More 2023 predictions
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What do you mean you’re sick of predictions post? This is free alpha, you’re literally getting told the future smh.
I picked a few of the predictions that came in that I enjoyed. Memes and commentary added by me.
Private Equity Offloading
"My big prediction is that with rising interest rates, some actionable price transparency and downward payer pressure on smaller/weaker providers, we’re finally going to start to see PE groups offload their underperforming assets and try to double down on the winners in larger metro markets. The popular opinion is this recipe will lead to a swing towards more independent physician groups, and I wish I could agree, but there are a lot of regulatory headwinds resulting in high overhead (the NSA IDR mess is one example [no surprises act/independent dispute resolution]). Thus, I think hospitals are going to be the ones to further consolidate providers and clean up whatever mess is left over from PE exits. Also, if the hospitals continue to have big losses (at least on paper), they could get more govt help and will be well-positioned to execute here."
[NK note: All those physician staffing groups that rely on out-of-network billing basically got rekt when the No Surprises Act came out. I can imagine they’re lookin’ like a snack to hospital corp dev teams.]
The UnitedHealth Hospital
"UHC will buy an AMC [academic medical center].
Here’s the gist: UHC is already the largest employer of physicians in the country. Independent physicians are few and far between - hard to keep buying them at scale because health systems have already done a lot of that work.
By and large, health systems are losing money. Some more than others. They are looking for ways to make the budget work. UHC could buy a regional system but what’s the fun in that? I’d need to do more research on this but my gut tells me that the number of specialty prescriptions prescribed by AMCs is markedly higher than at community based health systems. So not only do they get a health system to create a fully integrated care delivery system in that market, they can also control the prescribing habits of those physicians and maybe even (I don’t know) require them to send the meds to Optum to be filled
If the deal that Fairview currently has to merge with Sanford falls through, I would guess that UHC acquires them (they also own the University of Minnesota Medical Center) and UHC is headquartered in Minnesota.
It’s essentially the only piece of the healthcare system that UHC hasn’t messed with. Would the FTC care? Maybe? But they’ve already acquired so much already why would they put up a fight over an AMC?
It would also further UHCs research interests and clinical trials. Maybe they create a center of excellence and fly all their X disease patients there for treatment because the care is better."
[NK note: We’re gonna have single payer! It’s just going to be United.
More seriously, everyone talks about “how do we build more Kaiser Permanentes” (yes, EVERYONE, I go to fun parties). United might actually have the best shot at it, and the main piece that’s missing are hospitals. Question is whether they’ll anger every other hospital to the point of dropping all contracts if that happens.]
Pharma supply chains go in-house
“The drug supply chain security act will come into effect by end of 2023 so pharma manufacturers will look to vertically integrate, especially ones focusing on cell therapies, gene therapies, and RNA based therapies. It will be more cost effective and streamlined to track and trace in house.
Viral vector supply has been limited which has affected the roll out of some of the first to market cell therapies for MM (Abecma from BMS the big one which they said on earnings calls that supply chain issues directly effected the launch). Kite pharma (Gilead company) is the first big pharma to develop its own in house viral vector manufacturing facility in California.
Piggy back off that, we may see more of these complex therapies being manufactured in the US given macro effects of de globalization and supply chain issues continuing in Asia, and government subsidies pushing manufacturing job creation in the US”.
[NK note: This is not a space I know a ton about. But the cell and gene therapy pipelines for pharma in the next few years are absolutely stacked - it’s clear that we’re going to see a wave of new therapies coming to market so it makes sense the supply chain is being figured out now. The squad at Mickey K’s has some good posts about it.]
A few shorter predictions
“The hammer is coming down on marketing creative from all angles - CMS, advertising platforms, even internal teams. Folks who don’t have internal processes for review or escalation are going to have a lot of trouble keeping campaigns live, and spend a lot of time redoing creative to fit different guidelines”
- Alyssa Alsheimer
[NK note: Simply advertise in Out-Of-Pocket, it’s easier and more fun]
“Biogen’s Adulhelm “screw it, there is not price elasticity curve - let’s just gouge everyone” slides does more to reign in drug prices than the Inflation Reduction Act ever will…”
- Bryan Roberts
[NK note: The slides in question are part of a congressional investigation, and show the irregularities in Aduhelms arrival in the market. But it's a good view into how biopharma companies approach pricing. Market access consulting firms must be sweating.]
“2023 prediction: there's going to be a massive healthcare hack that will wind up with a ton of sensitive patient data online, and trigger a lot of hand wringing around whether HIPAA is still fit-for-purpose (20% confidence)”
- Barry McCardel
[NK note: Every year I think there’s gonna be a conversation about changing HIPAA or a big hack that makes significant changes in healthcare cybersecurity sentiment, and every year I’m wrong]
“My prediction contradicts yours a bit. It’s informed by what we’ve been seeing day-to-day in our sales process.
Plenty of startups had invested heavily in engineering teams to "build their own EMR" or other essential business functions (CRM, engagement, etc). Engineering teams have now been laid off, but these things are still essential needs. We’re already seeing a shift from a "build" to "buy" and predict that this will continue in 2023, even for teams with existing in-house tech platforms.
Startups building mission-critical software are now competing with budgets that were previously allocated for engineering teams, which still leaves a lot on the table for "startups selling to startups"
- Sebastian Coates
[NK note: I’m wrong??? No, it’s the market who is wrong.]
“My predictions are obvious and quite boring, but:
- Babylon being acquired by bigtech
- Bright Health being acquired by Apple
- Startups that laid of +20% of their workforce will now experienced that they don't need +50 software engineers to do meaningful stuff, so even if financials are getting better we will see a) startups with less FTEs but higher revenue b) more lay offs
- Digital health scene in Europe will fail further (e.g. KRY is having a very hard time, same for startups in the UK)”
[NK note: If Apple acquires Bright Health, I will print this newsletter out and physically eat it.
Really hoping I don’t…eat my words.]
“1. Someone will ask, will the Medicare only clinic explosion result in the end of primary care practices who do not elect this option leaving the 65 and under population to only have urgent care as an option.
2. Primary care practices coming into the hands of insurance companies, pharmacy, retail chains and investment groups will be the other nail in the coffin. “
[NK note: Primary care is in a tough place…but is this the worst thing? 65+ need more regular interaction than the population and most people below that are sporadic users of healthcare, so maybe this is the correct assignment of resources? I dunno, still thinking through this one]
Nikhil aka. “if you predict everything, something has to be right"
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