollars are subsidizing this coverage expansion, it’s worth pointing out that a IRS decision in 1954 confirmed the tax-free status of private health insurance premiums paid by employers which translates to an annual subsidy to private employers that exceeds the cost of the premium subsidies in the ACA. On the night that the ACA was passed a Canadian journalist reported that America had just seen the largest expansion of private health care coverage ever–and he was right.
This coverage expansion was by no means all that the ACA did. It was also the legal and regulatory basis for a substantial modernization of the nation’s health care system. Of course since the 1930s, US health care has largely been based on a fee-for-service payment approach, acknowledged by experts to be both inefficient and inflationary. The ACA created the Center for Medicare and Medicaid Innovation which has been at the forefront of creating programs that encourage improved care at a lower cost by, for instance, bundling payments for joint surgery, cancer and other care. It also created the system of accountable care organizations which encourages doctors and hospitals to work together to more efficiently and effectively manage the health of large populations of Medicare recipients. And while the ACA did not create the Medicare Advantage program, it put in place an environment in which private health insurance companies were able to use government funding within the Medicare program to deliver innovative programs that are improving the quality of care received by our seniors.
In addition, since the passage of the ACA, and assisted by it and the HITECH Act passed in 2009, there has been a considerable boom in the development of new types of health care technologies, particularly digital technologies. These show amazing promise for delivering 24/7 care to many vulnerable populations. The significant spread of telehealth and remote patient monitoring during the current COVID-19 pandemic was only possible because of the innovation of numerous private companies. They developed those technologies in large part in response to incentives created by the ACA.
Finally, although the cost of health care in the United States is still significantly higher than it is in other countries, since the passage of the Affordable Care Act the rate of increase of health care cost has slowed and up until this year the health care system was barely growing as a share of the overall economy for the first time ever (other than a brief blip in the mid 1990s).
This is just a brief overview of the impact of the Affordable Care Act. It has directly meant access to health care coverage for around 20 to 30 million people and, as health futurist Ian Morrison points out, has tentacles impacting every single part of the health care system. This was not the case when four conservative justices including two currently on the bench (Alito & Thomas) voted to throw out the ACA in 2012. And it has not escaped my attention that the two justices who have replaced Scalia and Kennedy appear to have similar or perhaps even more conservative viewpoints.
If following the arguments you will hear this week, the Supreme Court decides to uphold the lower court hearing and abolish the entire ACA on what is pretty much a technicality, the consequences will be dramatic. And they will be very bad.
Tens of millions of people will lose their health insurance. Of course they will still require care. The cost of delivering that care will fall upon the nation’s health care providers, and eventually on the taxpayer. That cost will be distributed in an unplanned and chaotic manner –resulting in much actual and financial pain.
In addition, virtually every current organization funding, delivering or involved in care delivery will have to completely reformat the business operations it has spent the last decade putting in place. American health care will be thrown into chaos and the cost in both dollars and human suffering will be extreme.
Given the extreme impact of throwing out the ACA, I will appeal to all the justices to maintain the ACA in place.
Unlike the outgoing president, I respect the institutions and separation of powers inherent in the constitution of our nation. But given that I and my colleagues in the Senate have just been elected by a significant majority of Americans, and also given that none of the conservative justices on the court were appointed by a President who won the majority of the vote of his fellow citizens when initially elected, I would recommend that the court consider its actions very carefully. Unlike some in my party, I am not advocating significant constitutional changes such as appointing more justices, but the more the court bends against the arc of history, the more likely it is that such actions may be taken in the future.
However, in regards to the nation’s health care system I am hereby telling you exactly what I will do–should the court return a verdict overturning the ACA.
You are well aware that in the Democratic primary campaign, which was largely settled before the covid-19 pandemic had its full effect, my opponent Senator Sanders was campaigning to create Medicare for All. While I was and am opposed to this policy, it is clear that a significant majority of Democrats and in some polling a majority of Americans were in favor of expanding Medicare For All even before the full effect of the pandemic was realized.
