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Friday catch-up

A rather busy week to be sure.   Not exactly beach reading, but plenty of food for thought while you’re manning the grill, watching the game, or lolling about.

Reform rollout

The biggest news was the decline in health care costs, an occurrence that surprised everyone.  If you missed it, healthcare spending declined by 1.4% in the first quarter of 2014 – earlier predictions had it increasing by almost 10 percent.  

Pundits who had cited the earlier incorrect figures as evidence of the horribleness of Obamacare are looking pretty, well, stupid.  If they blame increases on O-care, shouldn’t they attribute declines to it as well?  Not if you’re the Wall Street Journal...who gets this week’s prize for convoluting facts to fit their worldview…

Before we get too giddy, I’d expect costs to bump up this quarter and next as the newly insured start using their benefits.  Hopefully PPACA advocates won’t make the mistake opponents have and read too much into the numbers.  We’re a long way from understanding the impact of PPACA on cost trends…

A helpful analysis by the Kaiser Family Foundation on the impact of Medicaid non-expansion in the South reveals:

  • nearly 80% of the 4.8 million uninsured US adults who fall into the coverage gap (no Medicaid and can’t afford insurance) live in the South;
  • the coverage gap in the South disproportionately affects people of color.

Another KFF report indicates:

  • 57% of Exchange enrollees were previously uninsured
  • many are enrolled in narrow-network plans
  • most think their health plans are a good value, but some still struggle with the premiums

The work comp world

With the reports that Aetna is looking to sell Coventry’s work comp business, there has been lots of talk about who’s going to do the deal. CWC’s revenues have been declining for the last three years, so there isn’t a huge amount of interest among financial buyers.  Apax/OneCall is the early frontrunner; the investment firm seems to have an insatiable appetite, bottomless cash (and credit) resources, and a remarkable ability to see high values where other potential investors do not.

A key point worth pondering – Aetna has NOT re-contracted their provider network; any buyer will have to convince providers to sign a work comp-only contract.  Considering comp is just over 1 percent of US medical spend, and many providers never see a work comp patient, and  very, very few providers have more than one work comp patient a month, and (sources tell me) at least half of the Coventry work comp network’s providers likely don’t even know they are IN the Coventry work comp network, that’s going to be a heavy lift.

A timely report from WCRI analyzes Ambulatory Surgical Center costs, prices, and expansion; the brainiacs in Boston have come looked at 23 states and find there’s not a lot of consistency across the group with ASCs less costly than hospitals in some states and pricier in others.  Another report looks just at prices paid to ASCs – which are also wildly variable…

The agenda for this fall’s Las Vegas National Workers Comp meeting is out; one timely session will feature principals from three investment firms very active in the work comp space; they will be discussing the role of private equity in workers’ comp.

Make those plans now!

One thought on “Friday catch-up”

  1. Joe, I did not get to see the WCRI report yet, but ownership profiling will weigh in heavily on ASC cost structures. After having run a very ‘interesting’ set of ASC’s in the past, it is safe to assume pure physician ownership will most often lead to higher costs. CPT stacking is a sport to these physicians and to the surprise of nobody, they refer the highest margin procedures to ASC’s they have an equity interest. The lower margin procedures will often go to a hospital, even when an ASC makes more sense.

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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