A quick roundup of the issues driving the healthcare reform conversation.
Item of the Week
HOSPITAL REVENUE Hospitals’ operating margins continue to bounce back.
Quick takeaway: With patients flocking to outpatient centers and labor costs trending down, the hospital industry’s fortunes have steadily improved.
Further context: The coronavirus public health emergency upended the operating models of just about every industry – healthcare being no exception.
But, on this side of the pandemic, hospital revenues have quickly turned the corner as utilization has increased.
However, according to the data, nearly one-fifth of the $4.2 billion reimbursed by the federal government to providers for COVID testing and treatment may have been improperly paid.
Against this backdrop, hospitals now find themselves under increased scrutiny for the role they play in driving up healthcare costs.
PRIVATE PRACTICE The share of private practice physicians continues to decline.
Quick takeaway: According to a new survey, medical practices are getting larger – and, physicians are less likely to own them.
Digging deeper: Between 2012 and 2022, the share of physicians working in private practices – or, practices wholly-owned by physicians – fell from 60.1 percent to 46.7 percent.
Over that same period, the percentage of physicians working in practices at least partially owned by a hospital or a large health system rose by almost 8 percent, while the share of physicians working in a hospital also increased by 4 percent.
In addition to physicians being less likely to own their practices, other key takeaways from the survey include:
- Practices are getting larger and shifting towards multi-specialty care.
- Some specialty physicians are sticking to private practice.
- Private equity is investing more heavily in the space.
What it means: Even before the pandemic, provider consolidation was dramatically reshaping our healthcare delivery landscape. And, as mounting evidence has shown, this has led to higher prices.
PRIVATE EQUITY Private equity investors remain bullish on healthcare.
Quick takeaway: Investors have had their eye on healthcare for years, with specialty services like cardiology, oncology, and anesthesiology garnering increased attention.
Digging deeper: As featured last week, the effects of private equity interest on our healthcare delivery model are profound and far-reaching. And, it’s not just the threat of greater consolidation, as medical prices across a broad range of specialties and geographies are also being driven higher.
What it means: Where the trendline takes us is anybody’s guess, but private equity investors are showing no signs of cooling on the healthcare sector.
MEDICARE Rx A handful of prescription drugs drives a disproportionate share of Medicare Part D spending.
Quick takeaway: The ten top-selling medicines in the Medicare Part D prescription drug program accounted for more than one-fifth of overall spending in 2021.
Digging deeper: Despite representing just 0.3 percent of covered drugs in Part D, those ten drugs made up 22 percent of total spending ($48 billion). Going further, the top 100 drugs accounted for 61 percent of all spending ($131 billion), but still only represented 3 percent of covered drugs.
What it means: The data comes on the heels of the pharmaceutical industry’s twice-annual round of price hikes, which, so far this month, has seen dozens of drug manufacturers raise prices on more than 100 products.
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