The world of course is radically different now compared to how things were even at the start of 2020. Not only has our health care system had to deal with the onslaught of the pandemic, but the recession that it caused has placed many more millions of Americans out of work, and some 5 million of those have already lost their health insurance. I pledged in the election campaign both to get the economy moving and also to support those who were victims of the recession, which includes those millions who lost their health insurance.
In my campaign I pledged to build on the successes of the ACA. As you are well aware, two of the most significant policies I proposed were to create a public option and to reduce the eligibility age for Medicare to 60 years old. If the Supreme Court throws out the ACA, it will be by definition impossible for me to build on the ACA’s infrastructure.
But at a time of a pandemic during a recession I will not stand by and allow tens of millions of Americans to suffer.
Instead let me tell you what I will do.
As you know under the current rules of the Senate and from the convoluted passage of the ACA itself, it is virtually impossible to pass significant legislation without 60 votes. In the election that just happened we Democrats have retaken control of the Senate, but only with a slight majority. However, as you also know, the Senate can pass legislation impacting budgets under the process of reconciliation with a simple majority. You will recall that using reconciliation the Republican majority in the Senate tried to repeal the ACA in 2017, and were only prevented from doing so by the deciding vote of my friend the late Senator John McCain.
On the day which I hope never comes that the Supreme Court invalidates the ACA, my colleagues in the House and Senate will immediately introduce legislation amending Title 18 of the 1965 Social Security Act that created Medicare to reduce the age of eligibility not to 60 but to zero. At the same time we will amend title 19 of the 1965 Social Security Act that created Medicaid to reduce its budget to $0 other than to pay the premiums into Medicare for those known as “dual eligibles” and to pay for long term care and other services that Medicare currently doesn’t cover.
You and other conservatives might believe that we will not be able to complete this because of the Byrd Rule for reconciliation which was designed in the 1980s to ensure that reconciliation did not radically change the budget of the federal government. But the Senate Republican majority in the Congress before last essentially already violated these rules by passing a scandalously unfair and unfunded tax cut, and my colleagues in the Senate will be prepared to override the Byrd Rule. This, I point out, is significantly less controversial than overriding the filibuster or changing the number of justices on the Supreme Court.
Conservatives might also believe that Medicare expansion would significantly increase the budget of the federal government. This would be true but is ignoring two salient facts. The first is that the expansion to the federal budget would be something of the order of 2 trillion dollars a year, as the federal government already spends roughly 1.5 trillion of the 3.5 trillion the United States spends on health care. That level of expansion of government is somewhat similar to the deficit spending which just happened under the CARES act and other stimulus money spent during the current pandemic. So it’s not that large a leap for the country to make.
In addition while the expansion of Medicare under reconciliation would not directly abolish private health insurance in the manner that my colleague Senator Sanders has proposed, the fact that Medicare part A is free to Medicare recipients, and that parts B & D are very heavily subsidized, will mean that it is not only those who have lost their insurance or have trouble buying it in the individual market, or those who were previously on Medicaid, who will voluntarily enter the Medicare program. It is extremely likely that the vast majority of employers who are currently providing health insurance for their employees, which to be noted would be voluntary if there is no ACA, will cease to do that. After all their employees could now enter the Medicare program at no extra cost to them. While this will cost the government more, it will save employers and individuals an approximately equal amount and so the net effect on the economy will be limited.
Part of the reason that I am not a proponent of Medicare for all, has been that the change it would cause to employer-based health insurance, and to the finances of our nation’s health care system would be too extreme. It is worth noting that Rand recently showed that employer-based health insurance paid hospitals and doctors at nearly 250% the rate they receive from Medicare. There will certainly be high transition costs for the health care system from this move but everyone in the health care system already understands how Medicare works. My Administration will to work with providers and care delivery organizations to make sure that they are able to fulfill their mission of providing high-quality care to Americans.
Even though I have been a political centrist my entire life and have never been a proponent of Medicare For All–despite the fact that every other industrialized nation has something pretty similar to it–if you strike down the ACA I will act immediately. I would view the suffering of Americans as being too great not to respond. With no ACA in place there is no available legislative option other than this Medicare expansion.
I am well aware of the ideology of many on the political right in the US including most of the conservative justices on the Supreme Court. I would stress that this type of radical expansion of Medicare is not what I would ordinarily want to see. But if the ACA is abolished in the middle of a pandemic and a massive depression, my first duty to the American people as their President will be to relieve the suffering of as many of them as possible.
