January 29, 2021

The Weekly Gist: The Wall Street Zodiac Edition

by Chas Roades and Lisa Bielamowicz MD

How are your GameStop shares doing? You know the stock market situation has spun completely out of control when one of your kids asks you what “short selling” means. After a lengthy exchange of texts, relying on mostly faded memories of a b-school class in corporate finance, it became clear that no amount of simplification of “puts”, “calls”, “margin trading”, “short squeezes” or other financial arcana would suffice to explain the bizarre story of a bunch of basement-dwelling Redditors draining the fortunes of hedge fund tycoons. Finally came this exasperated reply: “How can you not believe in astrology but explain all of that in detail as if it’s real?” They’ve got a point.


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

Taking executive action to bolster the Affordable Care Act

Thursday was healthcare day at the Biden White House, the latest in a series of themed days during which the President has issued executive orders on topics ranging from COVID response to climate change to racial equity. Facing a closely divided Congress, the new administration has focused so far on actions it can take unilaterally to advance its agenda, and as President Biden described it at a signing ceremony yesterday, his healthcare agenda is centered on “restoring the Affordable Care Act and restoring Medicaid to the way it was” prior to the Trump administration. The new executive order reopens the HealthCare.gov insurance marketplace for a “special enrollment period”, lasting from mid-February to mid-May, allowing approximately 15M uninsured Americans in 36 states (including 3M who lost employer-based insurance due to COVID) to sign up for coverage, many subsidized by the federal government. The order also instructs agencies to review many of the regulatory changes made by the Trump administration, including loosening restrictions on short-term insurance plans, and allowing states to use waivers to implement Medicaid work requirements. (Also included in Thursday’s action was a measure to immediately rescind the ban on taxpayer funding for abortion-related counseling by international nonprofits, the so-called “Mexico City rule”.)

Actually unwinding those Trump-era changes will take months (or possibly years) of regulatory work to accomplish, but Biden’s executive order puts that work in motion. Attention now turns to Congress, which the Biden team hopes will provide funding for increased subsidies for coverage on the Obamacare exchanges, along with allocating money for the administration’s aggressive COVID response plan. Yesterday’s executive order is best understood as the starting gun for the lengthy legislative and regulatory process that lies ahead, as the Biden administration tries to bolster the 2010 health reform law, and stamp its mark on American healthcare.

Mostly good news on the vaccine front

Two additional pharmaceutical companies released preliminary data on the efficacy of their vaccine candidates this week, promising new weapons in the fight against the coronavirus, but raising some concerns about the efficacy of vaccine candidates against the variants of the disease that have emerged abroad and now in the US. Novavax reported Thursday that its vaccine proved to be nearly 96 percent effective at preventing COVID caused by the original Wuhan strain of the virus, and 86 percent effective against the variant that has taken hold in United Kingdom, but only about 50 percent effective among participants in South Africa, indicating that the predominant variant there, which was identified in the US this week, is able to skirt the immunity provided by its vaccine. Johnson & Johnson (J&J) reported similarly positive, if mixed, results for its vaccine, which was 72 percent effective against the virus with a single dose among US trial participants, but just 57 percent effective in trials in South Africa. However, the J&J vaccine was successful at reducing severe COVID disease by 85 percent—meaning that it could provide a capable tool in reducing severe disease and deaths with just a single dose.

Not all the vaccine news was positive this week: Merck announced plans to discontinue trials of its two vaccine candidates due to poor results, and German public health officials recommended that AstraZeneca’s vaccine should not be given to those over age 65, due to insufficient evidence of efficacy. As the pipeline, supply and relative strengths of approved and candidate vaccines are weighed, experts are expressing greater optimism that a majority of Americans could be vaccinated by late spring. However, the spread of new, more contagious strains is highly worrisome, especially in light of likely reduced vaccine efficacy in preventing COVID infection as the virus mutates. It’s no coincidence that new variants are emerging in places with uncontrolled spread, like the US, South Africa, Britain and Brazil. Immunizing as many people as possible, as quickly as possible (with whichever vaccine is to hand), while maintaining proven public health measures, will be the key to winning the footrace between vaccination rollout and viral mutation.

California taps an insurer to run its vaccine rollout

In an attempt to improve its beleaguered COVID vaccine rollout, the nation’s most populous state struck an agreement this week with one of its largest insurance companies to serve as statewide vaccine administrator. California will contract with Blue Shield of California to create a centralized system to streamline appointment sign-ups, notification, and eligibility for its nearly 40 million residents, and to oversee vaccine distribution to counties, healthcare providers and pharmacies across the state. Oakland-based Blue Shield, which serves four million members across the Golden State, faces a tall order to improve the state’s widely criticized rollout. As of this week, California had only administered 49.5 percent of the doses it has received, placing it among the slowest states in the country even as new COVID cases continue to be reported at a high rate. Details have yet to be released on specific terms of the contract, other than the fact that Kaiser Permanente will run a separate vaccination program for its 9M members in California. Blue Shield has been very involved in Governor Gavin Newsom’s pandemic response efforts to date, and has long been a lobbying powerhouse in the state—and a major donor to Newsom’s campaign. California’s bet seems to be that moving vaccine distribution from individual counties to a centralized system will result in greater distribution efficiencies, which mirrors the Biden administration’s overall pandemic strategy at the federal level. But it bears watching to see if the capabilities of a large insurer—including an extensive network of providers, and a robust customer service platform—will be sufficient to solve the logistical, supply chain, workforce and communication challenges currently hampering vaccine rollout.


