A survey of 500 physicians from healthcare technology company AthenaHealth (Watertown, MA) finds that 47% believe that the possible shift to ACOs will have a negative impact on physician profitability. The survey also found that physicians have a less favorable view of electronic health records than a year ago.
More warning signs that healthcare utilization is about to increase. Notes Google Flu Trends:
We have found a close relationship between how many people search for flu-related topics and how many people actually have flu symptoms. Of course, not every person who searches for ‘flu’ is actually sick, but a pattern emerges when all the flu-related search queries are added together. We compared our query counts with traditional flu surveillance systems and found that many search queries tend to be popular exactly when flu season is happening.
Click here and here for slide presentations from WellPoint’s investor day, which provide a pretty good feel for the strategic direction and general mood of both the company and the managed care industry in general. WellPoint expects 2011 net income to fall 6.5%; however, profits are expected to grow at least 10% annually for the next five years. Membership is expected to grow, but so are costs. The company expects medical cost trend to accelerate in 2011 to between 7% and 8%, compared to 6% to 6.5% in 2010, driven by unit cost increases, rising utilization, higher flu costs, rising drug trend and reform-related expenses. Strategic initiatives include rationalizing existing products, driving volume growth in others as margins tighten, and expanding into non-core businesses. Also on the agenda, lower administrative costs.
Stocks are up, 2012 payment rates are up and membership continues to rise, according to the latest issue of Health Plan Market Trends Letter. Total Medicare Advantage lives – including HMO, PPO and PFFS – rose 5% to 11.1 million as of Jan. 1, 2011, compared to a year earlier. UnitedHealth Group had the most Medicare Advantage lives at 2 million, up 7%. Humana followed with 1.8 million, up 2%.
So much excitement over a measly 1.6%. Still, shares in health plans with heavy Medicare exposure are soaring today after Friday’s announcement by CMS that Medicare Advantage payment rates are expected to rise 0.7% in 2012 (1.6% after adjusting for quality bonuses). For example, shares in Humana are up 5% in midday trading, while HealthSpring shares are up 3%. The projected 2012 increase is way better than what was expected by Wall Street analysts. Notes Christine Arnold of Cowen:
Friday’s announcement secures the payment outlook for 2012, in our view, which will enable companies to maintain and/or expand margins while maintaining and/or growing membership.
From the perspective of investors, that’s good and/or great news.
Scott Gottlieb, M.D., a fellow at the conservative American Enterprise Institute, suggests in this Health Policy Outlook that the Obama Administration may view accountable care organizations as a replacement for traditional health plans and may be crafting rules that provide ACOs with favorable treatment in health insurance exchanges.
If ACOs contract directly with patients on a health exchange by setting themselves up as entities that resemble staff-model HMOs (similar to the way Kaiser Permanente operates), some may partner with traditional health insurers to re-insure a portion of the risk they will be taking on. But on the whole, the problem with cutting out the health insurers from these arrangements is that consumers will ultimately be left with fewer provider options if they become tied to a local ACO.
The Obama administration believes that the ACOs, and the hospitals that operate them, will invest in new innovations in the delivery of medical care that lead to better coordination of health care services. The trouble with this vision is that hospitals have never been sources of innovation in the way medical care is organized and delivered. Over the last several decades, most of the notable innovations in health care services have been developed in for-profit companies, often run by entrepreneurs and backed by venture capital.