Providence CDO Sara Vaezy

Hint Summit 23 is coming to Digital Health Wire’s hometown of San Diego, CA on September 20-23, and we’ll be there with other Direct Primary Care enthusiasts and innovators to share ideas, build relationships, and celebrate the impact of DPC.

The team over at Hint definitely knows how to put on a show, and this year’s conference is packed with great keynotes, venues (shoutout to the Rady Shell), and an Innovations In Primary Care panel hosted by yours truly. 

Grab a spot here and use HEALTHWIRE50 for $50 off.

Population Health

PwC: Healthcare Costs Projected to Rise 7%

PwC’s annual medical cost report is out, and as always, it’s a lot to dig through. The full report breaks down each of the factors underpinning medical inflation, but the headline takeaway was that healthcare costs are projected to rise 7% in 2024.

That’s up from 5.5% in 2022 and 6% in 2023, with PwC attributing the acceleration to two primary changes.

Inflator 1: In an inflationary environment like the one we’re currently seeing, providers are pushed to seek significant rate increases from payors. That effect is only amplified by workforce shortages and the return of patient demand.

• PwC expects inflation to cause employers to focus on high performing networks, centers of excellence that target high-cost claims (particularly cancer and orthopedic cases), and health plans that steer patients to lower cost providers.

Inflator 2: Pharmacy expenses are skyrocketing, with the median annual cost of newly approved drugs reaching $222k in 2022. Combined with the introduction of new cell and gene therapies, we look poised for persistent double digit pharmacy inflation.

• The demand of GLP-1 medications is another strong contributor, and if the FDA decides that these drugs are appropriate for weight loss, their popularity is just getting started.

PwC called out a couple deflationary forces, most notably biosimilar drugs entering the market at less than half the cost of their reference products. In 2023, the launch of adalimumab biosimilars to Humira was “a new milestone” in the U.S.

• The shift to lower cost care sites also made an impact, with the report highlighting increased demand for outpatient surgeries, home-based services, and virtual care. PwC recommends that providers work with plans to establish models that share in the gains.

Cost Neutral but Key to Watch:

• Continued efforts to manage total cost of care (the growth of value-based care)
• The COVID hangover causing provider unit cost increases and pharmacy trends
• Behavioral health utilization increasing 
• Health equity’s impact on population health
• CMS Health Plan and Hospital Price Transparency Rule
• Medicaid redetermination 

The Takeaway

Although healthcare’s multi-year contracts dampen some of inflation’s immediate impact, PwC’s prediction of a 7% cost increase suggests that we’re now past any buffer. Industry bellwethers like UnitedHealth and Humana have already begun signaling that pent-up-demand is adding even more pressure to the equation, and PwC thinks that cost mitigation strategies should now be a top priority for payors and providers alike.

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The Wire

• Author Health Debut: Author Health launched with $115M in financing to support Medicare Advantage members with serious mental illness and substance use disorders, starting in Florida through a partnership with Humana. Author’s model involves virtual and in-person teams of geriatric psychiatrists, NPs, and community health workers that work together to coordinate treatments and caregiver support. General Atlantic led the round, apparently spending two years evaluating the thesis before recruiting a team to bring it to life, much like the approach it took with OneOncology in 2018.

• Hospital Margins Continue to Stabilize: Kaufman Hall’s latest figures showed that hospital margins continue to stabilize after spending most of the year in the red, with median margins ticking up from 0.1% in April to 0.3% in May. Operating revenue climbed 2% month-over-month (up 9% on-year), driven by both outpatient (+14%) and inpatient services (+6%). Labor expenses provided some relief as well, falling 1% since April to offset an equal increase in supply and drug expenses.

• Decentralization Crucial to Healthcare: Providence CDO Sara Vaezy penned a great piece in Forbes on why health systems need to start focusing on connecting the dots across the full spectrum of resources rather than trying to be an expert at everything. Vaezy makes the case that health systems are uniquely positioned to serve as “the brain” of care coordination due to the trust they hold with communities, which means they’re also in the best spot to facilitate partnerships that leverage specific expertise to deliver optimal care.

