8 key points on healthcare as a zero-sum game

1. Healthcare is increasingly a zero-sum game. Hospital and ASC reimbursement and procedure volumes are largely flat. The strategy for health systems, ASCs and practices? Block tackle, but keep eyes wide open.

2. Insurance, pharmaceutical and device companies are doing well. Pharma inflation is close to 10 percent a year. If healthcare is a zero-sum game, this is a problem for others in the industry. As inflation is high in certain areas and overall healthcare inflation is slowing, this is challenging for areas where inflation is growing at a slower rate.

3. Insurers: (1) Gloves are increasingly off with hospitals. (2) Insurers are closer with pharmacy benefit managers and pharmaceutical companies because they need to win on pharma and control pharma costs. (3) Oakland, Calif.-based Kaiser Permanente was originally formed to control healthcare costs, and thus built hospitals. (4) Insurers are buying a wide variety of assets, but not hospitals — a nonpositive sign for hospitals.

4. Telehealth is growing fast, particularly where systems have full risk. There is a big consumer trend toward "care where you want it when you want it." Kaiser Permanente, for example, has 50 percent-plus remote care visits. Telehealth is one of the few areas where this is a real ability to substantially reduce the costs of care. The nation also now has more than 13,000 urgent care facilities compared to approximately 2,500 five years ago.

5. There are five key types of hospitals and health systems. The great question is which types will thrive in a reimbursement period where rates are relatively flat but costs are increasing. The five types are:

1. Elite, i.e. Cleveland Clinic; Rochester, Minn.-based Mayo Clinic; NewYork-Presbyterian in New York City; Boston-based Massachusetts General Hospital; Jefferson Health in Philadelphia; and the top 25 on U.S. News and World Report's Best Hospitals list.
2. Regionally dominant.
3. Kaiser Permanente.
4. Community.
5. Safety-net.

6. Physicians, due to supply issues, may be safer than hospitals and ASCs as to reimbursement; however, they have fragmented political power. This is particularly true as physicians have all different types of employers today and are very devoted to their specialty societies, i.e. there is no strong single voice protecting physicians.

7. ASC chains are in flux. Amsurg merged to become Nashville, Tenn.-based Envision Healthcare, Surgical Care Affiliates was acquired by UnitedHealth Group's Optum and United Surgical Partners International has joined with Dallas-based Tenet Healthcare.

8. Congress is tone-deaf on both sides. The ACA was formed to help increase insurance options, but 80 percent of the newly insured have come through Medicaid expansion. Little expansion has come from private insurance. On the Republican side, there is a pushback toward free markets. But insurance companies won't compete in all markets. This leaves consumers with very poor options in many markets. Of interest, the postal service was born in part because not all markets were served well without it. Similarly to complement the private sector, the nation and increasingly those that were not originally necessarily advocates for the ACA may push the Republican Party for a public option solution, i.e. a good deal of middle aged Republicans who aren't yet Medicare eligible are likely finding their insurance options to be limited and expensive.

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