health transformation institute (HTI)
CEO Agenda Unit
Joaquim Cardoso MSC
January 17, 2023
Here are five main takeaways from the conference.
- 1.Health systems need to cut costs
- 2. Medicare Advantage remains crucial to insurers
- 3. Tense rate negotiations will continue
- 4. Competition heats up in health tech
- 5.Service integration is a growing priority
SOURCE:
Modern Health Care
CAROLINE HUDSON
January 12, 2023
Alex Kacik and Nona Tepper contributed to this story.
The 41st annual J.P. Morgan Healthcare Conference wrapped up in San Francisco on Thursday following a four-day schedule packed with presentations from dozens of health systems, insurers, pharmaceutical manufacturers and technology companies.
The 2023 conference covered topics ranging from expenses to public policy to patient care and discussions of what continues to be a tumultuous period for the healthcare industry.
Here are five main takeaways from the conference.
1.Health systems need to cut costs
In a challenging economic environment, health system executives are making costs a priority.
Labor, which typically accounts for more than half of expenses, continue to be the top concern as providers navigate wage inflation driven by staffing shortages.
Contract labor spending is coming down but is expected to stay elevated for months.
CommonSpirit Health detailed its plan for $500 million in cost savings in 2023, part of a four-year, $2 billion performance-improvement plan established when Catholic Health Initiatives and Dignity Health combined to form CommonSpirit in 2019.
So far, the Chicago-based nonprofit company has achieved about $1.3 billion of that goal through tactics such as vendor consolidation, service standardization and reassessment of its real estate holdings.
CommonSpirit Health detailed its plan for $500 million in cost savings in 2023, part of a four-year, $2 billion performance-improvement plan established when Catholic Health Initiatives and Dignity Health combined to form CommonSpirit in 2019.
So far, the Chicago-based nonprofit company has achieved about $1.3 billion of that goal through tactics such as vendor consolidation, service standardization and reassessment of its real estate holdings.
2. Medicare Advantage remains crucial to insurers
Health insurance companies presenting at the conference reported mixed results in their Medicare Advantage businesses but the lucrative, growing program remains a top priority regardless of recent performance.
Centene CEO Sarah London described the company’s Medicare Advantage growth as “soft” during open enrollment for 2023.
The insurer wants to boost profitability by signing up more dually eligible Medicare-Medicaid beneficiaries and by improving its star ratings, which came in worse than expected last year.
Humana saw much better results with Medicare Advantage and added at least 625,000 new members added during open enrollment, a 13.6% increase.
Cigna reported its Medicare Advantage membership grew in the high single-digit range.
3. Tense rate negotiations will continue
Expect difficult conversations this year as providers look for ways to cut costs and insurers try to avoid significant reimbursement hikes.
Economic uncertainty will further complicate this dynamic.
So will looming Medicaid eligibility redeterminations, which are expected to resume as soon as the COVID-19 public health emergency declaration expires and lead to millions losing benefits.
Centene Chief Financial Officer Drew Asher said the company expects to lose $8 billion in Medicaid revenue due to redeterminations, including $4.5 billion this year, and aims to transition Medicaid enrollees to other forms of coverage.
Centene Chief Financial Officer Drew Asher said the company expects to lose $8 billion in Medicaid revenue due to redeterminations, including $4.5 billion this year, and aims to transition Medicaid enrollees to other forms of coverage.
4. Competition heats up in health tech
The healthcare technology industry is growing more competitive as providers shift toward virtual platforms and digital tools to improve patient care.
Teladoc Health CEO Jason Gorevic expressed confidence in his telehealth company’s position relative to its competitors, which he said lack the scale needed to achieve strong financial results.
“There are a lot of virtual care companies out there that are more narrowly focused, smaller in scale and are nipping at the edges of single [software] solutions,” Gorevic said.
There are a lot of virtual care companies out there that are more narrowly focused, smaller in scale and are nipping at the edges of single [software] solutions,” …
General Catalyst CEO Hemant Taneja cautioned investors about a “tricky year ahead” as digital health companies have been forced to shift their focuses from revenue growth to profitability.
General Catalyst CEO Hemant Taneja cautioned investors about a “tricky year ahead” as digital health companies have been forced to shift their focuses from revenue growth to profitability.
Artificial intelligence continues generate interest.
GE HealthCare, which spun off from General Electric on Jan. 4, wants to grow its AI and connected devices business, CEO Peter Arduini said.
5.Service integration is a growing priority
Integrating services will be key for healthcare organizations this year, executives said.
Health systems and insurers view it as long-term savings opportunity and a path toward higher-quality care.
Integrating services will be key for healthcare organizations this year, executives said. Health systems and insurers view it as long-term savings opportunity and a path toward higher-quality care.
Walgreens Boots Alliance is open to additional acquisitions to diversify its services, CEO Rosalind Brewer said.
Walgreens’ VillageMD closed an $8.9 billion deal to acquire Summit Health-CityMD and plans to expand its multispecialty and urgent care operations.
Later this year, Walgreens will fully acquire CareCentrix, an at-home care business.
CVS Health CEO Karen Lynch said the company is in the market for a primary care asset, although she did not address a Bloomberg News report that CVS Health is targeting Chicago-based Oak Street Health, which plans to open 35 new clinics this year.
The insurtech Clover Health is counting on at-home primary care services to drive growth.
“Home care is strategically where healthcare will be moving toward in the next few years,” CEO Andrew Toy said.
Alex Kacik and Nona Tepper contributed to this story.
Originally published at https://www.modernhealthcare.com on January 12, 2023.
People mentioned
- Centene CEO Sarah London
- Centene Chief Financial Officer Drew Asher
- Teladoc Health CEO Jason Gorevic
- General Catalyst CEO Hemant Taneja
- CEO Peter Arduini
- CEO Rosalind Brewer
- CVS Health CEO Karen Lynch
- CEO Andrew Toy
