THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
- Walmart partners with UnitedHealth Group (UHG) in its continued push into healthcare. The nation’s largest retailer and its largest insurer announced a 10-year partnership to bring together the collective expertise of both companies to provide affordable healthcare to potentially millions of Americans. Set to start next year with 15 Walmart Health locations in Georgia and Florida, the collaboration will initially focus on seniors and Medicare Advantage (MA) beneficiaries, and will include a co-branded MA plan in Georgia. Walmart Health Virtual Care will also be in-network for some UnitedHealthcare beneficiaries. Plans for future years involve expanding the collaboration across commercial and Medicaid plans, as well as including pharmacy, dental, and vision services.
The Gist: We have long wondered if this powerhouse pairing was in the works, as this kind of partnership makes a lot of sense for both parties. While Walmart has reportedly been considering an insurance company acquisition for years, and more recently been dabbling in its own insurance efforts, partnering with UHG provides the retailer with a share of the upside potential of getting into the insurance market without having to fully commit to entering that complex business. And given that 90 percent of Americans live within 10 miles of a Walmart store, and more than half of Americans visit a store every week, Walmart provides UHG with low-cost healthcare access points all over the country, especially important in markets where United’s own Optum physician network is not (yet) present.
- CVS Health acquires Signify Health. CVS Health has emerged as the winner from among a group of interested purchasers, rumored to have included both Amazon and UnitedHealth Group, to acquire the home health and technology services company for $8B. Signify’s nationwide network of 10,000+ clinicians facilitates at-home visits for Medicare Advantage patients, largely focused on providing health risk assessments. Dallas-based Signify went public in February 2021 and acquired accountable care organization builder Caravan Health earlier this year.
The Gist: Though CVS has been more vocal about its goal to acquire primary care services—and was thought to have been interested in One Medical—it has been angling to expand its in-home presence as well. Signify provides CVS an immediate opportunity to improve risk-scoring operations for Aetna beneficiaries, and can connect beneficiaries to the CVS network of care sites, which includes pharmacies, MinuteClinics, and HealthHUBs. It can also sell Signify’s services to other insurers. In the longer-term, the acquisition offers CVS a critical piece of the healthcare services platform it is assembling, giving the pharmacy retailer a direct line into the burgeoning home care space.
- Court ruling threatens Affordable Care Act’s (ACA) no-cost requirement for preventive care services. The same Texas federal judge who ruled the entire ACA unconstitutional in 2018—a decision overturned by the Supreme Court last year—ruled this week that the ACA cannot require a company to fully cover preventive HIV drugs for its employees, on the grounds that doing so violates owners’ religious freedom. He also asserted that the government’s system for deciding what preventive care services should be covered under the ACA is unconstitutional, a broader declaration that potentially jeopardizes a wide swath of no-cost preventive services enshrined in the ACA for millions of Americans, including screening tests for a variety of cancers, sexually transmitted infections, and diabetes. The ruling did not include an injunction and is likely to be appealed.
The Gist: Fully-covered preventive care services are a cornerstone of the ACA, and have increased access to basic healthcare services for many Americans. While there is still some uncertainty about the scope of this ruling, if it were to stand, millions of Americans would once again have to pay for some of the most common and highest-value healthcare services. That additional financial barrier, along with potential tightening of health plan benefit designs, would create barriers to access that only exacerbate our nation’s already stark healthcare disparities.
Plus—what we’ve been reading.
- Private equity (PE)-backed physician practices increase healthcare spending and utilization. A recent JAMA study of 578 US dermatology, gastroenterology, and ophthalmology practices acquired by PE firms from 2016 to 2020 found a steady rise in spending in the two years after acquisition, indicating that the average charge per commercial claim increased 20 percent, and the average allowed amount per claim rose 11 percent. It also found that, compared to a large control group with similar patient risk scores, PE-acquired practices saw new patient visits increase by 38 percent and total visit volume increase by 16 percent.
The Gist: While the study’s authors note that these findings could be explained by changes in practice operations or management, they point out they could also be caused by an overutilization of profitable services not tied to an increase in value or benefit to the patient. We think the latter is likely the case here, and that this study provides evidence of PE-induced overutilization aimed at meeting aggressive growth targets. But this is just the latest wave of ownership-induced overutilization: 20 years ago the same spotlight was on physician-owned imaging, cardiac, and other outpatient diagnostics, with several studies then documenting higher utilization in these facilities. Nonetheless, this latest trend is an important one to document and quantify, as the number of physicians working in PE-backed organizations continues to rise.