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Recon takes an analytical look behind select developments in healthcare

An opinionated take on NEJM highlights for February 2018

A-fib in heart failure – time to be aggressive Over the last 15 years, there has been a growing body of evidence for the effectiveness of catheter ablation to treat atrial fibrillation (a-fib), a condition for which the standard of care has been anti-arrhythmic medications. A-fib commonly coexists with heart failure but until now it has not been clear whether medication or catheter ablation would be the preferred treatment – we now have the answer, at least for patients with a substantially reduced ejection fraction. In a randomized trial of

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Consider this speculative Amazon scenario in your strategic planning

Amazon has many puzzled about its plans for healthcare. Arguably, Amazon is just as puzzled, but is – in effect — running a massive Delphi process to sort out the plan. Amazon is, after all, the Breaker of Industries, Destroyer of Margins. Allow rumors to float, hire some people, have meetings, seek a few regulatory approvals, start a vaguely missioned non-profit with other business titans. Fear and greed do the rest. Stock prices gyrate as investors bet and counter bet on who is vulnerable, incumbent CEOs promise cooperation or competitive

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Will the coming wave of gene therapies have a Sovaldi-like impact?

The first approval of a gene therapy for congenital disease in the US (Luxturna) inaugurates a new – though long anticipated – era for therapeutics. Along with questions around durability of response and long-term safety, pricing and reimbursement is a particular challenge. At $850,000, the price of Luxturna is nominally higher than other high-cost specialty medicines. However, as a one-time cost with a multi-year benefit, the cost per year of efficacy is far lower. This is not a new challenge for the industry: Hepatitis C antiviral therapies such as Sovaldi

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How can Optum be in only 35 out of 75 target markets while also being available to 70%+ of the US population? An analytical speculation

During the UnitedHealth quarterly earnings call earlier this month, Larry Renfro, CEO of Optum, offered some additional color on the growth of OptumCare: “Combined with [Davita], OptumCare will be in 35 local care delivery markets, nearly one-half of the 75 markets targeted for engagement or development. And these market operations are still in the early stages of growth and development” (per transcript on SeekingAlpha). Yet, based on our data, we think OptumCare (including Davita Medical Group and its MedExpress and Surgical Care Affiliates components) is already present in Hospital Referral

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Two steps forward, one step back: an opinionated take on NEJM highlights for January 2018

Playing chess against cancer Tumors are not intelligent, but, because they have escaped mutational control, they constantly probe for mutations that will allow them to escape chemotherapeutic suppression. The epidermal growth factor receptor (EGFR) is a frequent driver of malignancy in the lung and as such, a target for EGFR inhibitors such as erlotinib (Tarceva, Roche) or gefitinib (Iressa, Astra Zeneca); unfortunately, tumors initially responsive to these agents quickly develop mutations which make them resistant. Osimertinib (Tagrisso, Astra Zeneca) was designed to overcome the most common resistance mutations and has

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The UPMC/Highmark brawl spills into Philadelphia’s backyard – what happens next?

(For background on Pennsylvania market, please take a look at previous note here) Summary The UPMC/Highmark rivalry continues to open new fronts in Pennsylvania Highmark’s response to UPMC is differentiated in two ways: first, Highmark is using a coalition building strategy and, second, it is controlling its exposure to big in-patient assets; in contrast, UPMC is building an integrated, single-brand system and happily taking over hospitals (and building more) along the way When UPMC and Highmark make major investments in a region, local systems will be caught in the capex

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Ochsner signs LOI to enter northern Louisiana and secure a medical school affiliation

(For Louisiana market context, please take a look at previous notes on Ochsner here and here) Before the holidays, Ochsner signed an LOI to take over the management of ailing University Health located in Shreveport and Monroe and affiliated with LSU Health Sciences Shreveport. The details have yet to be finalized and public disclosure of discussions do not necessarily mean a deal will be made. But Ochsner has been looking at the system for a while and must know its warts and the state appears to have precluded other partnership

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A golden age for gene therapy: an opinionated take on NEJM highlights for December 2017

Successes in gene therapy for hemophilia B and A Hemophilia A and B are X-linked genetic diseases which prevents the formation of functional coagulant factors VII and IX respectively and cause a propensity to bleeding in about 20,000 people in just the US. The standard of care of intravenous administration of recombinant factors is effective but also burdensome, expensive, and does not fully prevent the disabling sequellae of the disease caused by repeated bleeding in the joints. A possible cure is to deliver a functional copy of the defective gene

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With the DaVita Medical Group acquisition, OptumHealth deepens its presence in existing markets rather than adding new ones

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

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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

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