As you consider your judgement in the California v Texas case I would ask you not to put me in the position where I would have to take such a radical step.
But I assure you that if necessary I will have no hesitation in doing so.
Matthew Holt is the publisher of THCB. He has not written a speech for Joe Biden before but would happily lend him this one
– Healthcare Growth Partners’ (HGP) summary of Health IT/digital health mergers & acquisition (M&A) activity, and public company performance during the month of July 2020.
While a pandemic ravages the country, technology valuations are soaring. The Nasdaq hit an all-time high during the month of July, sailing through the 10,000 mark to post YTD gains of nearly 20%, representing a 56% increase off the low water mark on March 23. More notably, the Nasdaq has outperformed the S&P 500 (including the lift the S&P has received from FANMAG stocks – Facebook, Amazon, Netflix, Microsoft, Apple, Google) by nearly 20% YTD.
At HGP, we focus on private company transactions, but there is a close connection between public company and private company valuations. While the intuitive reaction is to feel that companies should be discounted due to COVID’s business disruption and associated economic hardships facing the country, the data and the markets tell a different story.
While technology is undoubtedly hot right now given the thesis that adoption and value will increase during these virtual times, the other more important factor lifting public markets is interest rates. According to July 19 research from Goldman Sachs,
“Importantly, it is the very low level of interest rates that justifies current valuations. The S&P 500 is within 4% of the all-time high it reached on February 19th, yet since that time the level of S&P 500 earnings expected in 2021 has been pushed forward to 2022. The decline in interest rates bridges that gap.”
Additionally, Goldman Sachs analysts also estimate that equities will deliver an annual return of 6% over the next 10-years, lower than the long-term return of 8%. Future value has been priced into present value, and returns are diminished because the relative return over interest rates is what ultimately matters, not the absolute return. In short, equity valuations are high because interest rates are low.
What happens in public equities usually finds its way into private equity. To note, multiple large private health IT companies including WellSky, QGenda, and Edifecs, have achieved 20x+ EBITDA transactions based on this same phenomenon. From the perspective of HGP, this should also translate to higher valuations for private companies at the lower end of the market. As investors across all asset classes experience reduced returns requirements due to low interest rates, present values increase across both investment and M&A transactions.
As with everything in the COVID environment, it is difficult to make predictions with certainty. Because the stimulus has caused US debt as a percentage of GDP to explode, there is an extremely strong motivation to keep long-term interest rates low. For this reason, we believe interest rates will remain low for the foreseeable future. Time will tell whether this is sustainable, but early indications are positive.
Noteworthy News Headlines
- A $10.2 million “sole source” contract to run a centralized Covid-19 database for the Trump administration drew sharp criticism from congressional Democrats, who demanded that the federal Centers for Disease Control and Prevention be reinstated as the primary repository of coronavirus data. The contract drew scant public attention when it was awarded in April to TeleTracking Technologies, a Pittsburgh company whose core business is helping hospitals manage the flow of patients. But it drew scrutiny after the administration ordered hospitals, beginning on Wednesday, to report coronavirus information, including bed availability, to the new database, housed at the Department of Health and Human Services in Washington, instead of to the C.D.C.
- With the CDC sidelines, some states lose access to timely COVID-19 hospital data. Just as the number of people hospitalized for COVID-19 approaches new highs in some parts of the country, hospital data in Kansas and Missouri is suddenly incomplete or missing. Earlier this week, the Trump administration directed hospitals to change how they report data to the federal government and how that data will be made available. Missouri Hospital Association spokesperson Dave Dillon called the move “a major disruption.”
- Hospital giant ACA makes $822 million profit off CARES Act stimulus money. HCA’s biggest profit driver and boost to surviving the pandemic and the influx of Covid-19 patients in the second quarter came from the federal government. In HCA’s second quarter, the government stimulus passed by Congress and signed into law by President Donald Trump turned into a windfall as of the end of the second quarter.
