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Episode Summary: In this enlightening episode of the Healthcare Nation Podcast, host Rick Gannotta is joined by Emily Evans, Managing Director of Health Policy at Hedgeye Risk Management. With a rich background in healthcare analysis and policy and a stint on the Nashville City Council, Emily shares her profound insights into the current state of the healthcare industry, including labor shortages, the impact of technology and policy, and the evolving landscape of healthcare delivery.
Key Topics Discussed:
- Labor Shortages in Healthcare: Exploration of current trends, including the recent jobs report, implications for bedside clinical positions, and strategies for addressing these shortages.
- Policy and Regulatory Environment: How policy impacts the healthcare sector, with insights into the effects of city council experience on healthcare analysis.
- The Role of Technology in Healthcare: This session will discuss the integration of AI and digital health tools in patient care and their potential to address labor shortages.
- Market Dynamics and Investment: Insights into healthcare markets, private equity's role, and investment trends shaping the sector.
- Challenges and Opportunities in Healthcare Delivery: The impact of consumerism, retail health, and telemedicine on traditional healthcare models.
- Future Directions in Healthcare: Predictions for healthcare trends, including regulatory changes, innovations in care delivery, and the role of venture capital and private equity.
Featured Guest: Emily Evans, Managing Director of Health Policy, Hedgeye Risk Management.
Episode Resources:
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Creators & Guests
What is Healthcare Nation?
Welcome to Healthcare Nation, the podcast for enthusiasts passionate about the healthcare sector and eager to explore its current state and future trajectory. Join us as we delve into the heart of the healthcare, biotech, and MedTech industries with the help of top thought leaders.
I'm your host, Rick Gannotta, with over four decades of experience in healthcare, spanning from the hospital bedside to the boardroom, C-Suite roles in renowned health systems, advising game-changing startups and established companies, and educating the next generation of healthcare leaders.
In each episode, we'll bring you conversations with distinguished guests, including innovators, scholars, practitioners, and influencers shaping the healthcare landscape. Gain valuable insights from their perspectives and stay updated on the latest developments, trends, and noteworthy news.
Join us on this exciting journey and become a part of the Healthcare Nation community. Subscribe now on Apple Podcasts, Spotify, or your favorite podcast platform to stay in the loop.
Rick: [00:00:00] Welcome to the Healthcare Nation podcast. Happy today to have as our guest, Emily Evans. Emily is a leading figure in the health sector with many years of professional experience in the area of risk analysis and, and the markets and policy and how that all comes together. For what I would say is giving clients key insights into what's happening in the sector.
Currently she's the managing director of health policy at Hedge High Risk Management, which is an independent investment research and online media company specializing in really generating. Comprehensive investment ideas for their clients. She's got a great background, obviously, in the private sector with Obsidian Research, which is a boutique healthcare research firm.
Way back also JC Bradford, which transitioned to UBS and Payne Weber, but also increasingly I think one of her areas of expertise being policy. She's got real experience there. She was a nine year member of the Nashville City Council. Which [00:01:00] exemplified not only her dedication to public service, but gave her a political insight that I think benefits the folks, she works with, her clients and also is gonna help our audience.
Hey, for our Healthcare Nation podcast audience, don't forget, if you're watching us on our YouTube channel, please like and subscribe. We appreciate your support.
If you have any questions, go to our website, healthcare nation podcast.com, and then submit those questions for Joe and I to tackle when we do our quarterly wrap up. Thank you for being supporters of the Healthcare Nation. So, with that, let's welcome Emily Evans.
Welcome to the Healthcare Nation Podcast. I'm your host, Rick Janata, and we're committed to bringing you thought leaders in the field to discuss what's new and noteworthy in the health sector.
This is the Healthcare Nation Podcast. I.
Rick: Okay, so welcome Emily Evans to the Healthcare Nation Podcast. Emily, so glad to have you here. I've been wanting to to interview you for a while.[00:02:00]
Emily: Well, you should have called earlier. Thanks, Rick. I'm glad to be here.
Rick: It should have, but timing is everything. Right. And that's the key. And I think given that there's so much that I wanna talk to you about, and you know, I think I, I, I gave you a little preview, everything from the markets, private equity, you know, shortages, new models of care, obviously reimbursement, which is a big part of this and retail influence.
That's coming into, I think the healthcare sector and how that plays out with consumerism. But all that said, let's just jump in. I would love to get your perspective on where we're at with labor, kind of in the aggregate in healthcare. We just got, I think a jobs report. It showed that that healthcare labor had a good report.
There were new jobs added. I don't know if that's true. When I look at how that translates to bedside clinical positions, let's just say nurses or even the physician. Side of things. So all that said, what do you think about the shortages, the impending worsening of the shortages and how that's [00:03:00] going to change or influence the sector, particularly on the delivery side, and also what kind of remedies are we gonna look at to, to address that?
Emily: Well, as you know healthcare is about labor. You know, at the end of the day or at the beginning of the day too, if you don't have a person there. Bedside or in a doctor's office to deliver care. You don't have much, you know, for all the talk about AI and, you know, and, and digital health and whatever it, it is, it is, it's a caregiving business, people to people that that's what it's, the and labor shortages or, and specifically the cost of labor peaked about the third, fourth quarter of 2022. Has been slowly improving throughout 2023 and, and [00:04:00] again with this latest jobs report 2024. It's doing that in part because the opportunities, employment opportunities in other parts of the economy have dimmed somewhat because of the, you know, what will probably be defined as. Maybe not quite a recession in fourth quarter and first quarter of this year.
