The document summarizes M&A activity and trends in the healthcare industry in 2011. There was approximately 1,250 healthcare transactions in 2011, a nearly 10% increase from 2010, making it one of the most active deal markets. Issues like healthcare reform, rising costs, expiring drug patents, and digital health records are fueling M&A activity. The Supreme Court upheld some provisions of the ACA but struck down the Medicaid expansion penalty. Compliance costs have driven small organizations to sell to larger companies.
Life Science Compliance Update November 2016Clay Willis
This document discusses value-based contracts (VBCs) and their potential impact on government pricing programs. VBCs tie drug prices or reimbursement to performance criteria or outcomes. Current guidance does not provide clear direction on how to evaluate VBCs for Medicaid pricing programs. The document suggests treating some VBCs as "temporal bundles," which would require complex pricing methodologies and adjustments over time. This could impact Medicaid rebates, 340B prices, and require manufacturers to develop processes for initial pricing estimates and true-ups. Manufacturers need coordinated approaches across functions to evaluate VBCs and understand impacts on commercial and government programs.
This document summarizes a virtual conference on market access in the era of specialty and biotech drugs. It notes that by 2016, 8 of the top 10 worldwide drugs will be specialty drugs. It also discusses industry trends of developing more targeted therapies, a substantial pipeline of specialty drugs, and the need to demonstrate value to payers facing high costs. Upcoming sessions at the conference will address recent payment developments like accountable care organizations, comparative effectiveness research, and CMS coverage policies.
WellPoint is the largest health insurance provider in the US with 34 million members. Through strategic acquisitions, WellPoint has expanded its market presence and product offerings. The document analyzes WellPoint's strategy, business model, and competitive environment. It recommends WellPoint aggressively target national accounts, Medicare participants, and early retirees to continue its growth trajectory.
The document summarizes The Walden Group's Q2 2012 Strategic Healthcare M&A Report. It discusses the impact of the Supreme Court upholding the Affordable Care Act individual mandate while invalidating Medicaid expansion requirements. This weakens the ACA's effectiveness in expanding coverage and addressing rising costs and quality issues. It argues that for real reform, patients need more responsibility, providers must adhere to standards, prevention should be rewarded, and FDA regulation balanced. The changes will pressure providers and medtech companies to focus on innovative, higher-margin technologies that improve outcomes and efficiencies.
PBMs Presentation (Holden Young - Roseman University of Health Sciences)HoldenYoung3
PBMs are companies that manage pharmacy benefits on behalf of payers like health insurers and employers. They negotiate drug prices, create formularies, and provide services like drug utilization reviews. The top 3 PBMs, CVS Caremark, OptumRx, and Express Scripts, account for 76% of prescription claims in the US. PBMs make money through rebates from drug manufacturers, service fees, and keeping the difference between the drugs' discounted prices and what they reimburse pharmacies. They have faced criticism for lack of transparency in their business practices and drug pricing.
This document discusses new strategies for pharmaceutical companies to bundle complementary products and services around drugs to improve outcomes for chronic diseases. Traditionally, healthcare products and services are evaluated and reimbursed individually, but this limits optimization for diseases like diabetes where costs are driven more by complications than individual treatments. The document explores bundling strategies like capitation payments and value-added services around drugs. However, patent expirations threaten many drug franchises in cardiovascular and respiratory areas. For combination solutions to succeed, companies need to demonstrate improved outcomes from integrated products and services compared to individual components.
Accountability in Healthcare: Collaboration and Analytics are KeyBukmarker
This document discusses accountability in the healthcare industry. Key points include:
- Healthcare providers, insurers, life sciences companies, and other stakeholders face increasing demands for cost control while improving quality of care and making the system more patient-centric.
- The Affordable Care Act aims to provide affordable healthcare to more Americans and represents an irreversible trend toward greater accountability in the industry.
- All players must find new business models using collaboration and data analytics to navigate this changing environment focused on evidence-based and patient-centric care.
Wellpoint is the largest health insurance provider nationally with over 34 million members. Through strategic acquisitions, Wellpoint has expanded its market presence and now operates Blue Cross Blue Shield plans in 14 states. Wellpoint aims to continue growing by targeting the uninsured, elderly, and large national employer accounts. Its strategy also includes wellness initiatives like investments in luxury health resorts to promote preventative healthcare and keep membership healthy.
Life Science Compliance Update November 2016Clay Willis
This document discusses value-based contracts (VBCs) and their potential impact on government pricing programs. VBCs tie drug prices or reimbursement to performance criteria or outcomes. Current guidance does not provide clear direction on how to evaluate VBCs for Medicaid pricing programs. The document suggests treating some VBCs as "temporal bundles," which would require complex pricing methodologies and adjustments over time. This could impact Medicaid rebates, 340B prices, and require manufacturers to develop processes for initial pricing estimates and true-ups. Manufacturers need coordinated approaches across functions to evaluate VBCs and understand impacts on commercial and government programs.
This document summarizes a virtual conference on market access in the era of specialty and biotech drugs. It notes that by 2016, 8 of the top 10 worldwide drugs will be specialty drugs. It also discusses industry trends of developing more targeted therapies, a substantial pipeline of specialty drugs, and the need to demonstrate value to payers facing high costs. Upcoming sessions at the conference will address recent payment developments like accountable care organizations, comparative effectiveness research, and CMS coverage policies.
WellPoint is the largest health insurance provider in the US with 34 million members. Through strategic acquisitions, WellPoint has expanded its market presence and product offerings. The document analyzes WellPoint's strategy, business model, and competitive environment. It recommends WellPoint aggressively target national accounts, Medicare participants, and early retirees to continue its growth trajectory.
The document summarizes The Walden Group's Q2 2012 Strategic Healthcare M&A Report. It discusses the impact of the Supreme Court upholding the Affordable Care Act individual mandate while invalidating Medicaid expansion requirements. This weakens the ACA's effectiveness in expanding coverage and addressing rising costs and quality issues. It argues that for real reform, patients need more responsibility, providers must adhere to standards, prevention should be rewarded, and FDA regulation balanced. The changes will pressure providers and medtech companies to focus on innovative, higher-margin technologies that improve outcomes and efficiencies.
