November 18, 2022

The Weekly Gist: The Great T-Swizzle Meltdown Edition

by Christy Davis

Spare a thought this week for fans of Taylor Swift, whose eagerness to attend the superstar’s upcoming Eras tour was rewarded with the utter meltdown of the Ticketmaster system. After a fans-only presale attracted ten times as many ticket buyers as predicted, the nation’s largest concert promoter and ticket seller shut down general sales for Swift’s tour. Meanwhile, tickets were on sale at StubHub and other secondary markets for as much as $20K each. There were reports of fans waiting in online queues for hours to secure their tickets, only to be turned away or kicked out of the system. Critics of Ticketmaster’s monopolistic market position were quick to point out the lack of accountability to consumers, while company officials complained publicly that Swift simply has too many fans. Hmm, who could have predicted this? Swift’s latest album, Midnights, literally occupies all the spots on Billboard’s Top 10 singles list, a first. Good luck to all you Swifties out there—we hope you eventually get to see the show.

THIS WEEK IN HEALTHCARE

What happened in healthcare this week—and what we think about it.

  1. Amazon launches direct-to-consumer virtual care platform. On Tuesday, the e-commerce giant unveiled its latest healthcare endeavor, Amazon Clinic, a “virtual health storefront” that can asynchronously connect patients to third-party telemedicine providers. It offers diagnosis and treatment for roughly 20 low-acuity health conditions—including acne, birth control, hair loss, and seasonal allergies—at flat, out-of-pocket rates. (The service does not currently accept insurance.) It also refills prescriptions, which customers can send to any pharmacy, including Amazon’s. At its launch, Amazon Clinic is available in 32 states.

The Gist: This is exactly the kind of venture at which Amazon excels: creating a marketplace that’s convenient for buyers and sellers (patients and telemedicine providers), pricing it competitively to pursue scale over margins, and upselling customers by pairing care with Amazon’s other products or services (like Amazon Pharmacy). Its existing customer base and logistics expertise could position it to replace telemedicine storefront competitors, including Ro and Hims & Hers, as the leading direct-to-consumer healthcare platform, at least among those that don’t take insurance. It bears watching to see how Amazon builds on this service, including whether it eventually incorporates insurance coverage, partners with health systems (similar to Hims & Hers), or connects Amazon Clinic to Prime in order to attract greater numbers of—generally young, healthy, and relatively wealthy—consumers.

  1. Sanford, Fairview health systems agree to merge. 47-hospital Sanford Health, based in Sioux Falls, SD, and 11-hospital Fairview Health Services, based in Minneapolis, MN, have signed a letter of intent to form a combined $14B health system that would retain Sanford’s name. Sanford has been seeking a health system partner for several years; most recently it was in talks with Intermountain Health, before they ended the process following a COVID-masking controversy with Sanford’s then-CEO. An announced merger with Iowa-based UnityPoint Health was also called off in 2019. Sanford had earlier attempted to combine with Fairview, in 2013, but abandoned plans after receiving pushback from Minnesota’s Attorney General, who was concerned that services could be cut, and that the system’s long-term partnership with University of Minnesota could be at risk.

The Gist: Perhaps Sanford has finally found its dance partner, one that gives it access to the booming Minneapolis metropolitan area, which the largely rural health system lacks. Like many recent mergers, the deal brings together two systems across non-overlapping markets, making it likely to pass antitrust scrutiny. Fairview has posted losses for the last two consecutive years, making it an easier pickup for Sanford, which can now introduce its 220K member health plan to a new market. We expect more health system mergers like this in 2023, as margin pressures are motivating many to seek the promise of shelter in scale.

  1. COVID public health emergency (PHE) likely to extend past January. The Department of Health and Human Services (HHS) appears set to extend the federal COVID PHE past its current expiration date of January 11, 2023, as HHS had promised to give stakeholders at least 60 days’ notice before ending it, and that deadline came and went on November 11th. Days later the Senate voted to end the PHE, a bill which Biden has promised to veto should it reach his desk. Measures set to expire with the PHE, or on a several month delay after it ends, include Medicare telehealth flexibilities, continuous enrollment guarantees in Medicaid, and boosted payments to hospitals treating COVID patients.

