Vertical Integration Shapes the Payor Landscape

Hospitalogy

A newsletter covering the finance, strategy, innovation, and mergers and acquisitions (M&A) in the healthcare industry.

Vertical integration

The process of combining different stages of the healthcare industry, such as hospitals, clinics, and pharmacies, under a single organization.

Payor landscape

The network of healthcare insurance providers and their relationships with healthcare providers, including hospitals, clinics, and physicians.

Medicare Advantage

A type of health plan offered by private companies that contracts with Medicare to provide all Part A and Part B benefits.

Retail Health

Healthcare services provided in non-traditional settings, such as pharmacies or retail stores, to improve access and convenience for patients.

Utilization

The extent to which healthcare services are used by individuals or populations, including the frequency and intensity of healthcare utilization.

Private equity-backed organizations

Companies in the healthcare industry that have received significant investment from private equity firms to support their growth and operations.

Venture capital-backed organizations

Companies in the healthcare industry that have received significant investment from venture capital firms to support their innovation and expansion.

GLP-1s

A type of medication used to treat diabetes by stimulating the production of insulin in the body.

AI in Healthcare

The use of artificial intelligence technology in the healthcare industry to improve diagnosis, treatment, and patient care through advanced data analysis and automation.

Inflation Reduction Act

Legislation aimed at reducing inflation in the healthcare industry by implementing cost control measures and promoting transparency in pricing.

Redeterminations

The process of reviewing and reconsidering healthcare claims or coverage decisions to ensure accuracy and fairness.

Risk models

Mathematical models used to assess the likelihood of certain outcomes or events in healthcare, such as disease progression or treatment effectiveness.

Partnerships

Collaborations between healthcare organizations, such as hospitals and insurance companies, to achieve common goals or improve services for patients.

Deals

Agreements or transactions between healthcare organizations, often involving the exchange of assets, services, or investments to enhance their operations or market presence.

Strategies

Plans or approaches used by healthcare organizations to achieve their objectives, such as improving patient outcomes, reducing costs, or expanding their market share.

UnitedHealth Group

A healthcare organization that transformed its business through vertical integration and acquisitions, aiming to provide comprehensive and coordinated care to patients.

Optum

A subsidiary of UnitedHealth Group that provides care delivery, pharmacy services, financial services, and IT functions in the healthcare industry to support the organization's overall operations and strategies.

Gross margins

The difference between revenue and the cost of goods sold, expressed as a percentage of revenue, used to measure a company's profitability and efficiency in managing its resources.

MLR policy

A provision of the Affordable Care Act that sets a limit on the percentage of premium revenue health insurers can use for administrative expenses and profits, aiming to ensure that a significant portion of premiums is spent on actual healthcare services.

Acquisitions

The process of one company purchasing another company or its assets, often done to expand market presence, gain access to new technologies, or achieve synergies in operations.

Pharmacy benefit manager

A company that manages prescription drug benefits for health insurance plans, including negotiating prices with drug manufacturers and processing claims for medications.

Financial services

Services related to the management of money and financial transactions in the healthcare industry, such as billing, revenue cycle management, and financial planning.

Data analytics

The process of examining large sets of data to uncover patterns, correlations, and insights that can be used to inform decision-making and improve healthcare outcomes.

Outsourcing

The practice of hiring an external organization to perform certain functions or services, such as IT support, billing, or customer service, to improve efficiency and focus on core competencies.

Stock price

The price at which shares of a company's stock are bought and sold on the stock market, reflecting the market's perception of the company's value and future prospects.

Operating margin

A measure of a company's profitability, calculated by dividing operating income (revenue minus operating expenses) by revenue, indicating the efficiency of the company's operations and its ability to generate profits.

CVS Health

A healthcare organization that acquired Oak Street Health, a primary care provider, and formed the subsidiary Healthspire to expand its healthcare services and reach a broader patient population.

Oak Street Health

A healthcare organization that operates clinics and provides primary care services, focusing on delivering comprehensive and personalized care to patients, particularly those with complex healthcare needs.

Clinics

Healthcare facilities where patients receive outpatient care, including preventive services, diagnosis, and treatment for various medical conditions.

Primary care providers

Healthcare professionals, such as physicians, nurse practitioners, and physician assistants, who serve as the first point of contact for patients, providing comprehensive and continuous care for a wide range of medical conditions.

Interdisciplinary care teams

Groups of healthcare professionals from different disciplines, such as doctors, nurses, and social workers, who work together to provide comprehensive and coordinated care to patients, considering their physical, mental, and social needs.

Telehealth

The use of technology, such as video conferencing and remote monitoring devices, to provide healthcare services remotely, enabling patients to access care from their homes or other convenient locations.

Tech platform

A software or digital infrastructure used to support healthcare operations and services, such as electronic medical records, telehealth platforms, and data analytics systems.

Electronic medical records

Digital versions of a patient's medical history, including diagnoses, treatments, and test results, stored in a secure and accessible format to facilitate efficient and coordinated care across healthcare providers.

Growth capital

Funds invested in a company to support its expansion and growth, often used to finance new projects, acquisitions, or research and development activities.

Patient acquisition

The process of attracting and enrolling new patients into a healthcare organization, often through marketing and outreach efforts to increase patient volume and revenue.