But, but definitely a, a, a slowing of, of economic growth. So we are in a better place in terms of availability of labor, and we see that both in. Hires and we see that in wage rates and and we see that in ours work. So the situation is, is improving. That doesn't address some of the long-term systemic issues like age of the workforce.
But, but for here and now we're, the situation is generally getting better.
Rick: Yeah. You know, when you mention the age side of things, and I, I think again, let's, let's focus [00:05:00] on nursing for a second. The age of the average nurses up there, you know pushing 50 plus. I also think that younger people going into the profession may have a very different notion of where they're going with their career, which does make me think about the model of care.
And, you know, you, I know you mentioned that the technology briefly, is there going to be any play for, you know, looking at reimbursement or different models, and I hate to even get into the situation where you, where you tie labor to unions, but I know that big markets that I've been in New York, Chicago, California, you also have a union element there that you have to deal with when it comes to, to those sectors.
Emily: The unions have, or right now, at least from the latest data, are making more noise than they are actually affecting, affecting things. But, but in, in nursing, you've, you had. You, you, most providers are in tough spot because nursing, nursing [00:06:00] nurses get pulled away from the bedside and often prefer as they age to get pulled away to bedside into, you know, the healthcare IT area, for example into management.
As, as another example. However, the, the, the training of new nurses has gotten better and we saw this. Really not until virtually stopped in, you know, 2021 but we, we did start to see an improvement in 20 22, 23, the, the number of, of people taking the nursing exam. The problem with that is that a new nurse and, and the.
Sam Hazen, who runs HCA healthcare, I think will tell you this, is that a new nurse is about 60% productive when compared to a, a seasoned veteran. So you're, you have, and you, you continue to see, I think this has contributed to the, the, the, the slower [00:07:00] throughput throughout 2022 and 2023 at hospitals where you simply don't have the expertise.
You, you, you once had. Though federal policy has been quite ambitious when it comes to trying to reinforce workforce issues and improve that. And I think that is, that is going to and will, is bearing fruit at, at this, at this point.
Rick: Yeah. You know, when I think about I would say the shortage in general and how it does impact care and, and just your observations on the productivity of new. Nurses. I do think that the, that the professional lifecycle though is getting shorter. What I've seen is that young folks who come in even and talk about physicians as well, they quickly wanna transition to an administrative role or something a little bit more entrepreneurial, which is just hurting us on, on the backend.
Particularly when you think about, [00:08:00] you know, the law of large numbers and where the baby boomers are at right now and, and the kind of burden that's gonna put on our healthcare system.
Emily: And I you know, the, the push into, you know, physicians try to push into, you know, the entrepreneurial space, I actually don't it, it's, it's not great for supply, but I think it's got this silver lining, which is doctors and nurses look at the way in which we practice healthcare and they want to find better ways of doing that and, and better solutions.
And, and we do see, and, and I'm. Fairly involved with a, a pree seed fund here in Nashville called Jumpstart health investors. We see at that level people trying to solve big problems. And then at another level, for example, HCA, they're attacking this clinical shortage thing. In in the, probably the same [00:09:00] way Henry Ford looked at the assembly line, although they would really be angry with that kind of a comparison.
But looking at things like, how much time does a nurse spend doing this particular task versus that particular task? They've done that work and they have those answers and they are, they are using it to streamline care, but also to make sure that the outcomes. Are acceptable because remember, they get penalized, right?
If their, their outcomes are not, are, are not, are not great. So, so they have to thread the needle between, all right, how do I automate or at least make like one hospital, I know, you know, they have a, a process for identifying, using advanced analytics. Some would call ai, identifying somebody who should go into the ICU.
Instead of the kind of anecdotal patient nurse experience, which if it's a young nurse, is a very limited experience. And, and that, and [00:10:00] getting that person into the ICU before that crisis really hits, has resulted in some really important advances in, in mortality by reducing it. So those are the kinds of things that, that are happening below the surface that a lot of people can't see.
And you certainly can't yet see it in the numbers, but I think you will.
Rick: Yeah, I think the early warning systems almost, yeah, I called it care traffic control instead of air traffic control. You know, when you're really Yeah. Identifying folks upfront who may be at risk. We saw this a lot in covid with wearables of the expansion of wearables and, and even elements of, of telemedicine into the home, which I think is all great.
What stands in the way I think of a lot of this. On the innovative side is you'll have folks in who are let's just say on the tech side, Silicon Valley, who are fantastic, but they don't have any healthcare perspective, and that healthcare content expertise is not imported. Then the folks who have the great ideas on the healthcare side [00:11:00] don't understand how to navigate, whether it's private equity or, or you know, raising money or just the whole process of ideation to commercialization, and you layer on top of that regulation.
It's just, and reimbursement. It's a whole new.
Emily: Yeah.
Rick: world for folks. I'd love to hear your thoughts on that.
Emily: Yeah, I, I think that this, we, we've seen the, the, the, the results of this, you know, the we saw it first with Theranos and Olive is another you know, big, big high flying company that has, has broken up. We're gonna see more of that where you get. You know, business people and maybe technology people trying to apply a solution without understanding the workflows, without understanding the, the, the, the duty, you know, of the people involved.
