IN THE NEWS
What happened in healthcare recently—and what we think about it.
- Corvallis Clinic plans to join Optum. Last week, the Corvallis Clinic, an independent physician-owned multispecialty group with over 100 providers based in Corvallis, Oregon, shared that it intends to join UnitedHealth Group’s Optum subsidiary. The clinic’s board of directors cited industry financial pressures, including a forecast of material losses for the next 12 months even following a 15 percent compensation reduction by its physician-owners, as a key driver behind the decision to join the nation’s largest employer of physicians. The transaction was made public in part due to a disclosure notice by the Oregon Health Authority which, following the passage of a 2021 state law, reviews business deals involving healthcare entities through its new Health Care Market Oversight program. If approved, this would be Optum’s fourth physician group purchase in the Beaver State. It currently provides administrative and management services for two groups based in Eugene and a small group in Portland.
The Gist: Echoing recent news of Intermountain-owned Saltzer Health seeking a buyer or else facing closure, large multispecialty groups are finding it increasingly difficult to sustain profitable operations in this more challenging post-pandemic operating environment. Optum seems well positioned acquire some of these assets, which state regulators may find preferable to the loss of local provider access stemming from potential closure.
- Cano Health files for bankruptcy. On Sunday, Miami, FL-based Cano Health, a Medicare Advantage (MA)-focused primary care clinic operator, filed for bankruptcy protection to reorganize and convertaround $1B of secured debt into new debt. The company, which went public in 2020 via a SPAC deal worth over $4B, has now been delisted from the New York Stock Exchange. After posting a $270M loss in Q2 of 2023, Cano began laying off employees, divesting assets, and seeking a buyer. As of Q3 2023, it managed the care of over 300K members, including nearly 200K in Medicare capitation arrangements, at its 126 medical centers.
The Gist: Like Babylon Health before it, another “tech-enabled” member of the early-COVID healthcare SPAC wave is facing hard times. While the low interest rate-fueled trend of splashy public offerings was not limited to healthcare, several prominent primary care innovators and “insurtechs” from this wave have struggled, adding further evidence to the adages that healthcare is both hard and difficult to disrupt. Given that Cano sold its senior-focused clinics in Texas and Nevada to Humana’s CenterWell last fall, Cano may draw interest from other organizations looking to expand their MA footprints.
- HHS establishes telehealth flexibilities for opioid treatments. The Department of Health and Human Services (HHS) has finalized a rule to make permanent some pandemic-era policies that allow patients to receive telehealth prescriptions for certain opioid addiction treatments without an in-person visit.These flexibilities, temporarily introduced under the COVID public health emergency, were found to both improve access to and reduce stigma around treatments like buprenorphine and methadone. This rule is relatively narrow, limited to providers working in certified opioid addiction treatment programs, and separate from a pending Drug Enforcement Agency (DEA) rule on broader telehealth flexibilities for controlled substances, currently extended through the end of 2024.
The Gist: The pandemic broadened the availability of telehealth prescriptions, including easing access to effective opioid addiction treatments. The DEA now faces a more difficult decision ahead, as relaxed telehealth rules allowed prescriptions for abusable ADHD medications to spike, backed by a glut of online mental health companies, some of which have been accused of putting profits over proper patient care. With our country still facing the effects of the opioid crisis, concerns about the overprescribing of controlled substances will surely weigh on regulators’ minds as they navigate how to oversee telehealth prescriptions for controlled substances.
Plus—what we’ve been reading.
- How GoFundMe use demonstrates the problem of healthcare affordability. Published this week in The Atlantic, this piece chronicles the increase in Americans using crowdfunding sites like GoFundMe to cover—or at least attempt to cover—their catastrophic medical expenses. Envisioned as a tool to fund “ideas and dreams,” the GoFundMe platform saw a 25-fold increase in the number of campaigns dedicated to medical care from 2011 to 2020. Medical campaigns have garnered at least one third of all donations and raised $650M in contributions. The article’s accounts of life-saving care leading to bankrupting medical bills are heartbreaking and familiar, and despite some success stories, the average GoFundMe medical campaign falls well short of its target donation goal.
The Gist: Although unfortunately not surprising, these crowdfunding stats reflect our nation’s healthcare affordability crisis. Online campaigns can alleviate real financial burdens for some people; however, they come at the costs of publicly exposing personal medical information, potentially offering false hope, and financially imposing on friends and family. The majority of personal bankruptcies are caused by medical expenses, and recent changes like removing some levels of medical debt from credit reports are only a small step toward reducing the personal financial effects of medical debt. Absent larger-scale healthcare payment and coverage reform, healthcare industry leaders continue to be challenged with finding ways to decouple the provision of essential medical care from the risk of financial ruin for patients.