| THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
- UnitedHealth Group (UHG) closes its $5.4B acquisition of LHC Group. The deal, first announced in March 2022, will bring LHC’s home health locations, hospice sites, and long-term acute care hospitals across 37 states into UHG’s Optum division. LHC also has over 400 joint-venture arrangements with hospitals. The acquisition received heightened scrutiny from antitrust regulators, but was ultimately allowed to proceed.
The Gist: LHC’s postacute footprint expands UHG’s Medicare Advantage value play, guaranteeing postacute capacity and providing a platform to funnel care into lower-cost settings. UHG’s strategy is right in line with its peers: Humana fully owns home health provider Kindred at Home (now branded CenterWell Home Health), and CVS Health plans to acquire Signify Health, which provides home care services with an emphasis on risk scoring. But achieving lower cost of care will require integration of postacute referrals and care management across rapidly expanding physician networks.
- Humana to exit employer-sponsored insurance market. On Thursday, Louisville, KY-based Humana announced it will wind down its Employer Group Commercial Medical Products business over the next two years. The company said its exit from all fully insured, self-funded, and federal employee medical plans—a book of business that shrunk to under 1M lives in 2022—will allow the company to focus more on its Medicare Advantage (MA) offerings, which covered over 5M lives in 2022. Humana is currently the second largest MA payer behind UnitedHealthcare.
The Gist: In a move signaled earlier this month, Humana has chosen to double down on its more profitable MA business, rather than continuing to compete with other major payers in the shrinking employer-sponsored commercial market. Humana already offers MA plans in 89 percent of US counties, more than UnitedHealthcare, but its 2022 MA growth was only a third of United’s (250K new lives enrolled, versus 750K). This move allows Humana to devote more resources to fielding competitive MA plan offerings and integrating its growing portfolio of physician and postacute care assets.
- Biden Administration withdraws permissive hospital antitrust guidance. Earlier this month, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) quietly released joint revisions to three healthcare antitrust policy statements which it now considers “overly permissive”. While two of the policies date back to the 1990s and relate to information sharing, the most significant, published in 2011, stated that certain ACOs were “highly unlikely to raise significant competitive concerns”. Instead, the FTC and DOJ say their policy will be to review these arrangements on a case-by-case basis.
The Gist: While unlikely to alter the ACO landscape significantly, this new guidance signals a departure from Obama-era policies that gave outsized priority to ACO development in cost-reduction efforts. Until now, ACOs were passed over for scrutiny, while regulators focused on more traditional hospital mergers in an attempt to prevent outsized market leverage. Moving forward, the Biden administration must strike a delicate balance between policies that encourage greater coordination amongst independent healthcare entities working together to improve patient care and lower costs, and the market leverage that such coordination can generate.
Plus—what we’ve been reading.
- Should we be prescribing ketamine via telehealth? A revealing article published in the New York Times this week explores the potential for both relief and abuse unlocked by the ability for physicians to prescribe ketamine virtually. Ketamine was originally approved decades ago as a sedative for surgery but has found two new lives: one as an emerging treatment for severe depression (though there is a lack of rigorous research on long-term outcomes), and the other as a psychedelic party drug. Due to concerns over its addictive properties and side effects, access to the medicine was tightly restricted by the Drug Enforcement Agency (DEA), until a provision tied to the COVID public health emergency (PHE) allowed providers to prescribe controlled substances like ketamine without in-person evaluation. This has caused a “ketamine boom” in which patients, aided by investor-funded startups offering the drug, can gain access to ketamine with little to no supervision, with some experiencing significant negative side effects including neurological symptoms and loss of bladder control.
The Gist: The growth in ketamine prescriptions—and the number of online-only startups providing access to the drug—is a prime example of the “Wild West” landscape of telemedicine industry. These purveyors often address conditions in isolation with minimal coordination on a patient’s other health needs. They also lack the infrastructure for close, ongoing monitoring, which can easily result in patient harm with a drug like ketamine, given its side effect profile. The DEA is currently exploring regulations to govern the remote prescribing of all controlled substances after the end of the PHE. We hope they can find a middle ground that maintains access while limiting abuse and prioritizing patient safety.
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