David Snow, chairman of Medco Inc. (Franklin Lakes, NJ), said it’s going to take more than just a new marketing message to improve sales results at the pharmacy benefit management unit of competitor CVS Caremark. Following billions of dollars in lost business, the CVS Caremark unit rehashed its marketing message (see prior post) to emphasize its PBM capabilities rather than its ties to a retail drugstore chain. At the annual UBS healthcare meeting today, Snow said the change “is not going to work” unless CVS Caremark successfully builds and delivers capabilities that change the way healthcare is delivered. He said Medco already benefits from proprietary software and algorithms that help its clients control overall healthcare costs. “They don’t even have the starting place that Medco had,” he said. All told, Snow’s remarks are biting considering the whole reason CVS chairman Tom Ryan acquired Caremark was to change the way healthcare is delivered.
Snow of Medco on CVS Caremark
February 9, 2010
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Posted by Carl Mercurio
Emdeon and Beyond
February 9, 2010Here’s some interesting data from Emdeon chief executive George Lazenby on adoption of electronic healthcare transactions. Lazenby, who spoke at the annual UBS healthcare conference, said less than half of Emdeon’s transactions are done electronically — broken down as follows:
Claims: 80-85% electronic (essentially all batch)
Eligibility checks: 34% to 40% electronic (real-time and batch)
Claims status and payment authorization: 15% (real-time and batch)
Remittance: 10%
He described the process of printing and mailing provider payment checks after receiving an electronic claim (essentially converting from electronic to paper) as “ridiculous.” Lazenby said Emdeon is the market share leader in physician revenue cycle management and is number two in hospital RCM.
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Posted by Carl Mercurio
The Value of Fully Funded vs. ASO
February 8, 2010I’ve written before (see prior post) about the danger to health plan profits of the continued shift from fully funded membership to administrative services only business. Wayne DeVeydt, chief financial officer of WellPoint Inc. (Indianapolis), put a number on it. It takes five ASO members to equal the pretax earnings of one fully funded member, DeVeydt said today at the UBS Global Healthcare Services Conference in New York. “Fully insured is what makes these entities the cash cows that they are,” he added.
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Posted by Carl Mercurio
Health Plan Executives on Reform
February 8, 2010I’m at the UBS Global Healthcare Services Conference this week, hoping to get a sense of the confidence level of health plan executives following the apparent demise of reform. The consensus from the presentations I’ve heard so far seems to be that healthcare reform may be down, but it’s not out.
“It’s still not behind us, and it’s still something this country very much needs,” said Wayne DeVeydt, chief financial officer of WellPoint Inc. (Indianapolis). However, he predicted a scaled back reform effort. For example, he expects an expansion of Medicaid eligibility and a long-term physician payment fix. He also thinks reform efforts at the state level “are going to heat up a lot more.”
Less likely, he said, is comprehensive individual market reform. He added, however, that WellPoint still supports individual reforms such as guaranteed issue provided there is a strong mandate requiring people to buy insurance. Guaranteed issue without a mandate results in rising premiums, he said, using New York as an example; DeVeydt said that a typical individual policy costs $800 per month in New York, compared to $150 in California.
Among others: Jay Gellert, chief executive of Health Net (Woodland Hills, CA), said the industry is entering a “dangerous” time, with the reform effort lacking a clear direction and leaving the industry with the potential of “a lot of fires to put out.” Cigna chief financial officer Annmarie Hagan said her company supports reform that addresses access, quality and cost. Humana chief financial officer James Bloem agreed that “at some point there will be some” type of reform.
Is there some posturing in these remarks? Probably. But there is still a degree of uncertainty around reform, and Wall Street hates uncertainty.
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Posted by Carl Mercurio
The Other Side of Obesity
February 3, 2010Nearly nine out of 10 teenage girls say the fashion industry is partly responsible for girls’ obsession with being thin, according to a survey of more than 1000 girls age 13 to 17 sponsored by the Girl Scouts of America:
The health implications of the preoccupation with super thinness are serious. Nearly 1 in 3 girls say they have starved themselves or refused to eat in an effort to lose weight. In addition, 42 percent report knowing someone their age who has forced themselves to throw up after eating, while more than a third (37 percent) say they know someone their age who has been diagnosed with an eating disorder.
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Posted by Carl Mercurio
Fun With Commercial Health Plan Membership
February 2, 2010Here’s a couple of charts I worked up using data from the Census Bureau, Kaiser Family Foundation and CRG’s own internal research. The first is a snapshot of commercial health plan membership by type of funding and type of plan. The second shows the trend (troubling for health plans) of deteriorating fully funded business.
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Posted by Carl Mercurio
Fitch Still Negative on Hospitals
February 1, 2010Fitch Ratings (New York) has maintained its negative outlook on not-for-profit hospitals and health systems, citing the recession and government cost-containment efforts, among other factors. Fitch also hits on a theme I explored after the recent setback in the push for healthcare reform , i.e., the need for reform isn’t going away, no matter who the junior Senator from Massachusetts is:
The underlying factors that have been driving reform efforts, despite the recent halt in the legislative process, remain. These factors include the broadly supported view that the uninsured problem must be addressed, that there is a need to rein in healthcare spending, and unabated calls for greater transparency, quality and value. The same characteristics that Fitch believes provide credit strength and credit weakness in a contemplated reform environment still apply, whether change is mandated by statute or by market and regulatory mechanisms.
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Posted by Carl Mercurio
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