OptumHealth and its proposed acquisition target DaVita Medical Group (DMG) have a lot in common: Ambulatory care portfolios: physician practices, urgent care centers and ambulatory surgical centers (ASCs) – both directly owned and affiliated via owned independent practice associations (IPAs) Geographic position: multiple states and markets Advantaged model: within-market cross-referrals and care collaboration which should support market share, economics and a value-based care advantage Construction: largely assembled via acquisition resulting in similar challenges in integrating operations (e.g. multiple EHRs, management structures) In short, the DMG acquisition is a classic horizontal play. And the assets coming from both sides are significant… Read More
United’s ambulatory delivery system OptumCare can reach 70% of the US population
Who will be the first to take integrated health care delivery national? A few years ago, the best bet might have been an established provider with a nationally compelling brand and a growing affiliate federation such as Cleveland Clinic or Mayo. Instead, Optum – just a decade ago three separate services largely focused on serving United’s health benefits business – has entered care delivery and — by a constant stream of acquisitions big and small — built up beachheads in a majority of markets and is – via ongoing big acquisitions, tuck-ins and greenfield expansions – laying the foundations of… Read More
Gene therapy, headaches, and tattoos: an opinionated take on NEJM highlights for November 2017
Two new therapies against a horrible congenital disease – but trouble ahead on pricing… Spinal Muscular Atrophy (SMA) is a genetic disease that declares itself at a few months of age, and typically leads to death before the second birthday. Two studies for two different therapies are reported in the Journal. First, the final results for a phase 3 placebo-controlled trial studying nusinersen (Spinraza, Sarepta, approved by FDA Dec 2016) therapy which involves monthly injections into the infant’s spine of an RNA-based drug. These show a clear beneficial effect over placebo (good enough for FDA approval), but still a high… Read More
Allegheny Health Network adds micro-hospitals to its ground game
UPMC’s recent spectacular deal-making careen through central Pennsylvania (picking up the big Susquehanna and Pinnacle systems as affiliates and Tower as a joint venture partner all in under a year) contrasts oddly with its tentativeness at home: in mid-September, UPMC unexpectedly scuttled plans to build a 90-bed, $211M hospital in the South Fayette suburb of Pittsburgh just a week after signing a deal with a developer which would have launched construction. Spokespeople said UPMC is “pursuing other, more significant strategic options” (per Pittsburgh TribLive). Perhaps UPMC caught early wind of the latest contrivance of its local… Read More
Between the very common and the very rare – An opinionated take on NEJM highlights for October 2017
Between the very common and the very rare – An opinionated take on NEJM highlights for October 2017 Another tool for prevention in cardiovascular disease Taking aspirin daily has been standard of care for cardiovascular disease for decades, but attempts to demonstrate the additive usefulness of other agents to prevent clot formation have not been successful. Now things have changed: in a large study of patients with established cardiovascular disease, those who took rivaroxaban (Xarelto, Bayer) daily on top of aspirin did markedly better than with aspirin alone, although with increased risk of bleeding (mostly gastrointestinal, but very rarely… Read More
Marrying into the right family pays off! Update on revenue cycle management joint venturing
Back in 2013, Dignity and Optum formed a joint venture for revenue cycle management (RCM) services named Optum360. Dignity contributed processing centers and 1,700 employees in return for ~25% share in the venture. Optum contributed technology and 1,300 employees in return for owning the rest. In addition, Dignity promised to buy RCM services from the joint venture for the subsequent ten years. At the time, our view was that the joint venture “marriage” gave Optum the scale and reference client needed to credibly compete vs. majors (R1, Parallon, Conifer) at a time when third party RCM appeared well positioned… Read More
An opinionated take on NEJM highlights for September 2017
A new drug to address hard-to-treat severe asthma In ~10% of people with asthma, traditional therapies do not work well and they have recurrent exacerbations leading them to the ED. Over the past few years, a number of biologics (mAbs) have been developed to treat such patients, but each of these agents is targeted to a small subgroup with specific biomarker characteristics for which it has been shown to be effective, resulting in ultra-niche therapies with limited uptake. For broader penetration of those modalities, what is needed is a drug that has more general applicability to the non-responders with severe… Read More
Price, costs, value, and rules: An opinionated take on NEJM highlights for August 2017
At last, drug prices influence physician usage patterns Association of Reference Pricing with Drug Selection and Spending (subscriber access); Nitroprusside and Isoproterenol Use after Major Price Increases (free access) Not that long ago, the share of mind US physicians devoted to the cost of the drugs they prescribe was essentially zilch. Thankfully, times have changed as demonstrated in two interesting papers that describe natural experiments. The first compared trends in prescribing patterns at a payer that instituted reference pricing in 2013 vs. one that did not (reference pricing means that for each drug class, the payer will limit… Read More
An opinionated take on NEJM highlights for July 2017
Taking stock: two decades of progress in heart failure: Here comes a clever study using existing clinical trial data to assess progress in standard of care over time for heart failure. For each trial, the authors assessed the rate of sudden cardiac death during the early part of the study (excluding patients with ICDs), and it appears that between 1995 and 2014, it decreased by nearly half. As always, in observational retrospective studies, one has to worry about systematic biases around the population that are included (i.e. are they really the same over time?), but there is a likely a… Read More
UPMC’s race to the sea and the tentative steps towards Highmark-Geisinger alliance
On May 10, Highmark and Geisinger announced plans for a clinical joint venture to create community-based care in four rural north-central Pennsylvania counties. The target counties are small (200K lives total), largely peripheral to Geisinger and Highmark core markets, and are already served by the Susquehanna Health system. Why all this complexity and investment to launch a battle for 1.5% of Pennsylvania’s population? Look at the whole board The move should be understood in the context of the widening struggle between Highmark and UPMC. Consent decrees have temporarily fixed some dimensions of competition in western Pennsylvania by requiring in-network… Read More