All GLG News Analyses Filed Under: Healthcare Services
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
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Adam FeinFounder & PresidentPEMBROKE CONSULTING INC
Big Premium in the McKesson–McQueary Deal
April 11, 2008
McKesson Corporation to Acquire McQueary Brothers Drug Company | www.mckesson.com
McKesson (MCK) is acquiring McQueary Brothers Drug Company, one the few remaining regional drug wholesalers in the U.S. McKesson is paying a substantial premium for the McQueary’s business, although the deal could be justified given today’s pharmacy industry dynamics. Will the higher price lure the remaining regional wholesalers to sell out, further concentrating the channel for manufacturers and independent pharmacies?
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Implementing Cost Controls Over Runaway Health Benefit Expenses
April 10, 2008
As Healthcare Spending is Predicted to Exceed 4 Trillion in Less Than 10 Years, Technology will be Called upon to Stem the Tide | biz.yahoo.com
Health care expenses are rising at an alarming rate. From 2000 until 2006, the inflation rate for medical care in the United States increased nearly 35%. And even worse, health insurance premiums rose 78% during the same period. At the same time, wages were up only 20%. Most employers and benefit plan sponsors do an excellent job controlling their direct human labor wage expenses. But, controlling benefit costs, whether the benefit plan is self-funded, with the employer or plan sponsor bearing the health benefits cost, or insured, with the employer or plan sponsor paying insurance premiums, is far more complex. Health benefits are a major operating expense for most companies and plan sponsors. Yet, very few employers and plan sponsors know how well their third party administrator (TPA) is performing. Employers and plan sponsors very seldom have appropriate safeguards functioning to verify that their money is being handled properly in their best interests.
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Adam FeinFounder & PresidentPEMBROKE CONSULTING INC
McKesson Gets Out of Pharmacy Outsourcing
April 8, 2008
Comprehensive Pharmacy Services to Acquire McKesson Medication Management | www.businesswire.com
McKesson (MCK) is selling its pharmacy outsourcing business to Comprehensive Pharmacy Services (CPS). McKesson has been the most active out of the big 3 in adjusting its health care business portfolio. For example, the company sold its acute care supply business to Owens & Minor last year. Last week, McKesson acquired Rosebud Solutions, a provider of software solutions to track and manage instruments, endoscopes and tissue implants for surgical services. I expect McKesson to continue tweaking its business mix over the coming year.
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Frederic GoldsteinPresident and Chief Operating OfficerU.S. Preventive Medicine, Inc.
Medicaid Health Plans Under the Microscope - Amerigroup Sued by District of Columbia
April 4, 2008
Amerigroup Medicaid Rates Questioned, Suit Filed | biz.yahoo.com
Amerigroup is but one example of the increased scrutiny being paid to Medicaid Health Plans following the FBI raid of Wellcare last year. Expect this to continue and have some volatility on Medicaid health plan performance. Some of this scrutiny may uncover material issues, or impact contracting and rates on a go forward basis.
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AllScripts - Misys Merger Investment analysis
April 1, 2008
Misys/AllScripts Merger - A bright future for a new company? | www.healthcarefinancenews.com
Short term pain long term gain? In my opinion, only within the sphere of Misys existing clients. Neither Misys nor Allscripts have been very good at marketing to non-customers.
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Organized Hopitals and Physicians Win More Medicare & Medicaid Contracts
April 1, 2008
Health insurers take a dive on WellPoint's warning | www.marketwatch.com
Regrettably, many physicians feel that dealing with dollars is less then fulfilling, especially in light of off-loading potential costs of defensive medicine. The very turbulent times ahead will give employed groups of physicians a strategic advantage over individually fragmented doctors attempting to win managed care contracts. Certainly, CMS will look to contract blocks of medicare (and medicaid) live with better organized hospital and physician entities capable of making a group decision to accept or reject a contract. The game remains about lowering fixed costs. The industrialization of medicine is here to stay.Paradoxically, it remains their best chance at maintaining professional and financial autonomy. The capitated contract is tried and true, and does keep healthcare inflation down better then anything else we have tried over the last 20 years.
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Frederic GoldsteinPresident and Chief Operating OfficerU.S. Preventive Medicine, Inc.
Police Department Focuses on Getting Officers to Lose Weight
March 31, 2008
In Deep-Dish Pizza Land, a Thinner Blue Line | www.nytimes.com
Naturally Police Departments are concerned about the weight of their officers, given the physical nature of the work for those on the beat, but this issue is beginning to be raised in the general employer arena. For employers to be successful with this type of approach, they need to go beyond such a tightly focused program.
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March 27, 2008
Health insurers take a dive on WellPoint's warning | www.marketwatch.com
multiple shareholders in the healthcare marketplace with divergent interests will prevent the insurance industry from continuing its constant pressure on the consumer and employer. There will be a point of no return when the healthcare providers can no longer provide services to the beneficiaries without some of the risk being transferrred back to the insurance industry. When the costs of providing care to prevent litigation exceed a threshold, the pool of funds must be increased by an increase in the revenue stream. Thus, the constant increase in premiums along with the pressures from stock holders to see an increase in profit. Consequently, fees paid have been steadily eroding but are now at a point where providers are simply refusing to take on the care of the beneficiary and absorb the risk of financial loss.
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Major Insurers Cant Keep Raising Prices with Employers Baulking
March 25, 2008
Health insurers take a dive on WellPoint's warning | www.marketwatch.com
Ongoing healthcare inflation at 200-400%/yr of CPI has surpassed the point where employers can easily compete with international products and services. We are already seeing growth in Scheduled Medical Benefits, which are a poor substitute - but do substitute for traditional major medical insurance where employers want to offer a gift of insurance. Providers are actively suing insurers for their billed charges, and insurers are actively moving to the Medicare fees schedule to lower their costs - some successfully and others not. The Medicare Advantage (PPO, HOM, POS and PFFT) plans with and without Part D pharmacy have many carriers attempting to develop new markets. The 10-15% fall in the stack market will cause increased pricing of insurance because of poor insurance company investment returns. The biggest wild card is forecasting what commercial class of insureds our government will subsidize in the new Presidency.
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March 19, 2008
Health insurers take a dive on WellPoint's warning | www.marketwatch.com
1. Managed care companies have run into a temporary problem of setting their prices too low in order to compete with eachother. Expect prices to rise and profitability to return. 2. Part of the problem was caused by providers becoming more sophisticated at fighting for higher reimbursement often aided by government regulators. 3. Most managed care companies have a strong insurance aspect with the "float" an important component of profit. As interest rates have fallen and the price of certain securities fallen because of the subprime crisis, the investment profits have dipped affecting profitability. 4. Litigation costs and government fines have also cut into profits. It is hoped the companies will have learned from this and not repeat the mistakes that led to these costs. 5. As employers have cut back on health care options, the companies cut commercial premiums to maintain market share. 6. The new Medicare Part D program has tricky reimbursement formulas are hard to learn.
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