PBMs Presentation (Holden Young - Roseman University of Health Sciences)HoldenYoung3
PBMs are companies that manage pharmacy benefits on behalf of payers like health insurers and employers. They negotiate drug prices, create formularies, and provide services like drug utilization reviews. The top 3 PBMs, CVS Caremark, OptumRx, and Express Scripts, account for 76% of prescription claims in the US. PBMs make money through rebates from drug manufacturers, service fees, and keeping the difference between the drugs' discounted prices and what they reimburse pharmacies. They have faced criticism for lack of transparency in their business practices and drug pricing.
This document discusses new strategies for pharmaceutical companies to bundle complementary products and services around drugs to improve outcomes for chronic diseases. Traditionally, healthcare products and services are evaluated and reimbursed individually, but this limits optimization for diseases like diabetes where costs are driven more by complications than individual treatments. The document explores bundling strategies like capitation payments and value-added services around drugs. However, patent expirations threaten many drug franchises in cardiovascular and respiratory areas. For combination solutions to succeed, companies need to demonstrate improved outcomes from integrated products and services compared to individual components.
Accountability in Healthcare: Collaboration and Analytics are KeyBukmarker
This document discusses accountability in the healthcare industry. Key points include:
- Healthcare providers, insurers, life sciences companies, and other stakeholders face increasing demands for cost control while improving quality of care and making the system more patient-centric.
- The Affordable Care Act aims to provide affordable healthcare to more Americans and represents an irreversible trend toward greater accountability in the industry.
- All players must find new business models using collaboration and data analytics to navigate this changing environment focused on evidence-based and patient-centric care.
Wellpoint is the largest health insurance provider nationally with over 34 million members. Through strategic acquisitions, Wellpoint has expanded its market presence and now operates Blue Cross Blue Shield plans in 14 states. Wellpoint aims to continue growing by targeting the uninsured, elderly, and large national employer accounts. Its strategy also includes wellness initiatives like investments in luxury health resorts to promote preventative healthcare and keep membership healthy.
Healthcare reform: Five trends to watch as the Affordable Care Act turns fivePwC
In its first five years, the Affordable Care Act (ACA) has had a profound, and likely irreversible, impact on the business of healthcare. Industry leaders must rethink strategies to remain relevant in a post-ACA world.
Web Page: http://www.pwc.com/us/acahealthreform
Jeff Campbell, Executive Vice President and CFO of McKesson, presented at the Goldman Sachs Healthcare Conference on June 14, 2006. McKesson generated $88 billion in revenues in fiscal year 2006, with strong growth over the past six years. McKesson has leadership positions across pharmaceutical distribution, medical supplies, and healthcare IT. The company is well positioned for ongoing growth through leadership in growing areas of healthcare and long-term customer relationships.
Healthcare systems around the world are fraught with challenges that reveal the cracks in today's operating models. But a nascent trend that is quickly becoming an imperative is poised to transform the industry: the consumerization of healthcare. By promoting and supporting more control, awareness, and responsibility on the part of the consumer, healthcare companies can drive a dramatic improvement in population health and reduction in costs.
The document discusses the potential impact of 2010 health care reform on WellPoint, Inc., a major health insurance carrier. It outlines key provisions of the reform legislation, analyzes how different parts of WellPoint's business may be affected in terms of membership mix, costs and revenues. The document also reviews WellPoint's financial and enrollment data and considers options for marketing and distribution strategies in light of the regulatory changes.
Banc of America Securities 2006 Health Care Conference Presentationfinance2
Jeff Campbell, Executive Vice President and CFO of McKesson Corporation, presented at the Bank of America Healthcare Conference on May 17, 2006. McKesson is a healthcare services and information technology company founded in 1833 with over $88 billion in revenues in FY2006. Campbell discussed McKesson's market leading positions in pharmaceutical distribution and medical-surgical supplies, as well as its growth strategy of creating long-term customer relationships through customized solutions. He also reviewed McKesson's financial performance over the past six years, which has included strong revenue growth and increasing diluted earnings per share, excluding one-time litigation charges.
Robert Baird Growth Stock Conference Presentationsfinance2
Jeff Campbell, Executive Vice President and CFO of McKesson Corporation, presented at the Robert W. Baird Conference on May 10, 2006. The presentation provided an overview of McKesson, including its financial performance over the past six years, market positioning, and growth opportunities. McKesson's revenues have grown from $36.7 billion in FY00 to $88.1 billion in FY06, and diluted EPS has increased from $0.65 to $2.44 over the same period. The presentation also reviewed McKesson's segments and their financial results, guidance for FY07 EPS, and positioning in key healthcare areas.
The document provides an overview and analysis of MedcoHealth Solutions (MHS), a pharmacy benefits manager. It describes MHS's business model, growth opportunities in specialty pharmacy and generics, competitive landscape, and financial projections. The Penn State Investment Association team recommends benching MHS until after its November 1 earnings report, citing risks around contract renewals and a lawsuit.
Life Sciences Implications of the U.S. Affordable Care ActCognizant
Life sciences companies will see substantial changes due to the upholding of the U.S. Affordable Care Act (ACA), and we offer a map of some of the forseeable developments for drug and device manufacturers, biotechnology innovators, and others. A primer on ACA impact on revenue opportunities, earnings pressures, pricing effectiveness, compliance and business models.
Employer drug plans are facing unsustainable rising costs of 10% per year due to factors within the current system. While increased drug usage and new drugs contribute to higher costs, the major drivers are a lack of evidence-based formulary management, under-utilization of lower-cost generics, and non-transparent pricing and dispensing fee practices. With costs being passed on to customers and employees, reforms are urgently needed to reduce unnecessary spending and rein in unsustainable cost increases.
2003 Merrill Lynch Global Healthcare Conferencefinance2
This document summarizes John Hammergren's presentation on February 5, 2003 at the 2003 Merrill Lynch Global Healthcare Conference. The presentation discusses McKesson Corporation's market overview and strategy, business unit performance, focus on innovation, and key highlights. McKesson is the largest healthcare services company in North America, with $46 billion in annual revenues across pharmaceutical, medical-surgical, and information solutions. The presentation notes McKesson's continued revenue growth and margin expansion across business units, driven by favorable market factors of an aging population demanding higher quality care.
The Alliance for Regenerative Medicine (ARM) is the leading global advocate for regenerative and advanced therapies. It fosters research, development, investment, and commercialization of transformative treatments and cures. ARM leverages the expertise of its members to promote legislative, regulatory, and public support for this expanding field of medicine.