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

Payers double down on lucrative MA market

As the oft-cited 10,000 Baby Boomers continue to age into Medicare each day, Medicare Advantage (MA) enrollment keeps accelerating. The graphic below highlights growth in the MA ranks across the last decade, showing that enrollment has more than doubled since 2010. By the end of this year, an estimated 42 percent of Medicare beneficiaries will get their benefits through a private health insurer. While seniors like MA plans for the growing number of supplemental benefits they can offer—which now include adult day care services, home-based palliative care, and in-home support services—health insurers are gravitating to these plans due to their attractive economics. Health insurers’ average gross margin per member, per month (PMPM) for MA plans is significantly higher than in individual or group market plans, a spread that increased in 2020 due to reduced utilization. PMPM margins for MA plans were up an average of 35 percent through September 2020 compared to 2019. Payers have been blanketing the market with plan options in recent years; the number of MA plans offered has increased 49 percent since 2017, although the MA market is increasingly concentrated. In spite of numerous headlines about venture-backed startups like Oscar, Bright Health Plan, and Devoted Health posting double- or triple-digit growth numbers, the MA market is still dominated by UnitedHealthcare and Humana, which together account for 44 percent of all MA enrollees nationwide.


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

Health systems in a state of suspended animation

Hardly a week goes by without a health system leader telling us about an initiative that’s been “put on hold because of COVID”. The range of things delayed by the pandemic is wide, from major facility expansions to incremental changes in organizational structure and operational processes. But in general, there’s a growing list of action items—many of them critical—that health systems have been putting off. Across last year we heard that many had plans to return to those items in early 2021, once the COVID situation eased. But of course, the past two months have been the busiest of the pandemic so far, and now the challenge of vaccine rollout has been layered on top of the day-to-day task of maintaining care delivery amid persistently high levels of COVID hospitalizations. With a protracted, uneven immunization campaign, and worrisome variants on the rise, there may yet be another surge of cases and hospitalizations in the spring, which will cause systems to further delay important projects. That’s not all bad news—surely some will realize that what seemed urgent pre-COVID is no longer necessary. We’ve already had a few leaders tell us that COVID has forced a rethink of capital plans, with facility expansions likely scaled back in favor of faster investment in digital care delivery. But it’s worth remembering that COVID didn’t just cause hospital systems to delay or cancel non-emergent surgeries and procedures (to the tune of $20B last year). It’s forced these large, complex businesses into a state of suspended animation, and likely set back a significant number of needed operational improvements. It’ll take some time to catch up when this is all over.

Getting to know the doctor behind the mask

A close friend was recently diagnosed with cancer, and has been navigating the process of gathering second opinions and comparing treatment regimens. She was leaning toward the program at the academic center where she was first diagnosed, and then an unlikely interaction sealed the deal: a telemedicine consultation with the oncologist to discuss the specifics of chemotherapy. She’d had in-person visits with him twice already, but “seeing my doctor without the mask, even if it was over Zoom, made me so much more comfortable.” With everyone worried about COVID infection, in-person visits are often more rushed that before. But it’s so important for a patient, particularly one facing a serious illness, to feel like they know their doctor. We often think of telemedicine as creating more distance between patient and provider. But it also provides a chance to slow down, see emotions and make a face-to-face connection. Hospitalized patients sometimes never see the faces of their doctors or nurses, leading many providers to tape smiling selfies on top of their PPE—could “inpatient telemedicine” help to facilitate deeper conversations with admitted patients about important decisions? Until we’re able to meet again without masks, blending virtual and in-person care may provide the best way to deepen relationships and understanding between patients and doctors.


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

On last Monday’s episode, we heard from Kristen Valdes, founder and CEO of healthcare technology company b.well Connected Health, and member of the CARIN Alliance. As price transparency and interoperability standards take effect, she believes early adopters will gain competitive advantage.

Coming up on Monday, we’re excited to share an episode from our friends at the health policy podcast Tradeoffs. Their team dug into vaccine hesitancy among nursing home staff—and found deep, longstanding challenges that extend well beyond the decision to take the COVID-19 shot. Make sure to tune in, you won’t want to miss it!

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


Give this a spin—you might like it.