The Gist: Despite growing calls to end the PHE declaration, and even as White House COVID coordinator Dr. Ashish Jha has said another severe COVID surge this winter is unlikely, the White House is likely trying to buy time to resolve the complicated issues tied to the PHE, some of which must be dealt with legislatively. And with a divided Congress ahead, it remains to be seen how these issues, especially Medicare telehealth flexibilities—a topic of bipartisan agreement—are sorted out. Meanwhile the continuation of the PHE prevents states from beginning Medicaid re-determinations, allowing millions of Americans to avoid being disenrolled.

Pluswhat we’ve been reading.

  1. Questioning the motives behind UnitedHealth Group (UHG)’s acquisition of Change Healthcare. UHG closed its $13B acquisition of data analytics company Change in early October, just weeks after the Justice Department failed in its bid to block the sale on antitrust grounds. In court proceedings, UHG denied it intended to use Change data to give its insurance arm, UnitedHealthcare, a competitive advantage against the rival insurers who use Change as an electronic data interchange clearinghouse. But a new ProPublica report highlights how communications between UHG and consulting firm McKinsey & Co. point to this potential data advantage as one of the clear upsides from acquiring Change. The McKinsey report was explicitly dismissed by the US District Court judge who, in his ruling in UHG’s favor, was persuaded by testimony from senior executives and evidence of UHG’s history of maintaining internal data firewalls.

The Gist: UHG has a longstanding business interest in maintaining the trust of rival insurers that use its data analytics unit, OptumInsight. Voluntary and internally imposed firewalls between the UHG’s insurance arm and its other businesses are key to maintaining this trust. Although Justice Department lawyers could not provide convincing evidence that UHG has or intends to breach its firewalls, there is still reason to monitor any such activity closely. The failure of the McKinsey report to sway the court against the deal illustrates how difficult it is for the Justice Department to challenge vertical mergers, even when there is compelling evidence that such deals may impact competition.


GRAPHIC OF THE WEEK

A key insight or teaching point from our work with clients, illustrated in infographic form.

The World Cup of Healthcare is back!

Every four years, soccer teams from 32 nations across the globe come together to compete in the World Cup, with the latest men’s tournament kicking off in Qatar this Sunday. For the previous men’s World Cup in 2018, we investigated who would take the top prize if the competition was between each nation’s healthcare system, rather than their soccer teams. Now four years—and a global pandemic—later, we’ve returned with a new approach (much like the US Men’s National Team, who are back after failing to qualify in 2018) to assess which of the 32 nations best protected its population from COVID. We based our analysis on three key metrics that we selected as the most reliable and meaningful representations of a nation’s response to the pandemic: 1) the quality of each nation’s underlying healthcare system (measured by the Consumer Value Index score that we created last time; 2) its per-capita vaccination rate (counting all doses administered, including boosters); and 3) its per-capita COVID mortality rate (adjusted by the percentage of population 65+).

The two highest-scoring nations hail from Asia, with Japan narrowly losing out to the 2022 host nation, Qatar. Both top performers built off their above average healthcare infrastructure by implementing strong vaccination campaigns, strictly limiting travel, and achieving a delicate balance between slowing COVID’s spread and continuing economic activities. While tiny, oil-rich Qatar unquestionably mustered an impressive response to COVID—due in part to its decade-plus of scenario planning for any geopolitical challenges that it might encounter in the lead up to its World Cup hosting debut—its “victory”, much like the corrupt decision to award it hosting rights, is tainted by tragedy and controversy. Thousands of migrant workers brought to Qatar to construct stadiums and facilities for the World Cup competition have died as a result of exploitation and unsafe working conditions. This raises the question of whom a nation’s healthcare system should serve. If it fails to help those in greatest need of care, including migrants—who now comprise 85 percent of Qatar’s population of just under 3M—then to us, this “win” is worth little. We only hope the real Cup’s champion is crowned with less controversy, and fewer caveats.

