|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
A somber milestone on the path to brighter days ahead
Although the nation reached a grim and long-dreaded milestone on Monday, surpassing 500,000 lives lost to COVID—more than were killed in two World Wars and the Vietnam conflict combined—the news this week was mostly good, as key indicators of the pandemic’s severity continued to rapidly improve. Over the past two weeks, hospitalizations for COVID were down 30 percent, deaths were down 22 percent, and new cases declined by 32 percent—the lowest levels since late October. This week’s numbers declined somewhat more slowly than last week’s, leading Dr. Rachel Walensky, director of the Centers for Disease Control and Prevention, to caution people against letting their guard down just yet: “Things are tenuous. Now is not the time to relax restrictions.” Of particular concern are new variants of the coronavirus that have emerged in numerous states, including one in New York and another in California, that may be more contagious than the original virus.
The best news of the week was surely a report from the Food and Drug Administration (FDA) evaluating the new, single-shot COVID vaccine from Johnson & Johnson (J&J), showing it to be highly effective at preventing severe disease, hospitalization, and death caused by COVID, including variants. On Friday, a panel of outside experts met to assess whether to approve the J&J vaccine for emergency use, which would make it the third in the nation’s arsenal of COVID vaccines. If approved, the vaccine will be rolled out next week, according to the White House, with up to 4M doses available immediately. The sooner the better: new data show that since vaccinations began in late December, new cases among nursing home residents have fallen more than 80 percent—a hopeful glimpse at the future that lies ahead for the general population once vaccines become widely available.
Relatively smooth sailing for Biden’s health nominees
Testifying at confirmation hearings in front of the Senate’s health and finance committees this week, California Attorney General Xavier Becerra, President Biden’s nominee to become Secretary of Health and Human Services (HHS), gave some indication of his likely approach to some of the key issues facing healthcare in the years ahead. Beyond the expected partisan questioning around hot-button issues like the COVID response in California, “Medicare for All,” and abortion policy, Becerra was asked about his views on how to control the rising cost of care. On the issue of price transparency, Becerra indicated that he would pursue “robust enforcement” of policies intended to give patients more visibility into the hospital prices, and could be inclined to keep some of the Trump administration’s provisions in place. He also pointed to his prosecution of California hospitals for anti-competitive behavior, suggesting he might pursue a similar tack at the federal level. Asked about the growing battle between pharmaceutical companies and hospitals over “340B” discounts on drugs for safety-net providers, Becerra pledged to “build on” the program, suggesting a position more favorable to hospitals that “are really helping some of our neediest patients”. After two days of questioning, it seemed likely that Becerra would be confirmed by the Senate, putting to rest earlier speculation that his nomination might be blocked. Separately, despite some tough questioning from GOP senators, two other health department nominees—Dr. Vivek Murthy (for Surgeon General), and Dr. Rachel Levine (for Assistant HHS Secretary)—seemed assured of confirmation as well. Up next, confirmation hearings for Chiquita Brooks-LaSure, Biden’s nominee to head the Centers for Medicare & Medicaid Services.
Cigna to acquire telemedicine provider MDLive
Health insurer Cigna announced today that its health services arm, Evernorth, has entered into a definitive agreement to acquire telemedicine company MDLive. While terms of the deal were not disclosed, Cigna plans to make MDLive’s telemedicine capabilities available to the company’s medical customers as well as Evernorth’s third-party clients. As insurance companies assemble a growing suite of care delivery assets in order to directly provide and manage care for beneficiaries, telemedicine is a central part of the value proposition, since it provides a direct care channel to patients. As recently as last August, MDLive was rumored to be pursuing a public offering, building on its rapid growth during the pandemic. But recent deals raise questions about the future of the standalone telemedicine business. Last year telemedicine company Teladoc acquired care management company Livongo to create a more comprehensive online health offering, and speculation continues that UnitedHealth Group is pursuing a deal with American Well. Telemedicine companies may ultimately find their offerings create more value, for consumers and investors, when integrated into a comprehensive healthcare platform.
The home-based care space heats up
This week Brookdale Senior Living, the nation’s largest operator of senior housing, with 726 communities across 43 states and annual revenues of about $3B, announced the sale of 80 percent of its hospice and home-based care division to hospital operator HCA Healthcare for $400M. The transaction gives HCA control of Brookdale’s 57 home health agencies, 22 hospice agencies, and 84 outpatient therapy locations across a 26-state footprint, marking its entry into new lines of business, and allowing it to expand revenue streams by continuing to treat patients post-discharge, in home-based settings. Like other senior living providers, Brookdale has struggled economically during the COVID pandemic; its home and hospice care division, which serves 17,000 patients, saw revenue drop more than 16 percent last year. HCA, meanwhile, has recovered quickly from the COVID downturn, and has signaled its intention to focus on continued growth by acquisition across 2021.
In separate news, Optum, the services division of insurance giant UnitedHealth Group, was reported to have struck a deal to acquire Landmark Health, a fast-growing home care company whose services are aimed at Medicare Advantage-enrolled, frail elderly patients. Landmark, founded in 2014, also participates in Medicare’s Direct Contracting program. The transaction is reportedly valued at $3.5B, although neither party would confirm or comment on the deal. The acquisition would greatly expand Optum’s home-based care delivery services, which today include physician home visits through its HouseCalls program, and remote monitoring through its Vivify Health unit. The Brookdale and Landmark deals, along with earlier acquisitions by Humana and others, indicate that the home-based care space is heating up significantly, reflecting a broader shift in the nexus of care to patients’ homes—a growing preference among consumers spooked by the COVID pandemic. Along with telemedicine, home-based care may represent a new front in the tug-of-war between providers and payers for the loyalty of increasingly empowered healthcare consumers.