Insurance M&A activity in the US rose to unprecedented levels in 2015, surpassing what had been a banner year in 2014. There were 476 announced deals in the insurance sector, 79 of which had disclosed deal values with a total announced value of $53.3 billion. This was a significant increase from the 352 announced deals in 2014, of which 73 had disclosed deal values with a total announced value of $13.5 billion. Furthermore, unlike prior years where US insurance deal activity was isolated to specific subsectors, 2015 saw a significant increase in deal activity in all industry subsectors.
United Health Group[PDF Document] Earnings Releasefinance3
UnitedHealth Group reported first quarter 2008 results, with revenues increasing 7% to $20.3 billion and people served growing by 2 million to 73 million. Operating margin was 8.4% and net earnings per share grew 5% to $0.78. However, the company reduced its full-year 2008 outlook by 10% to a range of $3.55-$3.60 per share due to higher than expected medical costs and lower investment income. The company remains committed to $4 billion in share repurchases for 2008.
Prescription For Success Paper (PI Knowledge Leadership Publication)Jon Hansen
Health care in Crisis: “Insolvency Is Seen Closer for Social Security and Medicare” New York Times (May 12, 2009)
In the “Prescription for Success” white paper I closely examine these as well as other case references, and in the process “provide the operational framework for a successful implementation of an automated health care procurement system.” Referencing the proven guidelines established by Bellwether Software Corporation’s highly successful track record of delivering results over the past 23 years, this paper will hopefully become an indispensable resource for health care organizations looking to “control their costs.”
This white paper explores how the health care reform bill will affect Medicare Advantage, Part D and Medicare Supplement plans, and how savvy agents can capitalize on the opportunities that will inevitably arise from this change.
McKesson Investor/Analyst Day (Part II: Pharmaceutical and Medical-Surgical...finance2
The document provides an overview and agenda for a McKesson Supply Solutions business meeting. It summarizes the company's financial performance, growth strategies across different business units including pharmaceuticals, automation, health solutions, and medical-surgical solutions. It highlights momentum in revenue growth, operating margin expansion, and market leadership across North America. The agenda outlines plans to continue this momentum through business unit execution, specialty pharmaceutical services, and driving further operating margin improvements.
The document provides Aetna's projected 2008 financial information including operating earnings of $4.00 per share, an operating expense ratio improvement of 50 basis points, a pretax operating margin lower than 2007, weighted average diluted shares of less than 505 million, medical membership growth between 850,000-900,000, and health care revenue growth of at least 15%. It also notes the projections are provided as of April 24, 2008 and are forward-looking statements subject to risks.
The document discusses the need for active strategic planning to address changing industry trends in healthcare delivery. It outlines political, economic, and regulatory factors impacting hospitals and emphasizes the importance of monitoring performance, making tough decisions about services, physician integration, and addressing unprofitable service lines. Recommendations include understanding community needs, assessing service sustainability, and continually monitoring service line performance.
Accountable Care Organizations and The Medicare Shared Savings ProgramPhytel
Population Health Management, Enabled by Information Technology, Will Be Critical To Success. In 2012, the Centers for Medicare and Medicaid Services (CMS) will launch a shared-savings program with accountable care organizations (ACOs). ACOs that meet specified quality goals will be able to split with CMS any savings that surpass a minimum level. The challenge facing ACOs is choosing the right information technologies so they can track the health status of and the care provided to every one of their patients to produce significant savings or meet the quality benchmarks of CMS
How to Manage Population Health Effectively in Accountable Care OrganizationsPhytel
The Affordable Care Act authorized a Medicare shared-savings program for accountable care organizations, and private payers are also contracting with ACOs. To succeed, ACOs must learn how to manage population health effectively.
The document provides an overview of Accountable Care Organizations (ACOs) and their relationship to the pharmaceutical industry. It discusses the goals of ACOs in improving quality of care while reducing costs. While initial results of ACOs are mixed, with some evidence of cost savings and improved quality, establishing the infrastructure has incurred significant start-up costs. The document also reviews the current pharmaceutical landscape and identifies opportunities for collaboration between ACOs and pharmaceutical companies, such as reducing hospital readmissions through better treatment adherence and education.
Healthcare reform: Five trends to watch as the Affordable Care Act turns fivePwC
In its first five years, the Affordable Care Act (ACA) has had a profound, and likely irreversible, impact on the business of healthcare. Industry leaders must rethink strategies to remain relevant in a post-ACA world.
Web Page: http://www.pwc.com/us/acahealthreform
Jeff Campbell, Executive Vice President and CFO of McKesson, presented at the Goldman Sachs Healthcare Conference on June 14, 2006. McKesson generated $88 billion in revenues in fiscal year 2006, with strong growth over the past six years. McKesson has leadership positions across pharmaceutical distribution, medical supplies, and healthcare IT. The company is well positioned for ongoing growth through leadership in growing areas of healthcare and long-term customer relationships.
Healthcare systems around the world are fraught with challenges that reveal the cracks in today's operating models. But a nascent trend that is quickly becoming an imperative is poised to transform the industry: the consumerization of healthcare. By promoting and supporting more control, awareness, and responsibility on the part of the consumer, healthcare companies can drive a dramatic improvement in population health and reduction in costs.
The document discusses the potential impact of 2010 health care reform on WellPoint, Inc., a major health insurance carrier. It outlines key provisions of the reform legislation, analyzes how different parts of WellPoint's business may be affected in terms of membership mix, costs and revenues. The document also reviews WellPoint's financial and enrollment data and considers options for marketing and distribution strategies in light of the regulatory changes.
Banc of America Securities 2006 Health Care Conference Presentationfinance2
Jeff Campbell, Executive Vice President and CFO of McKesson Corporation, presented at the Bank of America Healthcare Conference on May 17, 2006. McKesson is a healthcare services and information technology company founded in 1833 with over $88 billion in revenues in FY2006. Campbell discussed McKesson's market leading positions in pharmaceutical distribution and medical-surgical supplies, as well as its growth strategy of creating long-term customer relationships through customized solutions. He also reviewed McKesson's financial performance over the past six years, which has included strong revenue growth and increasing diluted earnings per share, excluding one-time litigation charges.