The 2022 Healthcare World Cup: COVID Response Edition


INTERMISSION

A recommendation from our weekly diet of music, movies, TV, and other good stuff.

And In the Darkness, Hearts Aglow by Weyes Blood—A return to Laurel Canyon for pop-folkster Natalie Mering. Her fifth studio release, and the second in a trilogy of catastrophe records, it’s unmistakably a pandemic requiem, full of reflections on loneliness and reconnection. Since Joni is still going strong, call Mering the new Karen Carpenter, maybe? Gorgeous.


THIS WEEK AT GIST—ON THE ROAD

What we learned this week from our work in the real world.

The analog reality beneath a patina of digital care 

Telemedicine is supposed to make consumers’ lives easier, right? One of us had the opposite experience when managing a sick kid this week. My 14-year-old has been sick with a bad respiratory illness for over a week. We saw her pediatrician in-person, testing negative for COVID (multiple times), flu, and strep. Over the week, her symptoms worsened, and rather than haul her back to the doctor, we decided to give our health plan’s telemedicine service a try. To the plan’s credit, the video visit was easy to schedule, and we were connected to a doctor within minutes. He agreed that symptoms and timeline warranted an antibiotic, and said he was sending the prescription to our pharmacy as we wrapped up the call.

Here’s where the challenges began. We went to our usual CVS a few hours later, and they had no record of the prescription. (Note to telemedicine users: write down the name of your provider. The pharmacy asked to search for the script by the doctor’s name, which I didn’t remember—and holding up the line of a dozen other customers to fumble with the app seemed like the wrong call.) We left and contacted the telemedicine service to see if the prescription had been transmitted, and after a half hour on hold, were finally transferred to pharmacy support. It turns out that the telemedicine service transmits their prescriptions via “e-fax”, so it was difficult to confirm if the pharmacy had received it. Not to be confused with e-prescribing, e-fax is literally an emailed image of a prescription, with none of the safeguards and communication capabilities of true electronic prescribing. The helpful service representative kindly offered to call the pharmacy and placed us on hold—only to get a message that the pharmacy was closed for lunch and not accepting calls! Several hours later, which included being on hold for 75 minutes (!!!) with our CVS, my daughter finally got her medication. Despite the slick app and teleconferencing system, the operations behind the virtual visit still relied on the very analog processes of phone trees and faxes—which created a level of irritation that rivaled trying to land Taylor Swift tickets for the same kid. It was a stark reminder of how far healthcare has to go to deliver a truly digital, consumer-centered experience. 


THIS WEEK AT GIST—ON THE PODCAST

All the headlines in healthcare policy, business, and more, in ten minutes or less every weekday morning.

Last Monday, we spoke with podcast host JC Larsen about our takeaways from the 2022 midterm elections, and what other health policy items we’re watching as we look forward to the 2024 campaign.

And coming up on Monday, we’ll hear from Alonzo Sexton, MD, CEO and co-founder of ATL Orthopedics in Atlanta, GA. He discusses how his goal to reduce the significant local disparities in orthopedic care led him to open an all-Black physician private orthopedics practice in an underserved area of the metro region.

[Subscribe on Apple, Spotify, Google, or wherever fine podcasts are available.]


That’s all for this week—now go eat some turkey! We’ll be off next week celebrating the Thanksgiving holiday, and we hope you have a great break as well. Thanks so much for taking time to read the Weekly Gist…now please share it with a friend or colleague and encourage them to subscribe, and listen to our daily podcast. Goes great with cranberry sauce!

As always, please let us know if we can be of assistance in your work. You’re making healthcare better—we want to help!

Happy Thanksgiving,

Chas Roades
Co-Founder and CEO
chas@gisthealthcare.com

Lisa Bielamowicz, MD
Co-Founder and President
lisa@gisthealthcare.com