It’s selling season for the PBM industry. Who will the winners and losers be? J.P. Morgan analyst Lisa Gill breaks it down in this video from the Nasdaq Market Site in New York.
Citi has upgraded shares of Aetna, Cigna, Coventry, HealthSpring, UnitedHealth and WellPoint to “buy” from “hold,” but warns it’s a short-term opportunity:
Charging customers rates that are meaningfully in excess of underlying cost trends is not a sustainable long-term strategy, so pricing is likely to get more competitive. But there probably isn’t going to be evidence of this until much later in the year, and in the meantime, we believe the headlines will be dominated by big earnings upside. We still think the Medicare & Medicaid plans have more structurally attractive businesses for the long-term.
Here are the headlines from the April 2011 issue of ACO Market News:
- Mercy/St. John’s Annual ACO Costs Run $350,000 to $400,000
- Community Health Network Takes Cautious Steps toward an ACO
- Cigna AZ Clinic Uniquely Positioned for ACO – Begins Tiered Network Pilot
- Midwest IPA Sees IT as Biggest Challenge, Expense in Establishing an ACO
- Commonwealth Fund Suggests 10 Ways to Ensure Medicare ACOs Succeed
- Aetna to Acquire Leading TPA Prodigy for $600 Million – A Sign of the Times
- BCBS-FL Pilots Bundled Payment for Radical Prostatectomy with MSI
A Commonwealth Fund study suggests 10 ways to CMS can ensure Medicaid ACOs succeed:
Source: The Commonwealth Fund
Publicly traded Medicaid plans are typically more profitable than privately held plans. One reason why may be that utilization of medical services at publicly traded plans is lower, according to data compiled by CRG in Managed Medicaid 2011. For example, physician visits per 1000 members were 5303 among the publicly traded plans, 16% lower than for private plans. Bed days per 1000 were 11% lower, while hospital length of stay was 1.1 days shorter. Medical cost ratio was 330 basis points lower. Click here to obtain a copy of the report.
I’ve been a little behind on blog posts as we wrapped up our Medicaid 2011 report last week. To sum it up, the opportunities are huge:
CRG estimates that following Medicaid expansion programs under way and following healthcare reform in 2014, the managed Medicaid business will grow to at least 35 million members and generate $109 billion in annual premiums. That’s a 52% increase in membership, a 56% increase in premiums, and a 45% increase in profits.
Click here for additional details.