Robert Baird Growth Stock Conference Presentationsfinance2
Jeff Campbell, Executive Vice President and CFO of McKesson Corporation, presented at the Robert W. Baird Conference on May 10, 2006. The presentation provided an overview of McKesson, including its financial performance over the past six years, market positioning, and growth opportunities. McKesson's revenues have grown from $36.7 billion in FY00 to $88.1 billion in FY06, and diluted EPS has increased from $0.65 to $2.44 over the same period. The presentation also reviewed McKesson's segments and their financial results, guidance for FY07 EPS, and positioning in key healthcare areas.
The document provides an overview and analysis of MedcoHealth Solutions (MHS), a pharmacy benefits manager. It describes MHS's business model, growth opportunities in specialty pharmacy and generics, competitive landscape, and financial projections. The Penn State Investment Association team recommends benching MHS until after its November 1 earnings report, citing risks around contract renewals and a lawsuit.
Life Sciences Implications of the U.S. Affordable Care ActCognizant
Life sciences companies will see substantial changes due to the upholding of the U.S. Affordable Care Act (ACA), and we offer a map of some of the forseeable developments for drug and device manufacturers, biotechnology innovators, and others. A primer on ACA impact on revenue opportunities, earnings pressures, pricing effectiveness, compliance and business models.
Employer drug plans are facing unsustainable rising costs of 10% per year due to factors within the current system. While increased drug usage and new drugs contribute to higher costs, the major drivers are a lack of evidence-based formulary management, under-utilization of lower-cost generics, and non-transparent pricing and dispensing fee practices. With costs being passed on to customers and employees, reforms are urgently needed to reduce unnecessary spending and rein in unsustainable cost increases.
2003 Merrill Lynch Global Healthcare Conferencefinance2
This document summarizes John Hammergren's presentation on February 5, 2003 at the 2003 Merrill Lynch Global Healthcare Conference. The presentation discusses McKesson Corporation's market overview and strategy, business unit performance, focus on innovation, and key highlights. McKesson is the largest healthcare services company in North America, with $46 billion in annual revenues across pharmaceutical, medical-surgical, and information solutions. The presentation notes McKesson's continued revenue growth and margin expansion across business units, driven by favorable market factors of an aging population demanding higher quality care.
The Alliance for Regenerative Medicine (ARM) is the leading global advocate for regenerative and advanced therapies. It fosters research, development, investment, and commercialization of transformative treatments and cures. ARM leverages the expertise of its members to promote legislative, regulatory, and public support for this expanding field of medicine.
Insurance M&A activity in the US rose to unprecedented levels in 2015, surpassing what had been a banner year in 2014. There were 476 announced deals in the insurance sector, 79 of which had disclosed deal values with a total announced value of $53.3 billion. This was a significant increase from the 352 announced deals in 2014, of which 73 had disclosed deal values with a total announced value of $13.5 billion. Furthermore, unlike prior years where US insurance deal activity was isolated to specific subsectors, 2015 saw a significant increase in deal activity in all industry subsectors.
United Health Group[PDF Document] Earnings Releasefinance3
UnitedHealth Group reported first quarter 2008 results, with revenues increasing 7% to $20.3 billion and people served growing by 2 million to 73 million. Operating margin was 8.4% and net earnings per share grew 5% to $0.78. However, the company reduced its full-year 2008 outlook by 10% to a range of $3.55-$3.60 per share due to higher than expected medical costs and lower investment income. The company remains committed to $4 billion in share repurchases for 2008.
Prescription For Success Paper (PI Knowledge Leadership Publication)Jon Hansen
Health care in Crisis: “Insolvency Is Seen Closer for Social Security and Medicare” New York Times (May 12, 2009)
In the “Prescription for Success” white paper I closely examine these as well as other case references, and in the process “provide the operational framework for a successful implementation of an automated health care procurement system.” Referencing the proven guidelines established by Bellwether Software Corporation’s highly successful track record of delivering results over the past 23 years, this paper will hopefully become an indispensable resource for health care organizations looking to “control their costs.”
This white paper explores how the health care reform bill will affect Medicare Advantage, Part D and Medicare Supplement plans, and how savvy agents can capitalize on the opportunities that will inevitably arise from this change.
McKesson Investor/Analyst Day (Part II: Pharmaceutical and Medical-Surgical...finance2
The document provides an overview and agenda for a McKesson Supply Solutions business meeting. It summarizes the company's financial performance, growth strategies across different business units including pharmaceuticals, automation, health solutions, and medical-surgical solutions. It highlights momentum in revenue growth, operating margin expansion, and market leadership across North America. The agenda outlines plans to continue this momentum through business unit execution, specialty pharmaceutical services, and driving further operating margin improvements.
The document provides Aetna's projected 2008 financial information including operating earnings of $4.00 per share, an operating expense ratio improvement of 50 basis points, a pretax operating margin lower than 2007, weighted average diluted shares of less than 505 million, medical membership growth between 850,000-900,000, and health care revenue growth of at least 15%. It also notes the projections are provided as of April 24, 2008 and are forward-looking statements subject to risks.
The document discusses the need for active strategic planning to address changing industry trends in healthcare delivery. It outlines political, economic, and regulatory factors impacting hospitals and emphasizes the importance of monitoring performance, making tough decisions about services, physician integration, and addressing unprofitable service lines. Recommendations include understanding community needs, assessing service sustainability, and continually monitoring service line performance.
Accountable Care Organizations and The Medicare Shared Savings ProgramPhytel
Population Health Management, Enabled by Information Technology, Will Be Critical To Success. In 2012, the Centers for Medicare and Medicaid Services (CMS) will launch a shared-savings program with accountable care organizations (ACOs). ACOs that meet specified quality goals will be able to split with CMS any savings that surpass a minimum level. The challenge facing ACOs is choosing the right information technologies so they can track the health status of and the care provided to every one of their patients to produce significant savings or meet the quality benchmarks of CMS
How to Manage Population Health Effectively in Accountable Care OrganizationsPhytel
The Affordable Care Act authorized a Medicare shared-savings program for accountable care organizations, and private payers are also contracting with ACOs. To succeed, ACOs must learn how to manage population health effectively.
The document provides an overview of Accountable Care Organizations (ACOs) and their relationship to the pharmaceutical industry. It discusses the goals of ACOs in improving quality of care while reducing costs. While initial results of ACOs are mixed, with some evidence of cost savings and improved quality, establishing the infrastructure has incurred significant start-up costs. The document also reviews the current pharmaceutical landscape and identifies opportunities for collaboration between ACOs and pharmaceutical companies, such as reducing hospital readmissions through better treatment adherence and education.