And, and without understanding. You know, how, how this, how this will be, you know, implemented and, and does it deliver something better? Does it, do more people [00:12:00] survive? Do they have a better experience in the hospital, the healthcare system? And that, that is, that has clearly been an, an issue. And, and, and I think that it will continue to be an issue.
Although there's a little less money sloshing around in Silicon Valley these days, but, but if you take private equity, I'm gonna defend it a little bit. There's a ton of bad practice, a lot of private equities plan is they buy up a bunch of physicians practices, roll it up, and then engage in what they call rate lift, which is to increase the, the reimbursement.
Okay, fine. That usually we call 'em roll up blowups. Where I'm from is usually how it plays out. But if you look at some of the private equity owned health systems. They're the first to engage in technology advancement. Ardent health, for example, which is largely private equity owned here in Nashville, they [00:13:00] have been spending a lot of time on developing solutions, automated algorithmic solutions on the business side of their of their hospitals scheduling.
Is a great example of that. And an easy example.
Rick: Yeah.
Emily: And then and also we've already seen it with, you know, claim submissions. It's sort of the battle of the machines between the big healthcare providers and, and the big insurance companies. So, so the, the private equity guys seem to be more willing to engage in activities that get more productivity out of their workforce and make their workforce happier.
They're doing less repetitive things and more, more interesting things. So that's my defense of, of private
equity. Don't
Rick: And, and listen, I'm with you a hundred percent and I, we, we've said it here on the show many times that, you know, I've said right or wrong, but it's my opinion that most of the innovation you're [00:14:00] seeing now, and certainly for the last, you know, number of years has come out of the private sector, whereas maybe historically it was, you know, you you looked at government and NIH and see not, not only is there a trust issue there.
But just the innovation that we're seeing you, I think it's almost analogous to what, you know, SpaceX and NASA we're really seeing a lot now happening that I think is forward thinking very, very exciting on the innovation front. And most recently it was the acquisition you know, of a whole of a hospital system essentially, right?
With
Emily: Yeah.
Rick: what, and so that is very new territory.
Emily: Well, and, and I, I, we are, I think, misled by the regulatory bodies. Enthusiasm for innovation. Like CMMI is a great example. You know, they. We've learned a few things I think through CMMI programs that have been beneficial. [00:15:00] I think some of the work they're doing in rural health, for example, probably nobody else would do.
So there's, there's some benefit. Also, the renal dialysis is another area that probably nobody else would do without them, although seen a wonderful companies like Monogram, for example, emerge in, in that space as well. But, but the, the, the truth, the what, what it took. We'll see this more clearly in the rear view mirror, but what it took was those labor shortages, you know, and the cost of that labor to suddenly, for hospital, particularly the creative ones and the ones with a lot of experience to say, okay, how am I gonna get back to the throughput I had?
When I'm down 10% of the nurses and, and these are kinds of solutions that they, they've come up with. So it, it's, it's a, it's a weird thing to be thankful for, but that is indeed what, what, happened. And I, and I think it'll continue to bear fruit through time.
Rick: Yeah. And I wanted to ask you, I, I [00:16:00] do think that and you mentioned what I would consider some of the low hanging fruit with. With the, the enormous amounts of paperwork and how companies have come in and addressed that. But how about AI for pre-authorization or, you know, step therapy? Those kind of areas where you really can look at that space and perhaps change the velocity of care for what many would consider is low hanging fruit not necessarily clinical, but certainly something that is an enormous burden on the sector and the delivery system.
Emily: Yeah, and I think you're seeing a lot of that. You're, you, you, it's not declared at that, but the, the pressure the, the, the machinery, the algorithmic submissions of claims are now so sophisticated. That the, to, to address what concerns might exist for prior authorization, for example. And [00:17:00] the, and the insurers.
The carriers are, have their own, you know, set of, I call it the, the, the fighting machines, you know, up there, which is frustrating policy makers to a great degree. And that's why we've seen a lot of conversation about prior authorization in both Medicaid and, and Medicare because there was a system of doing things.
That system is changed into a more automated system, a more automated system. It's hard to find humans and make your argument and you know, all those, those kinds of things. So I, I think we're, we, we are, we are seeing the, that being expressed somewhat quietly, I would argue, because UnitedHealth Group does not want anybody to think that.
They just have machines
Rick: Right.
Emily: telling, telling you what they're gonna pay for, but that's indeed what they have.
Rick: Right. So let me, let me pivot on that because when I think about, you know, gen Xers, millennials, comfort with Technology, a different type of [00:18:00] transactional expectation with respect to a healthcare experience, consumerism, what do you think is happening with. With the retail sector and the emergence of some significant players, Amazon and obviously Walmart and Target, et cetera, getting in even Dollar General, getting into this space, what, what do you think that is all about?
I have my own ideas on that, and we've talked about it for a while, but where's it really going, Emily?
Emily: This is, I think, in my category of a little too early to tell because the healthcare system in most states is so. Regulated, and particularly in the urbanized, high population states like New York and, and California so regulated that what a, a healthcare provider that's retail [00:19:00] focused, let's say like a Walmart, what they can do.
It's a little limited because of, you know, they like Walmart for example, which has really had trouble getting off of go when it comes to healthcare. But they're looking at the, the, the floor and, okay, if I give up 200 square feet for healthcare versus 200 square feet for shoes. Which is, which is better?