“Eagerly anticipated” isn’t a description often applied to debut albums, but that’s just what Collapsed in Sunbeams, the new release from London-based singer-songwriter Arlo Parks, is. The 20-year-old daughter of Nigerian and Chadian-French parents, born in Paris as Anaïs Oluwatoyin Estelle Marinho, began producing a stream of critically acclaimed singles when she was just 17, and was set to headline her own tour on the heels of two excellent EPs when the pandemic hit. So she retreated to her parents’ house, and turned her work into a full-length album loaded with the kind of confessional, lo-fi bedroom pop that led UK critics to dub her the “Voice of a Generation”. The moniker flatters Gen-Z: Parks writes empathetic, closely observed songs with a precocious emotional depth, whether singing conversationally about a brief romance with a high school girlfriend, a friend struggling with depression, or a young couple she witnessed having an argument at a bus stop. The beautifully crafted lyrics are delivered over laid-back, mid-tempo, neo-soul beats that perfectly frame her vocals. Parks gives us the raw truth of new adulthood (“We’re all learning to trust our bodies/Making peace with our own distortions”), but always with a sense of compassion and wonder. By the time she claims, on the last cut on the album, to be “always making rainbows out of something painful,” there’s little doubt that’s just what she’s about. A worthy debut, promising more to come. Best tracks: “Black Dog”; “Eugene”; “Hurt”.


We said it, they quoted it.

Health Care Unions Find a Voice in the Pandemic
New York Times; January 28, 2021

“The past year has created conditions ripe for organizing to address longstanding issues like inadequate wages, benefits and staffing, a problem exacerbated by health care workers falling ill, burning out or retiring early for fear of getting sick. The unions ‘have successfully been able to use the pandemic to rebrand those same conflicts as very urgent safety concerns,’ said Jennifer Stewart, a senior vice president at Gist Healthcare, a consulting firm that advises hospitals.

“They have also shifted many nurses’ view of their employers, she said. ‘The perceptions and the experiences are being crystallized and starting to be viewed through a certain lens. And I think that lens is very favorable to unions.’”


Stuff we read this week that made us think.

A city in Brazil crushed twice by COVID

The Brazilian city of Manaus thought it had seen the worst of the coronavirus. The largest city in the Amazon, with a population of 2M residents, Manaus saw a severe COVID spike last spring and early summer. Infections were widespread, leaving an estimated 76 percent of the population with antibodies to the virus, as measured in October 2020. Manaus was potentially one of the few regions with herd immunity to COVID-19, yet the city has now found itself in the midst of an even more severe January surge, with soaring numbers of cases, hospitalizations and deaths. Experts attribute the latest surge to the so-called Brazilian, or P.1 variant, which is now the dominant strain in Manaus—raising real concerns of whether prior COVID infection provides protection from the new strain.

A new paper in Lancet posits four potential reasons for the resurgence of COVID in Manaus. First, it’s likely that the seroprevalence of COVID antibodies in the population was overestimated. And it’s possible that immunity gained from earlier infection had begun to wane by December when the new strain began to spread. The third and fourth possibilities are more worrisome: the Brazilian variant may be both more transmissible, and more able to evade immunity, than the original virus. The latest COVID surge has been more severe than anything Manaus endured in 2020. Supplies of oxygen ran short earlier this month, leading to the deaths of a number of patients. Their experience is a harbinger of what might happen if COVID restrictions are loosened too quickly as new strains take hold, and why continued vigilance is critical as we run the race between population vaccination and ongoing viral mutation.

There’s (still) a fungus among us

Remember 2019, when the scariest “new” pathogen was Candida auris, a drug-resistant fungus that was creeping into hospitals and nursing homes, often proving fatal to elderly and immune-compromised patients who came in contact with it? C. auris proved difficult to eliminate from infected facilities, sometimes requiring drywall to be ripped out of patient rooms in order to fully decontaminate. With all of our attention focused on COVID-19, C. auris and other drug resistant bacteria and fungi have been making a resurgence, according to a recent New York Times report. In Los Angeles County alone, 250 facilities now report C. auris infection, up from just a handful before the pandemic. Unlike COVID-19, these pathogens cling relentlessly to surfaces, so protocols allowing the reuse of protective equipment in order to conserve resources inadvertently provided a mechanism for these bugs to spread. Steroids used to treat COVID-19 patients suppress the immune system, making patients more vulnerable. According to one expert, the spread of these drug-resistant infections shows the danger of “seeing the world as a one-pathogen world”. Providers have had a laser focus on preventing the aerosol spread of COVID—now is the time to double down on surface decontamination and infection mitigation procedures to make sure we don’t meet the end of the pandemic with the rise of other classes of “superbugs”.

That’s all for this week—another eventful one! Thanks so much for taking the time to read our thoughts on what’s going on, and for getting in touch with your feedback. We love hearing from you! Please do pass this along to your friends and colleagues, and encourage them to subscribe, and to check out our daily podcast.

And as always, please let us know if there’s anything we can do to be helpful in your work. You’re making healthcare better—we want to help!

Best regards,

Chas Roades
Co-Founder and CEO

Lisa Bielamowicz, MD
Co-Founder and President