Running Head: HEALTHCARE 1
HEALTHCARE 2
Hospital Mergers and Acquisitions
Joseph Toole
Public Health Policy Research
29 Oct 2016
Identify a legal issue confronting a healthcare policy from your state. Briefly describe the legal issue.
One of the legal issues that would affect the healthcare sector within the United States involves the hospital's mergers. The ever changing market, as well as business environment, has continued to force hospitals to enter into mergers without considering or adhering to all the set rules and regulation on mergers. Hospitals are obliged to merge due to various reasons. One of the goals that hospitals aim while establishing a merger the assumption that they are well placed financially when operating as one compared to operating individually (Feinstein, 2011). Other reason for embracing merger include, increased the need to lower the operation cost. In the modern society majority of the health care institutions are finding it hard to realize the set goals as well as remaining profitable.
Like other business are struggling, health care sector is not spared. Uncertain revenue flow has continued to halt hospital business while the certain operation costs have continued to increase every day. Over the past decades, hospitals were focusing more on efficient management and paying least attention or no attention on ways to maintain the operation costs as low as possible to ensure increased profitability (Feinstein, 2011). The unpredictable business environment has made revenue management a very complex task that if gotten wrong, many of business and hospitals are forced to close down or enter into a merger. The merger is seen as the only positive alternative by hospitals to ensure reduced burden on the scarce resources. Also, there is a general perception that mergers would help to reduce or control the operational costs effectively.
Need to share cost involved in acquired or stabling new and modern health care facility and technology is another reason why hospitals from mergers. The cost associated with new technology and modern infrastructure is huge. Thus the objective can only be achieved through partnerships such as mergers. The merger also results in increased bargaining power or net creditworthiness of the hospitals thus increasing their chances of securing loans from financial institutions to procure new technology or health care infrastructure.
The urge to increase the business market share or overcome competition is another force that is forcing hospitals to enter into mergers. Increased access to more markets is an essential strategy embraced used by organizations to enjoy increased revenue generated as well as the tax gains (Davis, 2012).
Currently, t ...
Consumer-Centric Healthcare: 2015--The Tipping Point Has Arrived (Report by William Blair)
Consumers—in tandem with disruptive healthcare technology and healthcare services providers—are the key to solving many of US healthcare's woes, particularly the unsustainably high cost of care.
Public exchanges, private exchanges, and high-deductible health plans are growing quickly. Disruptive forces of competition will create a lower-cost system that promotes the growth of highly efficient, low-cost, and high-quality providers and technologies.
The continued movement of financial and quality risk back to providers (and increasingly to consumers themselves) is encouraging providers and consumers to seek preventive medicine, cost efficiency, clinical efficacy, and overall value in healthcare. In turn, this could drive significant change regarding the primary point of care delivery (rapidly moving outside the hospital), the overall cost of healthcare and investment decisions made by healthcare providers.
Consumer-centric healthcare providers will experience strong top- and bottom-line growth over the coming years. Investors in both the public and private-equity markets will achieve superior long-term returns by identifying and investing in these companies.
Medical devices equipped for the futureBrand Acumen
The document discusses disruptive changes underway in the medical devices industry that will transform it over the next 5 years. It identifies 5 major disruptors: 1) a power shift to payers and providers who are focusing more on cost and value-based evidence, 2) heightened regulatory scrutiny that is increasing compliance costs, 3) unclear sources of innovation as R&D spending yields diminishing returns, 4) new healthcare delivery models that are shifting care settings out of hospitals, and 5) a need to serve lower socioeconomic classes in developing markets. The disruptors threaten $34 billion in industry profits by 2020 but taking appropriate measures could help maintain revenue growth and offset margin declines, preserving significant value for medical device companies.
Historically, the medical device industry has been highly attractive and relatively stable. As a consequence, established players have been able to compete successfully across the device spectrum, applying common business models and processes without much need for differentiation.
The future, however, is very different as disruptive change is underway. Companies will need to look at new segments and offer end-to-end solutions to secure additional revenue and maintain their profit margins.
Provider/payor convergence: A prescription for growth?Grant Thornton LLP
As bottom lines shrink, payors and providers are beginning to see convergence, or vertical integration, as the path to growth, Panelists from Johns Hopkins Institutions, Buchanan Ingersoll & Rooney PC and Grant Thornton LLP share their experience.
Life Science Compliance Update November 2016Clay Willis
This document summarizes an article about value-based contracts (VBCs) between pharmaceutical companies and payers, and the potential implications of these contracts for government drug pricing programs. VBCs tie the price or reimbursement of drugs to certain outcomes or performance metrics. While VBCs are gaining momentum, there is little guidance on how they impact programs like Medicaid's Best Price. The article argues that manufacturers need a coordinated process across departments to evaluate VBCs and understand their effects on both commercial and government programs. It also provides an overview of VBC trends in the industry and discusses applying current government pricing guidance to these new complex agreements.
In the coming years the United States will find themselves going through a number of changes within the Social Security Administration which will affect the Health Care Industry as we know it “Hospital size has long been an area of discussion and debate in the U.S. healthcare industry. Questions have consistently focused on cost management or efficiency in large versus small hospitals. A persistent question among researchers is whether efficiencies are associated with larger facilities through economies of scale, or if there are alternate scenarios that play a significant part in hospital cost and efficiency” (2009, JHM). Since the Affordable Health Care Act was established it made obtaining health care much more affordable and accessible, but at the same time there has to be some cut back.
The document discusses several major trends in the US healthcare industry in 2014 as the Affordable Care Act continues implementation. Key points include:
1) Companies are reinventing themselves and blurring traditional lines as insurers seek to directly manage healthcare delivery to control costs, providers enter the insurance business, and retailers expand healthcare services.
2) With traditional venture capital pulling back from healthcare, corporate venture arms are investing more heavily in startups, bringing cash as well as expertise, connections, and other resources.
3) Employers are increasingly interested in private health insurance exchanges as a way to define their contribution while giving employees more choice and potentially reducing administrative costs and budget unpredictability.