Well over there in healthcare, you can't do this, you can't do that. You can do, it becomes it's, it's, it's really, I think made the transition to retail despite the demand, the demand from, from young people is, is obviously huge, but it's made it difficult to, to transfer, people to transfer into that environment.
You've seen something different in telehealth. You've, you've seen a very smooth and aggressive transition into that [00:20:00] because it meets a lot of the regulatory requirements and regulations have, have been relaxed, certainly during covid and, and continue to be advancing as well, I think before retail to really.
And, and what I'm envisioning here is that for most things, not a hospital thing, not cancer treatment or major surgery, but for most things you'd be able to get your strep test or your pink eye or whatever addressed in a more retail environment. That's gonna take, and I think this is inevitable. That's gonna take some deregulation and, and we, we've seen this.
Kathy McMorris Rogers, the Chairman of the House Energy and Commerce Committee, has done some great work on on, you know, site neutral payments, particularly very small stuff like drug administration. We know that the Trump administration, if it returns, has been very interested in getting rid of the Medicare inpatient only [00:21:00] lists, for example.
So the doc decides where the the care is delivered. And deregulation, as we saw in the late 1970s when transportation was deregulated, which of course makes Amazon possible today, ironically that, that people will, that that deregulation will, will, will have to happen. just to bring the price down, but because people demand it.
wanna, they want a better experience.
Rick: Yeah, let, and let me comment on that one is I think with respect to the retail side though, would you agree that just the foot traffic coming in. If someone goes in, say to the Minute Clinic or there to get a prescription filled, they're walking out with a bag of items that perhaps the margin on that is 30 to 60%, which would be, you know, good ancillary business.
I guess if you, if you were going to use that strategically.
Emily: Yeah, that's the, and that's the strategy. And we've seen, we've seen it [00:22:00] work well when it stops working and when it's not been working well is because so much of drug delivery has moved to mail order and specialty. So to get your medication, in many cases, you just wait for the mail to come. Now, there are a lot of problems with that, which we don't need to get into today, but, but nonetheless, your number of trips to CVS or Walgreens have dropped and it's something that they are wrestling with.
How do we, how do we, people aren't coming to the pharmacy, so what do we do? Well, we, we set up these health hubs and, and these clinics and, and that's, that's one, one strategy. It's a. It's been suffering from great execution, though. We we're give it, I think we're all gonna give it more time, but but it's a, it's a, it's a difficult, it's a difficult strategy to get themselves away from their legacy approach to, to, to this.
But I don't, I don't disagree with your, [00:23:00] with your approach or your analysis. I think that's, that's the future state.
Rick: Yeah, let me go back to maybe the political question in a, in a much broader. Sense and think about regulation. I have thought regulation has been problematic with respect to innovation. And when we talk about, let's just say venture capital, private equity, the, the private sector and that being the source of a lot of the innovation that's happening right now.
What is going on politically? You mentioned the Trump administration and some of the moves they may make. Can you comment on both parties and what's. Perhaps going to be top of mind for them when it comes to healthcare delivery, the sector and regulation.
Emily: Well, the Biden approach, I, I think the, and, and this will continue if he is reelected in in the [00:24:00] fall, has f focused on a couple of things. One, the labor force ensuring that that labor force is robust and all the incentives are there to make sure that those. That labor force is well paid. Mr.
Biden, of course is, and, and, and as his predecessor or, or his president when he was vice president president Obama, they, they, they got to the White House in part through Union. I. Support and, and they are keenly aware that they need to keep that, that support. So, so that's the first thing. The second part of it is insurance coverage, making sure that there is robust insurance company coverage, I'm sorry for all levels of, of society, which on my data.
Achieved and then some, so, so that's, that's where their, their focus is. And their, you know, they're, [00:25:00] they've been talking a lot about private equity lately and, and how bad private equity is and, and that, that get back gets back to their labor question because or their labor issue because private equity tends to try and get things to run more efficiently.
We can argue whether that's good or bad, but, but that, that's what they, they try and do. The Trump administration had this very chaotic, and I'm probably being kind here, healthcare policy at the beginning of the term. 20 16, 20 17. Republicans are famous for not actually developing healthcare policy.
They've always preferred defense and tax and, you know, those, those kinds of things. And, and it definitely showed in in 20 16, 20 17, but when the policy did take hold, the most obvious theme that ran through it was deregulation. Ending the inpatient only list for hospitals, for [00:26:00] example, which would see the migration of a lot of care into ambulatory surgery centers and physician outpatient and, and so forth.
You know, their, their approach to drugs and particularly the three 40 B program which is a drug discount program that helps nonprofits was very, very similar. So, so I think where we're, and, and I don't know of any. Disagreement they've ever had with private equity or, or venture capital. So if we have a a Biden, another Biden administration, we are likely to see, you know, more of the, more of the same.
And the more of the same has some problems, which is, right now we are printing a lot of money
Rick: Mm-Hmm.
Emily: and a lot of that money printing is a res, is going into the healthcare sector. It's, you know, 18% of GDP is GDP. You know, recedes, you know, we could see it pick, pick up another, [00:27:00] another percentage point in the, in the coming years or so.
