|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
A worrisome spike in cases and hospitalizations
As states across the US continued to move forward with reopening, this week saw several places experience spikes in coronavirus cases, with Arizona, Florida, California, South Carolina and Texas all reporting record single-day increases in cases. While some of the increase was due to additional testing, spikes in hospitalizations in Texas and Arizona were particularly worrisome, leading to concern that the “first wave” of COVID cases was not yet over. Experts warned that the nation could be seeing a post-Memorial Day surge in the virus, and that more precautions were warranted. California governor Gavin Newsom issued an order for all Californians to wear masks or other face coverings in public settings, as did state and local leaders in other states. All eyes will now turn to Tulsa, OK, where President Trump plans to hold a rally Saturday that will be the largest indoor public gathering in the US since the start of the pandemic. (The President said this week that he views mask wearing as a “signal of disapproval” of himself.) Meanwhile, some hopeful news emerged from the United Kingdom, where researchers conducting a large, randomized trial of potential treatments announced that the use of dexamethasone, a widely-available, low-cost steroid, reduced deaths by one-third in ventilated patients and by one-fifth in patients hospitalized on oxygen. Full details of the study were not made available, leading some industry experts to urge caution in interpreting the results ahead of peer review. The alarming rise in coronavirus cases and related hospitalizations is a further warning that, while we may be finished with the virus, it is by no means finished with us. It’s going to be a long summer. US coronavirus update: 2.25M cases; 120K+ deaths; 25.4M tests conducted.
Two steps forward, one step back
In a sweeping 6-to-3 decision, the US Supreme Court ruled Monday that LGBTQIA+ (lesbian, gay, bisexual, transgender, queer or questioning, intersex, and asexual) Americans are protected from job discrimination under existing federal law. The court stated that discriminating against an employee on the basis of sexual orientation or gender identity inherently amounts to discriminating against them on the basis of sex, which is illegal under Title VII of the Civil Rights Act of 1964. The impact of the landmark ruling could affect the recent Trump administration rule, issued just three days prior, that would remove nondiscrimination protections for LGBTQIA+ people laid out in the Affordable Care Act (ACA). The June 12th Department of Health and Human Services (HHS) rule seeks to undo the Obama administration’s 2016 rule that expanded the scope of the ACA’s sex-based antidiscrimination provisions to specifically include healthcare protections for transgender individuals.
Under the new Trump administration rule, due to go into effect in mid-August, health plans and providers would be able to discriminate against someone on the basis of gender identity, including refusing to provide medical services. While HHS could argue that healthcare and employment are different issues, and that it has the authority to interpret what the ACA’s provisions mean, the Supreme Court ruling will make it more difficult for the administration to attempt to redefine sex discrimination to what it considers “the plain meaning of the word ‘sex.’” Most health systems and physicians feel an obligation to serve all members of their communities and to work to provide equal access and care. We must continue to be attuned to the needs of LGBTQIA+ people and other patient populations who have historically faced health disparities and reduced access to healthcare services due to discrimination. Love is love, and health is health.
A new wave of mergers kicks off
This week brought the first two major merger announcements of the post-COVID era. Illinois- and Wisconsin-based Advocate Aurora Health and Michigan-based Beaumont Health announced Wednesday they are “exploring a potential partnership” that would create a $17B health system across three Midwestern states. (Last month Beaumont called off a planned acquisition of Akron, OH-based Summa Health.) Given the lack of market overlap between the systems, this merger is less likely to face the kind of antitrust scrutiny that stalled Advocate’s previous merger plans with Evanston, IL-based NorthShore University HealthSystem. The combination bears watching to see if the merger of two like-minded, integrated regional health systems is able to deliver strategic value despite being geographically dispersed, and what kinds of synergies it can find.
On the payer side of the industry, two Blue Cross Blue Shield health plans also announced an affiliation agreement. Under the agreement, Pittsburgh-based Highmark, Inc. will become the licensee for Buffalo-based HealthNow New York, Inc.’s 21-county service area across the state. We’d expect to see more consolidation of this kind among state-level Blues plans as they look to compete with well-funded and diversified national insurers like UnitedHealth Group and CVS Health. These two deals are likely to be the first of many across the rest of this year and next, as health system finances experience continued pressure, and well-positioned payers and providers look to pursue growth opportunities by bulking up. As always, the key metric to watch is what happens to pricing in the wake of mergers—the historical evidence is not promising.