Market Power, Transactions Costs, and the Entryof Accountabl.docxinfantsuk
Market Power, Transactions Costs, and the Entry
of Accountable Care Organizations in Health Care
H. E. Frech III.1 • Christopher Whaley2 •
Benjamin R. Handel3 • Liora Bowers4 •
Carol J. Simon5 • Richard M. Scheffler6
Published online: 15 July 2015
� Springer Science+Business Media New York 2015
Abstract ACOs were promoted in the 2010 Patient Protection and Affordable
Care Act (ACA) to incentivize integrated care and cost control. Because they
involve vertical and horizontal collaboration, ACOs also have the potential to harm
competition. In this paper, we analyze ACO entry and formation patterns with the
use of a unique, proprietary database that includes public (Medicare) and private
ACOs. We estimate an empirical model that explains county-level ACO entry as a
function of: physician, hospital, and insurance market structure; demographics; and
other economic and regulatory factors. We find that physician concentration by
organization has little effect. In contrast, physician concentration by geographic
Earlier versions of this paper were presented at the International Industrial Organization Conference in
Boston, the International Health Economics Association meeting in Sydney, the Allied Social Science
meetings in Philadelphia, the ACO Workshop in Berkeley, and the Bates White Health Care and Life
Science Seminar in Washington, D.C. Thanks are due to the participants of those meetings, especially
Martha Starr, Dean Rice, and Martin Gaynor for helpful comments. Thanks are also due to Sandra
Decker, Abe Dunn, Robert Obstfeldt, Jim Rebitzer, Michael Morrisey, Jessica Foster, and Lee Mobley
for helpful comments on earlier versions and to the referees and editor of this journal for more recent
useful comments.
& H. E. Frech III.
[email protected]
Christopher Whaley
[email protected]
Benjamin R. Handel
[email protected]
Liora Bowers
[email protected]
Carol J. Simon
[email protected]
1
Department of Economics, University of California, Santa Barbara, Santa Barbara, CA 93106,
USA
123
Rev Ind Organ (2015) 47:167–193
DOI 10.1007/s11151-015-9467-y
http://crossmark.crossref.org/dialog/?doi=10.1007/s11151-015-9467-y&domain=pdf
http://crossmark.crossref.org/dialog/?doi=10.1007/s11151-015-9467-y&domain=pdf
site—which is a new measure of locational concentration of physicians—discour-
ages ACO entry. Hospital concentration generally has a negative effect. HMO
penetration is a strong predictor of ACO entry, while physician-hospital organiza-
tions have little effect. Small markets discourage entry, which suggests economies
of scale for ACOs. Predictors of public and private ACO entry are different. State
regulations of nursing and the corporate practice of medicine have little effect.
Keywords Health care competition � Antitrust � Entry � Integration � Accountable
care organizations � Transactions costs � Obama plan
JEL Classification L 14 � I11 � L44 � I18 � L41
1 Introduction and Overview
The US health car ...
This document discusses the emerging "big data" revolution in healthcare and its potential to accelerate value and innovation. It notes that healthcare stakeholders are now gaining access to large amounts of clinical data, claims data, pharmaceutical R&D data, and patient behavior data. Technological advances have improved ability to analyze these diverse data sources while protecting patient privacy. The convergence of greater data availability, demand for insights into reducing costs, and government policies promoting transparency have created a tipping point where big data can play a major role in healthcare. Innovative companies are building tools to make better use of available data, with the potential to substantially reduce healthcare costs in the US.
This document discusses the emerging "big data" revolution in healthcare and its potential to accelerate value and innovation. It notes that while healthcare has lagged other industries in utilizing big data, several converging trends are now bringing the industry to a tipping point. These include rising demand for insights to curb costs, an increased supply of clinical and other healthcare data, technological advances enabling data sharing, and government initiatives promoting data transparency. The document outlines various data sources fueling big data and examines how stakeholders can leverage insights from big data to address issues like variable healthcare quality and rising costs through more effective treatments and reduced readmissions.
Big data revolution_in_health_care_2013_mc_kinsey_reportkate hong
This document discusses the emerging "big data" revolution in healthcare and its potential to accelerate value and innovation. It notes that healthcare stakeholders are now gaining access to large amounts of clinical data, claims data, pharmaceutical R&D data, and patient behavior data. Technological advances have improved ability to analyze these diverse data sources while protecting patient privacy. The convergence of greater data availability, demand for insights into reducing costs, and government policies promoting transparency have created a tipping point where big data can play a major role in healthcare. Innovative companies are building tools to make better use of available data, with the potential to substantially reduce healthcare costs in the US.
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Grant Thornton - Healthcare M&A Snapshot 2012
1. Health care
M&A snapshot
Grant Thornton Corporate Finance July 2012
Reviewing the 2011
health care industry
A dynamic climate The other major ruling partially upheld the Medicaid
The past year has been exciting for health care M&A, with expansion under the PPACA. However, the penalty clause that
approximately 1,250 transactions reported during 2011 in a allowed the federal government to withhold all Medicaid funds
nearly 10% increase from 2010, making it one of the most active from states refusing to comply with the expansion was struck
deal markets in history. Issues such as health care reform, rising down. Compliance with the new Medicaid eligibility standards
costs of care, expiring patents and the move toward digital will now be decided on a state-by-state basis.
health records are fueling a lively deal market and have powered While some of the significant provisions in the PPACA do
significant M&A activity. The aging of the U.S. population is not take effect until 2014, the act has certainly influenced the
another issue with widespread implications, though its impact M&A markets. Compliance cost concerns have driven many small
tends to be a secondary factor in M&A trends. In the next few organizations to consider selling to larger rivals, and we expect
pages, we will delve into some of these issues, highlighting their this trend to continue. As the ultimate impact of the legislation
impact on the deal market and commenting on how future unfolds, M&A will play a key role as businesses take advantage
M&A trends might be affected. of new opportunities and attempt to mitigate new risk factors.
continued >
The Patient Protection and Affordable Care Act
The Patient Protection and Affordable Care Act (PPACA),
signed into law on March 23, 2010, requires major changes to
current health care legislation. The Supreme Court held the
individual mandate, one of the most controversial aspects of the
law and one of the major areas under consideration by the
court, valid under the taxing power of the U.S. Congress.