And the only way out of that fiscal issue is gonna be deregulation, which I don't think the Biden administration is likely to, to, to undertake. So so that, that's. Kind of where we are, there's a little bit of a standoff, you know, should Republicans do something with the Affordable Care Act? Some say no, some say yes but, but that, that, that's, that's how the, that's how the ball the globe looks to me.
My Christopher Ball looks to me today. I, I'll reserve the right to, to amend as we get closer to the election, though.
Rick: Let me on that theme, talk a little bit if you would, Emily, about Medicare Advantage and also managed Medicaid at the state level. Where they're at now, where they're, where they're going with respect to growth expansion and how that, how that might change under, under either administration.[00:28:00]
Emily: This is an interesting topic. How many times, Rick, do you hear a day? Well, America is aging. You know, 10,000 people turn 65 every day. Right? How, how long have you been listening, hearing that? 10
years, 15 years? Um. Well, if you, if you look at the Census Bureau population by age, the last of the post-war generation, so is the 19 61, 62 cohort. turn 65 in twenty twenty, twenty seven, call it 27. That me, and then from there. The number of people turning 65 declines rapidly until you hit this little bump in seven, the this 19 71 72 cohort. But it's back to trough after that little bump and it's [00:29:00] 2040. Before you actually start to see more growth in the, in the over 65 population.
And this is just demographics, you know, it's, it's just a question of, of when, when people were born and, and how they're aging. So as a result of that. And you're seeing the early signs of this, Cigna is selling their Medicare Advantage business. Humana is rumored to be taken over by somebody. You're gonna see probably more acquisitions in this space.
I think Devoted Health is, has been having some, some problems as well. But what will happen here with fewer people aging into Medicare Advantage? It's a knife fight for customers. So you have to offer the best premium, lowest possible premium, the highest possible benefits. And that's the kind of thing you could do if you've got a lot of capital like your United Health Group or Humana or Ance, probably not so much if [00:30:00] you're a Devoted Health or even if you're a small Blue Cross Blue Shield plant.
So we're gonna see a lot of consolidation there. We're also gonna see a lot of penetration increased penetration, my estimate of total penetration Medicare advantage. Just a few years ago, it was around 50% because getting into these rural markets, I mean, you run a hospital and, and and someone says, Hey, do you wanna be in our Medicare Advantage Plan Network?
No,
Rick: Yeah.
Emily: you're the only hospital in, in, in, in the state or in the county or whatever. That penetration is actually getting a huge boost from the Medicare, the redesign of Medicare Part D. That was part of the inflation reduction Act. Now all the incentives are to have a Medicare Part D drug benefit, paired with a Medicare advantage plan.
The very common pairing, traditional Medicaid, Medicare, I'm sorry, [00:31:00] with a standalone. PDP plan. That is not, that is much less interesting in the plan for the plans. And we're seeing, we're going to see, I think, a decline we still see and are seeing a decline in that membership which is na necessarily gonna force up the membership and Medicare advantage, which is gonna cause a lot of heartburn on Capitol Hill because there's a.
Fairly substantial group on both sides of the Hill that see Medicare Advantage as privatization, and they're, they're not for that.
Rick: Right. Well, let me ask you one thing. How does, how does, lifespan factor into this when you look at not only longevity, but also acuity of of a, of the, that particular population and what that would mean for an MA plan if you were just thinking about it Actuarily.
Emily: Yeah. If you think about it, actuarily your highest cost years as a senior are [00:32:00] age 70. Two to 78. Right? Is that fair? I mean, I've seen different studies, but does that seem fair? All right, so the two thou, the 1947 cohort. Cohort, which is the biggest birth cohor cohort in the United States, turned 65 in 2012.
So they are today, what, 70? This is 2023. So they are 76, 77 depending on what year they were born, right? If my math's right there they are in the bullseye of the high acuity years. So the pressure on medic medical loss ratios for the insurance carriers is high. It's going to, I expect it to, to be higher in 23.
It looks like it, it all kind of accumulated in the fourth quarter, judging on, you know reports from Humana, for example. I think it's going to continue in, in 2024. We're [00:33:00] gonna see high acuity as that, that group. Starts to clear their highest utilization and most expensive years in, you know, in terms of cancer and, and, and, and neurologic neurodegenerative diseases and, and cardiac diseases.
Rick: And Emily, that would be, that would, that would be part of I think the washing out of the smaller players and the consolidation you're seeing. Right. I mean, that would go into, that just makes sense. Which, I mean, I'm, I'm not saying this is the case, but Yeah. I do think on Capitol Hill there is a lot of folks who are saying, sure, this is.
This is the way out ma plans, you know, privatization and it, it does put a line in the sand. There's no doubt about it, but like you, I do not see them going away at all.
Emily: No, no.
Rick: though, at the, at the state level with Medicaid and, and manage Medicaid?
Emily: Medicaid is so. Interesting. You know, [00:34:00] before the public health emergency was declared in March of 2020, there are about 64 million people on Medicaid managed care fee for service. You know, all, all kinds of configurations including expansion, non expansion, about 7 million kids on the in the chip program. We have about 82 million people on Medicaid and about 7 million kids in the CHIP program. So we're almost 17 million people. Long as we say in my business, we have 17 million more people in, in Medicaid than we had prior to the public health emergency. And at the same time, you have certain states.