• MA Lower Costs for Chronic Conditions: Medicare Advantage beneficiaries with certain chronic conditions have lower acute care utilization and overall healthcare spending than FFS enrollees, according to a study by Avalere Health. MA per-member per-month spending ranged from $1,532 for beneficiaries with diabetes (vs. $2,204 for FFS beneficiaries) to $1,276 for beneficiaries with hyperlipidemia (vs. $1,834). MA enrollees also had more physician visits, which probably accounts for some of the lower costs and acute care utilization.

• CMS Proposes 2.2% Home Health Cut: CMS published its 2024 HH PPS Rate Update proposed rule, which included a 2.2% cut to Medicare home health payments, or about ~$375 million less than this year’s levels. It’s unsurprising that home health advocates seem to be universally upset, with NAHC President William Dombi telling Home Health Care News that “overall spending on Medicare home health is down… and providers have closed their doors or restricted service territory to reduce care costs. If the rate was truly budget neutral, we would not see these actions occurring.”

• Major Weight Loss Semaglutide Pill: As if GLP-1 drugs needed any more momentum, a phase 3 trial (667 participants, 68 weeks) published in The Lancet revealed that an oral form of semaglutide – the active compound in injectable diabetes/obesity drugs Ozempic and Wegovy – could effectively treat nondiabetic adults who are obese or overweight. Among oral semaglutide-takers, 85% lost at least 5% of their body weight during the study period, compared to just 26% of placebo-takers. Those who took oral semaglutide lost an average of 15% of their body weight, while the placebo group lost only 2.4%. 

• Neko Raises $65M: Swedish whole-body scanning firm Neko Health raised $65M in Series A funding to fast-track its concept of preventive care across Europe and the US. The firm was cofounded by Spotify CEO Daniel Ek, and unlike other longevity-focused startups targeting a premium user base, Neko plans to offer a $270 scan to assist physicians with detecting skin conditions, cardiovascular disease, diabetes, and other metabolic conditions.

• Atropos & Datavant Team Up: Atropos Health and Datavant are teaming up to allow members of the Datavant ecosystem to access the Atropos Evidence Platform, while also bringing Datavant’s information exchange services to members of the Atropos Evidence Network. The Atropos Evidence Platform provides health systems with confidential assessments of their data quality and enables them to generate real-world evidence reports at the point of care that answer clinical questions with insights derived from millions of patient encounters. 

• Maternal Mortality Doubles: A JAMA study found that the maternal mortality rate (MMR) in the U.S. more than doubled in a single decade, from a total of 505 maternal deaths in 1999 to 1,210 in 2019. That increase affected some populations more than others, with American Indian/Alaska Native MMR climbing from 14 deaths per 1k live births to 49.2 over the study period. The average MMR for Black patients grew from 26.7 to 55.4, while White patients saw an increase from 9.4 to 26.3.

• Rimidi Diabetes Platform Expansion: Rimidi buffed up its diabetes management platform by adding Glycemic Risk Index and Time-in-Range metrics through an enhanced collaboration with Dexcom. While both metrics leverage continuous glucose monitor data to support proactive care, Glycemic Risk Index is a new composite score developed by the Diabetes Technology Society that assesses how well a patient is doing over time and is reportedly a better predictor of complications than any single measurement.

• Molina Acquires Bright’s Last MA Plans: Molina Healthcare is acquiring Bright Health’s Medicare Advantage business in California for approximately $510M, a move that will completely exit the struggling insurtech company from the payor business. Bright last posted a loss of $94.8M in the first quarter and has been offloading assets and refocusing on consumer care products to stem the bleeding. For its part, Molina’s Medicaid business has been bumpy with redeterminations, and Bright’s MA plans are a “strong strategic fit” with its dual-eligible strategy in California.

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