2. Widespread cost pressure One other notable recent development is the FTC’s recent
Softening revenues and rising costs throughout the health care ruling that ProMedica Health System’s August 2010 acquisition
industry have put many smaller or less well-capitalized providers of rival St. Luke’s Hospital was likely to substantially lessen
under significant financial stress. Many of these facilities face competition and increase prices for general acute care and
the stark choice of either joining a larger organization or risking obstetric inpatient hospital services sold to commercial health
financial distress on their own. In some cases, facilities that chose plans in the Toledo, Ohio, area. The ruling calls for ProMedica
to weather the storm ended up in bankruptcy, with either a sale to unwind the transaction by selling St. Luke’s Hospital and
or closure as the ultimate outcome. supporting the transition to a new qualified owner. Whether
this ruling signals a trend in FTC action or a one-time event,
Health care facility M&A/bankruptcy operators on either side of an M&A transaction need to be
Hospitals and other health care entities have felt significant aware of the competitive environment and take steps to address
effects from both increased costs and decreased revenues due to potential FTC concerns proactively.
a combination of reimbursement rate pressure and collections Further, in a somewhat less well publicized decision, the
issues. In response, health care facility M&A activity has risen Supreme Court agreed to hear a case involving the acquisition
markedly as providers seek to take advantage of economies of of Palmyra Medical Center (PMC) by the Hospital Authority
scale by acquiring smaller or less well-capitalized organizations. of Albany-Dougherty County (Georgia). As a state-run entity,
The number of health care facility M&A transactions acquisitions by the Authority are currently immune to FTC
increased 32% in 2011, as hospitals, clinics and other medical oversight. By agreeing to hear the case, the Supreme Court will
facilities combined in order to address financial and strategic set law on whether the FTC can intervene when a state-created
concerns. Deal value declined by 11% from $15 billion to entity is involved, potentially leading to expanded oversight
$13.3 billion as a result of two sizable deals in 2011: Ventas’ authority for the agency.
acquisition of Atria Senior Living for $3.1 billion and Universal
Health Services’ purchase of Psychiatric Solutions for more than Insurers quietly buying medical practices
$3 billion. Excluding the impact of these two transactions, deal Insurers have a vested interest in controlling costs, and some
value increased 52% in 2011. carriers are experimenting with acquiring physician groups in an
Going forward, health care facility M&A activity is likely attempt to align doctors’ incentives with their own. The concept
to remain active. Despite the slight uptick in the U.S. economy, is straightforward: A private physician group is financially
cost pressure will continue to affect health care facilities and fuel motivated to maximize billings by performing large numbers
M&A transactions. While the PPACA is intended to address of medically justified tests and procedures, while a group owned
some of these issues, its ultimate effects are still in question. by an insurer can have an incentive structure that is focused
on minimizing the use of diagnostic tests, albeit in a medically
Health care facility M&A activity responsible way. Many people believe there is a gap between
what patients actually need in terms of tests and what doctors
Number of transactions
Deal value ($B) often order. They believe bringing patient care under the same
Deal value ($B)* corporate umbrella as insurance can help close that gap and
stem rising health care costs. Further, certain provisions of the
Number of Deal value
transactions ($B) PPACA have invigorated this trend and will likely continue to
400 $30 fuel M&A in this area.
Recent examples of insurers buying physician practices and
$25 hospitals include the following:
300 • UnitedHealth Group (NYSE: UNH), a health insurance
$20 company, acquired Monarch, an association of physicians in
private practice in California, during 2011.
200 $15
• In August 2011, WellPoint (NYSE: WLP), a $60 billion
health benefits company, closed on its acquisition of
$10
100
CareMore Health Group, a senior medical group and
$5 health plan provider.
continued >
2007 2008 2009 2010 2011
* Discounts two transactions that transpired in 2010
Sources: GTCF research; certain financial information provided by S&P Capital IQ
2 Health care M&A snapshot June 2012
3. In what is perhaps an even bolder move, an east coast-
based, independent licensee of the Blue Cross and Blue Shield
Association, announced its intent in 2011 to purchase a large
regional hospital system comprised of a financially distressed
operator of five hospitals.
There are factors that might reverse this trend, however.
The prospect of changing the incentive structure for physicians
raises legitimate concerns about the quality of care. Patients
don’t want cost to their insurer to be a factor in determining
their treatment. If insurers can convince consumers that the
current standards of care will be preserved and the expected
cost savings actually materialize, the acquisition trend might
continue; however, if patients resist these practices or costs do
not decline as expected, insurers may abandon this strategy.
Cost pressure on insurers, care providers and other entities
in the health care space is an ongoing issue that is exacerbated
by the aging of the U.S. population (although the additional
care associated with the aging of the boomers presents revenue
opportunities). This is also a political hot-button issue, with 2011, recently acquired King Pharmaceuticals, a specialty
widespread disagreement as to both causes and potential pharmaceutical discovery and clinical development company, for
solutions. In the near term, it appears that costs will continue to $3.6 billion in cash. Pfizer believes the acquisition diversifies its
increase, contributing to, among other things, strong incentives product revenue and expands its presence in pain management.
for companies to seek efficiencies and strategic partnerships Another example is the Sanofi-Aventis acquisition of U.S.
through M&A activity. biotechnology company Genzyme for almost $20 billion. The
deal is intended to help Sanofi rebuild its pipeline given its loss of
The patent cliff patent protection on Lovenox in 2010 and its loss of protection
Pharmaceutical companies also face substantial strategic and on Plavix in 2012.
financial challenges in the current market. For example, nine of While this patent cliff is a somewhat extraordinary event, the
the top 10 best-selling drugs have lost or are scheduled to lose motivation for M&A in the pharmaceutical sector remains strong
patent protection in the next five to six years — a time period because of the tremendous investment in R&D needed to bring
often referred to as the patent cliff. In response, pharmaceutical a single drug to market. If they are acquired, smaller R&D firms
companies have stepped up R&D and implemented cost- with promising drugs can often recoup some of their investment
efficiency programs. Further, many companies are embracing and better the chances that their drug will make it through the
M&A as a way to supplement R&D during their quest for the onerous approval process. Likewise, larger companies with the
next lucrative drug. capital to pursue acquisitions invest heavily in their courtship of
For example, Pfizer, which lost exclusivity on the underlying up-and-coming firms. Given today’s economic pressures,
formula for Lipitor in the United States during November we expect this trend to continue.
continued >
Top 10 drugs for 2010 by U.S. sales
2010 U.S. product
Rank Drug Treatments Marketers U.S. patent expiry
sales ($MM)
1 Plavix Blood clots Bristol-Myers Squibb + Sanofi $6,154 2012
2 Lipitor Cholesterol Pfizer $5,329 2011
3 Seretide/Advair Asthma GlaxoSmithKline $4,026 2016
4 Seroquel Mental disorders AstraZeneca $3,747 2012
5 Epogen/Procrit Anemia Amgen + Johnson & Johnson $3,594 2013
6 Actos Diabetes Takeda $3,582 2012
7 Abilify Mental disorders Otsuka + Bristol-Myers Squibb $3,348 2015
8 Enbrel Arthritis/ psoriasis Amgen + Pfizer $3,304 2028*
9 Singulair Asthma/allergies Merck & Co. $3,219 2012
10 Remicade Arthritis/ psoriasis Johnson & Johnson $3,088 2018
* Enbrel was originally set to expire in 2012 in the U.S., but it has been extended for another 16 years.