Who are claiming that they are almost done. You know, we finished that process. We've dis-enrolled a lot of people, and the [00:35:00] question, the budget question that will be asked is, how come there's so many more people? On this program than there were in March of, of 2020. Now, the, an part of the answer to that is that in some states, and this has been a thorn in the side of the oversight people, some states will take what is a traditional Medicaid beneficiary aged, blind, disabled.
Pregnant woman and push them into the expansion population because they get a 90% match instead of a 50% match. We know that that is part of, of what is going on. There's also probably a lot of duplicate duplicate enrollment, you know, people in Medicaid, but also in exchange plans, but also in insured by their employers.
But what has happened, because back to what I was saying about the Biden White House, is they're, they are, it's very important to [00:36:00] them to maintain coverage because they've. For political reasons, do not want to face an uninsured rate that goes up. They are very committed to the Affordable Care Act.
Many of them are, most of the White House are are former, you know, Obama people. And, and so they're the, they're been very deferential to activists like the Georgetown Center for families and Children. Who have been very outspoken about any disenrollment whatsoever, and our model has about 253 million people insured.
When you add up Medicare, medicaid, a CA plan, whatever, there's about 260 million people. That's about as close as one can get to, to universal coverage. But there's a, there's a deference to the to the coverage. Advocacy system by the White House, that means they're [00:37:00] not really pushing very hard on, on Disenrolling.
You see states like Florida being more aggressive, getting a lot of of heat from CMS and actually filed suit last week over it. And and that's, that's, that's the, that's the push and pull, the tension, if you will between the, the states and, and the regulators that is not likely to go away before January of 2025
and may never go
away.
Rick: what happens under a, a Trump administration with Medicaid
Emily: It Trump administration SEMA Verma is, I'm sure everybody knows was
a,
Rick: I think she went to Oracle Health now, right? Yeah.
Emily: She has gone to Oracle Health, but her background was at, in Indiana, she worked for Mike Pence. And she developed a number of Medicaid reforms. And, and Indiana has some interesting interesting programs. Compare pairing [00:38:00] you know, giving people essentially a HRA that they can, you know, manage.
And, and as in addition to Medicaid, it training them, if you will, to be health insurance consumers in the private market, which, if you're on a Medicaid plan, you're not necessarily gonna be a good health insurance con consumer. So Sima AMAs attitude towards Medicaid throughout the, the, the term her while she was there 20 16, 20, 20 was defer great deference to the states. What do you wanna try, how do you wanna make this work? And one of the, one of the policies that, that congress passed that she championed was the individual HRA, where an employer can say to his employees, we're not gonna offer health insurance. 'cause they, they don't have to under the law.
We're not gonna offer health insurance, but here's $200 a month. Go spend that [00:39:00] on the a CA exchanges. You will get all the, we will get all the tax benefits that we get with an HRA you'll get to pick what you want. You don't have to pick what I pick, you know, those kinds of things. So that's, it's a, it's, it, it's kind of a, well, it's a, it's a part of that deregulation attitude that the Trump administration has but also a deference to states.
That she feels are in a better position to, to come up with, with innovation. And and it, there's isolated circumstances. She didn't get, she didn't get to do it very long, but there are isolated circumstances that suggests that she's, she was probably right about that.
Rick: Yeah, when I think about just, you know, self-insured plans that are out there, employers, self-insured, in companies that are, that are there, and how the pandemic kind of influenced the playing field with respect to [00:40:00] all things insurance, et cetera. Do you have any observations on, on that space?
Emily: On the, on the a CA marketplace
insure exchange. Yeah. Well, they, they've got, they got a big boost. And this is why enrollment is at 20 million. It's, it's still behind the original estimates, but now it's getting closer. But a couple of things changed during the public health emergency. One of those was the threshold for eligibility.
The upper bound of that threshold was people making 400 or. Percent or more of the federal poverty level, you weren't eligible to, to get any of the subsidies on the exchange that was lifted through 2025, the end of 2025. The other change was the end, and this is, was an administrative change. It didn't involve Congress was the end of the family glitch.
And not to get into it in detail, but it essentially discouraged. Entire [00:41:00] families from signing up for a CA exchanges if one member of the family had a, had a job that has, that has been fixed as well. So the combination of these two things have really accelerated the enrollment in the a CA exchanges and I think presents a really interesting issue, which back to what I was saying about Medicaid enrollment.
If you look at Texas, for example, their a CA, their a CA enrollment population, about 60% of it would be Medicaid eligible if they expand in Medicaid, and which, if you're a provider in Texas, what do you want?
Rick: Yeah.
Yeah.
Emily: you want people to stay on the a CA exchanges, right? You don't want Medicaid expanded.
Rick: absolutely. Yeah.
Emily: Yeah. And, and, but, and then let's say you're, you're a state that was very enthusiastic about expanding [00:42:00] Medicaid and new governor comes in and he's got a budget problem. He starts looking at what's going on in Florida and thinking. I mean, these people are insured,
Rick: Yeah.
Emily: you know, and it doesn't mean to do with my budget.
So, so what's the, what's, what's wrong with doing that? And that's a, that's gonna present a real issue, I think for the. That universe that believes firmly, that Medicaid is, is, is the way to go. Medicaid, as we know, and you know, has a number of shortcomings. It has a lot of shortcomings as far as a, as a health plan goes, and, and it, it's not the perfect thing that people think it is.
I
having encountered it.
