Price Transparency Bill Faces Headwinds
Hospitals and healthcare providers are keeping an eye on the effects of the Trump administration’s move to adopt the price-transparency rule, a bill that will force hospitals to reveal how much they charge their patients. In retaliation, the American Hospital Association and other industry groups have sued the administration to block the rule. The groups argue that the rule violates their First Amendment rights, extends beyond the statutory intent of the Affordable Care Act, and substantially increases hospital compliance burden. However, the Trump administration and the Health and Human Services counter that more transparent pricing will drive down patient costs and allow them to make more informed health-care-related decisions.1
Challenging Times for Antibiotic Drug Producers
Exiting from their less effective list of antibiotics and having to deal with hospitals unwilling to pay higher prices for new treatments, pharmaceutical giants, such as Novartis and Allergan, have started limiting investments in this sector to focus on more profitable medications. The lack of investment in the antibiotic space is causing start-ups to run into insolvency, hindering future innovations in new antibiotics. In addition, large antibiotic manufacturers face cash constraints, further limiting capital to an already sparse venture capital environment.2
Healthcare Spending Picks-up
Nationwide healthcare spending rose by 4.6% to $3.65 trillion between 2017 and 2018, even though retail prescription drug prices fell by 1% due to lower generic prices and weaker pricing power of brand name drugs. The ACA tax on insurers caused most of the increase in health care costs, according to federal officials. The net cost of private insurance grew by 15.3% to $164 billion and partially resulted in Medicaid spending to rise by 3% to about $598 billion between 2017 and 2018.3
Increase in Hospice Services Acquisitions
Humana has announced it will acquire Enclara Healthcare, a large hospice pharmacy and prescription benefit manager. The acquisition continues the trend of pharmacies’ efforts to extend its customer base. Hospice patients have long been a target customer base for large insurance agencies. Patients will receive services via mail order, in-home pharmacy, and access to the company’s enhanced mobile medication management platform.4
AI Decreases Physician Overtime
According to a survey by MIT Technology Review, 78% of the 908 medical professionals from the U.S. and U.K polled indicated AI (artificial intelligence) improved their workflows and boosted productivity. Further, 80% of healthcare institutions expect to spend more on AI applications in the future. As a result of AI, healthcare professionals experience less burnout, use the extra time to schedule more patients and match them more effectively with specialists. The adoption of new technology in the healthcare field could address the $4.6 billion annual cost of elevated physician turnover leading to lower clinical hours spent, based on a study published in the Annals of Internal Medicine.5 6
Households Willing to Switch Healthcare Providers for Lower Costs
According to 1,000 consumers surveyed by AccessOne, 33% of individuals and 43% of households with children indicated they would consider switching providers to access affordable payment arrangements to cover their cost of care. This comes at a time when healthcare costs continue to balloon and growing public discontent of unaffordable healthcare.7
Wearables Work to Minimize Doctor Visits
The Apple Watch detects atrial fibrillation (AFib) 84% of the time, notifying wearers to confirm the condition with a medical professional. The device has the potential for commercial uses to monitor and assess people outside of clinical settings. Researchers recommend additional testing as the Apple Watch lags behind AFib detection when compared to traditional blood pressure monitoring medical devices.8
Increased Scrutiny on “Medicare for All” in Election Year
As the 2020 election gears up, all expect the additional discussion and focus on the economics of financing healthcare in the US. A full-scale single-payer health insurance program or “Medicare for All,” is estimated to cost taxpayers $32 trillion over ten years while it covers the remaining 32.2 million uninsured people in the country, according to a study by the Urbana Institute and Commonwealth Fund. Savings to American households will likely amount to $886 billion due to the elimination of premiums and deductibles. Other options, such as government-run options with substantial government subsidies proposed by Biden and Buttigieg, is estimated to cost $1.3 trillion over the same period while insuring about 25.6 million uninsured people.9
Largest Transactions Closed
- Celgene Corporation
- Bristol-Myers Squibb Company
- Worldwide Rights to Otezla of Celgene Corporation
- Amgen Inc.
- Acelity, Inc.
- 3M Company
- Medidata Solutions, Inc.
- Dassault Systems Americas Corp.
- Spark Therapeutics, Inc.
- Roche Holding AG
- Cambrex Corporation
- Permira Advisers Ltd.
- Genomic Health, Inc.
- Exact Sciences Corporation
- Myovant Sciences/Enzyvant Therapeutics/Altavant Sciences/Spirovant Sciences/Urovant Sciences Ltd.
- Sumitomo Dainippon Pharma Co., Ltd.
- Alder BioPharmaceuticals, Inc.
- H. Lundbeck A/S
- Corindus Vascular Robotics, Inc.
- Siemens Medical Solutions USA, Inc.
This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.
EBIT - Earnings Before Interest and Taxes