Source: EvaluatePharma
3 Health care M&A snapshot June 2012
4. Electronic health records
U.S. target announced health care information technology M&A
Digitization of health records has been accelerating for a number
of years as providers throughout the health care sector have Number of transactions
Deal value ($B)
sought ways to offer more efficient and effective care while
maximizing the benefits to the patient and minimizing risk Number of Deal value
transactions ($B)
associated with incomplete medical records. In response, the
health information technology (HIT) industry is expanding 125 $7
significantly as competitors vie to provide new applications $6
within the lucrative and growing health care market. M&A 100
activity has been a natural mode of competition, allowing $5
companies to secure new technologies and capture additional 75
$4
market share.
Further, the American Recovery and Reinvestment Act 50
$3
of 2009, commonly known as the stimulus bill, includes
$2
approximately $27 billion in incentives for eligible institutions
25
(including hospitals) that install and “meaningfully use” $1
electronic health records (EHR). These federal subsidy payments
commenced in 2011 and diminish in each subsequent year until 2007 2008 2009 2010 2011
2015, when providers start facing penalties for noncompliance.
Sources: GTCF research; certain financial information provided by S&P Capital IQ
While the inclusion of funds was in response to underlying care
and economic factors, the stimulus money is driving increased
growth in the HIT sector and fueling expanded M&A activity.
As depicted in the chart to the right, the number of
U.S.-based HIT M&A transactions rose by almost 7% in 2011,
while deal value increased 72%. The dramatic rise in value
was partially due to the acquisition of Emdeon by private U.S. target announced health care M&A activity
equity firms Blackstone Capital and Hellman & Friedman for
Number of transactions
nearly $3.5 billion. Emdeon offers payment cycle and revenue
Disclosed deal value ($B)
management solutions to thousands of providers and payers Disclosed deal value ($B)*
within the U.S. health care system.
Number of Deal value
Continued M&A activity is expected in this market as
transactions ($B)
technology quickly evolves to provide better, faster access to
1400 $250
patient records across a broader spectrum of care providers.
1200
$200
Trends in the metrics
1000
M&A activity
The number of U.S.-based health care M&A transactions rose $150
800
nearly 10% — from 1,141 transactions in 2010 to 1,248 in
600
2011 — which is not surprising given the improved economic $100
outlook and credit markets. Deal value increased more 400
significantly, rising almost 43% from $118 billion in 2010 to $50
$170 billion in 2011; this amount exceeded 16% of total M&A 200
value in the United States for the year. Taking a closer look at
deals from an industry subsegment perspective, we see a sharp 2005 2006 2007 2008 2009 2010 2011
uptick in the number of health care facility transactions over the * Excludes two mega deals: Pfizer’s acquisition of Wyeth and Merck’s purchase of Schering-Plough
past two years. Sources: GTCF research; certain financial information provided by S&P Capital IQ
continued >
4 Health care M&A snapshot June 2012
5. U.S. target announced health care M&A activity by segment (Number of U.S. transactions)
2009 2010 2011
Pharmaceuticals/
biotechnologies
Health care facilities/
providers
Health care information
technology
Health care
intermediaries
Health insurance
companies
0 100 200 300 400 500 600
Sources: GTCF research; certain financial information provided by S&P Capital IQ
Notable transactions announced in 2011 include • In April 2011, Johnson & Johnson (NYSE: JNJ) announced
the following: its intent to acquire Synthes Inc. (SWX: SYST.VX),
• Express Scripts Holding Company (Nasdaq: ESRX) a medical device company, for approximately $20 billion.
acquired Medco Health Solutions for $33 billion. This deal The combined company would have greater product
closed despite months of lobbying by pharmacy benefit development capabilities and a stronger global reach.
managers who believed the merger would create a monopoly. Moreover, Johnson & Johnson would gain a significant share
The deal was ultimately approved because representatives of the trauma device market. The deal closed on June 14, 2012.
from both sides of the deal convinced the FTC that the
merger would create efficiencies, allowing the combined Public company performance
company to drive down consumer costs. This deal closed The Grant Thornton Corporate Finance LLC (GTCF)
in April 2012. Health Care Index reflects data from health care participants
that are broadly categorized as pharmaceuticals/biotechnologies;
Grant Thornton Corporate Finance health care index facilities; HIT; intermediaries (e.g., distributors, equipment and
supply manufacturers, service providers); and health insurance
Pharmaceuticals/biotechnologies Health insurance companies
Health care intermediaries Heath care information technology companies. Reviewing the relative performance of these
Health care facilities/providers S&P companies against a benchmark, such as the S&P 500, can provide
insight into how the industry is perceived by well-informed
200%
investors and what is expected in terms of future performance.
175% The public market information indicates that all indices
have generally increased since March 2009, with the HIT index
150%
growing at the strongest pace. The only index that has consistently
125% underperformed the S&P 500 is the insurance sector. However, as
100% shown at left, it has recently started to perform on par with (and
even outperform) the broader market. Going forward, this sector
75%
will likely gain momentum. Corporate Research Group estimates
50% steady profit growth of 8% for the insurance sector over the next
25% year in its Outlook for Managed Care 2012 report. Managed
care is an important driver of the overall health insurance market
Dec–07 Dec–08 Dec–09 Dec–10 Dec–11 because a majority of people with private health insurance are
covered by a preferred provider organization (PPO) or health
Sources: Public company filings; certain financial information provided by S&P Capital IQ maintenance organization (HMO) plan.
Note: The GTCF health care index reflects the average stock price for all companies in each
category relative to 12/31/07. continued >
5 Health care M&A snapshot June 2012