Rick: before we leave this. Particular topic and and section. Any observation on what's happening with venture Venture capital in the Medicaid space and, and the medi me manage Medicaid space? [00:43:00]
Emily: You know, I have seen mostly point type solutions in for managed Medicaid to address particularly problems in the behavioral health space. That's been a, a focus also intellectually dis and developmentally disabled, populations have seen a lot of interesting things go on there. I haven't seen.
Too terribly much. One of, I mean, one of the, the things about interesting things about Medicaid is a lot of it is children, not just in the chip program, but, but also, you know, the babies, as well. And they don't require a lot of care. You know, children aren't, aren't high healthcare utilizers. One area that is just taking off is maternal health and, and trying to solve. Yeah, trying to solve for that problem of, you know, why are so many women dying? [00:44:00] You know, why are their babies dying and, and being very aggressive. And I think to the credit of. Many states, including Republican states, that, that have not expanded Medicaid. It's been nearly universal, that to expand the postpartum coverage to a year or more in some cases, to, to look at that.
And I've seen some, some solutions developing to address, address that problem.
Rick: So let me switch completely. Maybe it's one of your favorite topics, I don't know. But let's talk about pharma. I think I could probably spend an entire podcast with you on this, but I, I really wanted to get your, your, your perspectives on. How is the pharmaceutical industry addressing this balance between innovation, access, regulation, also navigating, I think I could say controversies around things like the GLP ones [00:45:00] and, and how that's all kind of coming down.
Emily: You know, the, the, the whole thinking back in the nineties when China was admitted to the World Trade Organization and and NAFTA was inked. The thinking was, you know, America would be the brains, right? And the rest of the world would be the Braun. They would do the environment, they would make paint, for example, you know, which we could now get again, I don't know where they're making it, but but they, they would make paint and they would do nesty smelling things that we didn't want in, in our country.
I'm being a little hyperbolic, but that's what happened. And the and we would be the brains. And one of the key, a keystone to that strategy was. Was pharma, and what, where pharma has found itself, unfortunately because of its one opaqueness, it tries very hard to protect its intellectual property.
Nobody argues with that. Unfortunately. Their customers [00:46:00] are governments which don't like that sort of thing. They have also found themselves as. One of the only unregulated parts in terms of price in the healthcare system. So if you're a hospital, your price is regulated by other insurance companies or the government.
Same with the doctor et cetera. Back to that whole regulation problem. So what happened? What happened was everybody started exploiting the drug channel. As best they could because those guys could raise their prices to the roof and they did and, and everybody would take a little piece out of the, out of that, that, that drug channel.
And yes, I am, am simplifying things, but the setup for them was just eye popping prices, that got the attention of the public. They weren't real, those prices weren't real. But because the system was so opaque. They couldn't explain that to anybody, so, so they ended up with [00:47:00] this inflation reduction act, which does two things, the most important of which a keys Medicare Medicare prices to inflation just like Medicaid already does.
And it sets up a negotiation process for 10 drugs beginning this September. I suspect that negotiation process will be tossed out because the penalty for not negotiating is initially a 65% excise tax, which rises to 95% over several years, which I don't think the courts are gonna look at that as a tax.
I think they're gonna look at it as a taking, because it is so, it is so big. But we, that remains to, that remains to be seen. But what they while we've been rolling along through this process and, and pharma's been under this pressure from everybody who wants, you know, in on their drug channel, they haven't been doing a ton of innovation.
They've been buying most of their innovation from biotech, which is fueled by federal [00:48:00] dollars. That money is drying up. There's less things go and they aren't actually, haven't been for years looking, with the exception of a company like there are Ex Regeneron is very outspoken about this. They haven't really come up with with great.
Great solutions. And some of the oncology drugs, for example, you know, a hefty percentage of them are worse than the disease itself.
Rick: Yeah.
Emily: As, as a lot of people will complain. So, so this is, this is where they find themselves and I think they're, they're really is gonna have to, and we've seen early signs of this from Santa Fe.
I think you're really gonna have to have a moment of. Clarity about what they're doing and how they're gonna do it going forward. I think that inevitably means the industry is gonna get smaller. Their solutions are gonna be more targeted. [00:49:00] And there will probably be less drug ads on television on Sunday night.
Rick: Back to the future, Emily. How payment models for expensive therapies, are we gonna see anything that's gonna be outcome based? You know, the warranty side, subscription models, what are your thoughts
Emily: The,
Rick: In, in that space? In its in, in, in where it's going.
Emily: you're most likely to see that coming out of Medicaid. I think you might see some of that coming out of Medicare as well. Now that we have that inflation cap, we're a few years away from that, I think. But Medicaid has, has done, I. I think some of the best thinking there, the Medicaid directors, this was particularly true on the hepatitis drugs.
You, you know, which we, we, we fixed hepatitis and boy, you know, if you'd had an outcomes-based payment model, you, you could have, you know, you could, you could have changed the trajectory of, of some of these companies. But, uh. And, and I think this [00:50:00] is a, the Alzheimer's drugs might be right for that, that sort of thing, but it's, it's, it's difficult.
The pharmaceutical industry is under a lot of pressure and they have not been great. About negotiating with some of these out on these outcome based things, in part because they believe that any drug that they make will be, has to be covered by Medicaid and Medicare. And so why bother? There are lots of Medicaid directors who say that's not true.
They haven't challenged it officially. But, I, I think we're, I think we're still. A good ways away from that and, and I don't see much progress as we're, as we find ourselves or they find themselves in this really tight spot for the next few years.