- Hims Inc, a U.S. online provider of mens’ healthcare and consumer products ranging from hair loss treatments to Viagra, is exploring going public through a merger with a blank-check acquisition company that could value it at more than $1 billion, according to people familiar with the matter.
- HIMSS pushes back 2021 conference to August. HIMSS canceled its 2020 global health conference in March just days before it was slated to start due to concerns about COVID-19. HIMSS officials are planning a press conference Friday to offer more details about the HIMSS21 conference.
Noteworthy M&A transactions during the month include:
- Workflow optimization software vendor HealthFinch was acquired by Health Catalyst for $40mm.
- Sarnova completed simultaneous acquisition and merger of R1 EMS and Digitech.
- Payment integrity vendor The Burgess Group acquired by HealthEdge Software.
- Ciox acquired biomedical NLP vendor, Medal, to support its clinical data research initiatives.
- Allscripts divests EPSi to Roper for $365mm, equaling 7.5x and 18.5x TTM revenue and EBITDA, respectively.
Noteworthy Buyout transactions during the month include:
- HealthEZ, a vendor of TPA plans, was acquired by Abry Partners.
- As part of a broader wave of blank check go-public transactions, MultiPlan will join the public markets as part of Churchill Capital Corp III.
- Also as part of a wave of private equity club deals, WellSky partially recapped with TPG and Leonard Greenin a rumored $3B transaction valuing the company at 20x EBITDA.
- Edifecs partnered with TA Associates and Francisco Partners in another club deal valuing the company at a rumored $1.4B (excluding $400mm earnout) at over 8x revenue and 18x EBITDA.
- Madison Dearborn announced a $410mm take private of insurance technology vendor Benefytt.
- Nuvem Health, a provider of pharmacy claims software, was acquired by Parthenon Capital.
Noteworthy Investments during the month include:
- Doctor on Demand, a telemedicine vendor, raised $75mm led by General Atlantic.
- Truepill, an on-demand pharmacy, raised $25mm from investors including Optum Ventures.
- VillageMD, a primary care provider, took a $275mm investment from Walgreens and others.
- Medly Pharmacy, an online pharmacy, received a $100mm investment led by Volition and Greycroft.
- Forcura, a vendor of post-acute software, received a growth investment from Accel-KKR.
- Preventice, a developer of mobile health applications, received a $137mm Series B with a host of strategic investors.
- Ro (fka Roman), a cloud consumer pharmacy, received a $200mm investment valuing the company at $1.5B.
- Sema4, a big data genomics company, raised $121mm led by BlackRock valuing the company at $1B.
- Heal, a physician house call company, raised $100mm from Humana.
- Tempo, developer of smart at-home fitness platforms, raised $60mm.
Public Company Performance
HGP tracks stock indices for publicly traded health IT companies within four different sectors – Health IT, Payers, Healthcare Services, and Health IT & Payer Services. Notably, primary care provider Oak Street Health filed for an IPO, offering 15.6 million shares at a target price of $21/ share. The chart below summarizes the performance of these sectors compared to the S&P 500 for the month of July:
The following table includes summary statistics on the four sectors tracked by HGP for July 2020:
About Healthcare Growth Partners (HGP)
Healthcare Growth Partners (HGP) is a Houston, TX-based Investment Banking & Strategic Advisory firm exclusively focused on the transformational Health IT market. The firm provides Sell-Side Advisory, Buy-Side Advisory, Capital Advisory, and Pre-Transaction Growth Strategy services, functioning as the exclusive investment banking advisor to over 100 health IT transactions representing over $2 billion in value since 2007.
Episode 17 of “The THCB Gang” was live-streamed on Thursday, July 9th! Watch it below!
Joining me were some of our regulars: patient advocate Grace Cordovano (@GraceCordovano), health economist Jane Sarasohn-Kahn (@healthythinker), WTF Health Host Jessica DaMassa (@jessdamassa), and guests: Tina Park, partner at Diagram (@diagramoffice) & Shannon Brownlee, Senior VP at the Lown Institute (@ShannonBrownlee). The conversation focused on asynchronous care, the gap between patients & technology, and the Supreme Court ruling on employers’ ability to limit women’s access to birth control coverage. It was a great and engaging conversation with some of the top health care experts in the field.