Rick: So more to come on that. Let's, let's let's wrap up the, the show with this. I'm gonna take advantage of you by saying, look, put you on the hot seat for [00:51:00] some predictions moving forward. You really just started 2024. I.
Emily: I love predictions. Get my.
Rick: well give, us your, your, the, your, your crystal ball out.
What's the headwinds? Ted Wind tailwinds. What are we, what are we looking at? Emily moving forward
Emily: What, what's my time horizon here?
Rick: the next year,
Emily: Okay, so over
the,
Rick: remaining 24 into, into 25.
Emily: I would say that it is going, healthcare is going to be in. Unprecedented, almost unprecedented. Tailwind, we have almost unprecedented tailwinds. One utilization, and I'm talking about services right now. Utilization is high in rising just because of the population dynamics of the, [00:52:00] of the post-war. Group the, the need for the Washington to keep feeding that beast through a sort of stealth kind of stimulus to protect from job losses is very real and will continue throughout this year.
The employment cost index, which. You know, dictates a lot of the payment updates for the specific silos in Medicare. That is signaling that we're gonna see pretty, pretty solid reimbursement. People are older, people are sicker. It's gonna be quite the year is my, my guess.
Rick: Plus the, plus the elections,
Emily: Plus the elections, the, the healthcare is untouchable.
You know, as we get into, into election, the managed care organizations have gotten a bit of a a bad rap because of Humana. Their disclosure on a, [00:53:00] a high. Benefit ratio. I think that gets fixed somewhat with price in 2024. And I think that we're, they're premium. The, the, the years of the zero premiums are, are probably over.
They're not gonna be hundreds of dollars, but, but, but they're, they're probably over. And also I'll add a lot of these managed care organizations stashed on their balance sheet. A lot of money during Covid when they weren't delivering care, they weren't paying for care. So we've got a lot of financial flexibility that in normal circumstances they would not have and they would not have as a result of public health emergency.
So we have this very unusual period where we have a lot of demand and cost on the services side, but we happen to have a lot of money on the. Payer side too, to, to, to handle it so it doesn't come around very often. I think the last time was probably right after passage of the Affordable Care Act. And and, and that was a little bit offset by some [00:54:00] Medicare cuts, but, but we're in a, we're in a very sweet spot.
The one caveat is how, how this all shapes up for the pharmaceutical industry, which, which we're gonna have to see some court in court cases before we, we can make any judgements there.
Rick: How, how about the VC and PE space?
Emily: I think the VC and PE space are going to respond. If you're a, if you, if you are a payer, for example, you have actuaries, you know what's going on. And, and you know what 20, 27 and beyond looks like. And you know, as part of grabbing market share. If you're a Medicare Advantage plan, to give you one example you know, that, that has to, you have to deliver a high quality experience for your plan members, and you have to keep your star ratings up so that you get your bonuses and what you will, what you will see is a, an effort to, to do that, whether that's through, you know.
Bet more timely and more careful drug, you know, delivery, mail order delivery or, [00:55:00] or that's through some other mechanism. I think that those kinds of things are, are gonna get funded. On the provider side, you're still working with less people than you need. Right now we, and we see that through, through job openings.
And you're also paying them more than you did in 2019. So you're, you're motivated towards. These types of solutions that enhance the how many hours in the day. That somebody works and how much productivity that they got out of, they get out of their workforce. Remember, healthcare, healthcare is, is not productive.
It is it, it has very little technological innovation. We talk about how great the technol, but none of it has been directed towards towards employment. And and you're gonna see some of those, and those things are gonna come out of primarily the venture space. And I think it's, it's somewhat.
Got its head screwed on a little bit better [00:56:00] after some big hits in from 21, 20 and 21. So I think we're gonna see it, it improve it, the setup is, is pretty remarkable actually. That in, I've not seen anything like this in 20, 25 years.
Rick: The, that sounds I, I'll tell you, I think a lot of folks. Our listeners are gonna be hanging on to that, Emily, and we're gonna have to have you back for a, for an update
Emily: Can I, can I add one caveat please. If you are running a small, mid-size regional hospital, you really need to get your act together in terms of innovation, in terms of, you know, getting your work, your workforce, and your workflows optimized. This is not 2019.
Rick: do they get acquired?
Emily: They get acquired or they get or they get shut down.
You know, we're seeing the Steward Health in Boston, for example. There's other reasons for their [00:57:00] problems, but but, but we're, we're gonna see some, we're definitely gonna see some consolidation and we might see some closures, but a lot of those closures are gonna be because senior leaders have not looked at their.
You know, for example, labor shortages and higher cost of labor and gone, okay, how do I make each of these people get the most out of the workday? You know? And that's 'cause they've never had to, and now they do. And if they don't, then they'll be left behind.
Rick: Great insight from Emily Evans. Emily, thank you so much for being on the show. I'm gonna have you back. Should have done this a while ago. There, I think there's gonna be a regular spot for us to hit some, some really important topics moving forward. So on
Emily: Happy.
Rick: audience, our listeners, thank you so much.
Really appreciate it.
Emily: Oh, I'm so glad to have been spent this [00:58:00] part of my day with you, so looking forward to seeing you again.
Rick: We'll do it again. Okay. Thank you everyone for tuning into the Healthcare Nation Podcast.