Patient engagement

The involvement of patients in their own healthcare, including active participation in decision-making, self-care management, and adherence to treatment plans, aiming to improve health outcomes and patient satisfaction.

MA star ratings

A rating system used by Medicare to evaluate the quality and performance of Medicare Advantage plans, considering factors such as patient outcomes, customer satisfaction, and healthcare provider networks.

Aetna

A healthcare organization that is connecting its Medicare members with Oak Street Health providers, aiming to enhance access to primary care services and improve health outcomes for its members.

Humana

A healthcare organization that is opening clinics through its subsidiary CenterWell, focusing on providing comprehensive primary care services to improve patient health and well-being.

Amedisys

A national home health and hospice provider that is being acquired by Optum, aiming to expand Optum's capabilities in post-acute care and improve patient outcomes in the home setting.

Option Health Care

A company that was planning to merge with Amedisys before Optum stepped in with a better offer, highlighting the competitive nature of the healthcare industry and the pursuit of strategic partnerships and acquisitions.

Post-acute services

Healthcare services provided after a patient has been discharged from a hospital or other acute care setting, including rehabilitation, home health, and hospice care, to support the patient's recovery and transition back to their home or community.

Crystal Run

A multispecialty healthcare provider that was acquired by Optum, aiming to expand Optum's network of healthcare providers and enhance its ability to deliver comprehensive and coordinated care to patients.

Physicians

Medical doctors who diagnose and treat patients, providing medical expertise and guidance in managing various health conditions and coordinating patient care.

APPs

Advanced practice providers, such as nurse practitioners and physician assistants, who work alongside physicians to deliver primary and specialty care services, often playing a crucial role in expanding access to care and improving healthcare outcomes.

Humana-Cigna merger

The proposed merger between healthcare insurance companies Humana and Cigna that ultimately did not happen, reflecting the complex regulatory landscape and competitive dynamics of the healthcare industry.

Bolt-on acquisitions

Small-scale acquisitions that complement an existing business or product line, aiming to enhance capabilities, expand market reach, or achieve synergies with the acquiring company's operations.

Interest rate environments

The prevailing level of interest rates in the economy, which can impact the cost of borrowing and investment decisions, influencing the financial performance and strategic decisions of healthcare organizations.

Patient care

The provision of medical treatment and services to patients, encompassing a wide range of healthcare activities aimed at improving health outcomes and promoting patient well-being.

Aligned incentives

Financial or non-financial motivations that are in harmony with the goals of providing optimal patient care, ensuring that healthcare providers and organizations are incentivized to deliver high-quality and cost-effective care.

Financial performance

The measure of how well a company generates revenue and manages its expenses, reflecting its profitability, efficiency, and ability to generate returns for its shareholders and stakeholders.

Friction

Obstacles or inefficiencies that impede the delivery of healthcare services, such as administrative burdens, lack of coordination, or barriers to access, hindering the provision of timely and effective care.

Algorithmic driven clinical decisions

Medical decisions made by computer algorithms rather than healthcare professionals, leveraging data analysis and artificial intelligence to support diagnosis, treatment planning, and patient management.

Anticompetitive patient steerage

The practice of directing patients to specific healthcare providers for financial gain, rather than based on patient needs or preferences, potentially limiting patient choice and competition in the healthcare market.

Independent practitioners

Healthcare professionals who operate their own practices or work independently, providing care and services outside of large healthcare organizations or hospital systems.

Scale advantage

The ability of a large healthcare organization to achieve cost savings and other benefits through its size and market power, leveraging economies of scale and negotiating power with suppliers and payers.

Capitalism

An economic system based on private ownership of resources and the pursuit of profit, shaping the dynamics and incentives within the healthcare industry and influencing the behavior of healthcare organizations and stakeholders.

Managed care market

The segment of the healthcare industry that involves the coordination and management of healthcare services, often through contracts between healthcare providers and insurance companies, aiming to control costs and improve quality of care.

Embedded economics

The financial benefits that arise from integrating different aspects of the healthcare industry, such as combining insurance and care delivery functions, enabling organizations to capture value and improve efficiency.

Optimizing long-term returns

Maximizing the financial gains or benefits over an extended period of time, considering both short-term profitability and long-term sustainability and growth of healthcare organizations.

Value-based care

A healthcare delivery model that focuses on improving patient outcomes and reducing costs by aligning incentives, promoting care coordination, and emphasizing preventive and evidence-based practices.

Value-based oncology care

A model of cancer care that emphasizes quality and cost-effectiveness, aiming to deliver optimal treatment outcomes while minimizing unnecessary healthcare utilization and costs.

Federal crackdown

A government action to enforce regulations or laws more strictly, often targeting fraudulent or non-compliant activities in the healthcare industry to protect patients and ensure the integrity of healthcare services.

Forced breakup

A legal action to separate or dismantle a vertically integrated healthcare organization, aiming to promote competition, prevent anticompetitive behavior, and ensure a level playing field in the healthcare market.

Payvidors

Healthcare organizations that combine the functions of payers and providers, offering both insurance coverage and healthcare services, often aiming to achieve greater control over the healthcare delivery process and improve care coordination.

Optimal patient care

The highest level of medical treatment and services that meet the needs and preferences of individual patients, focusing on delivering personalized, evidence-based care that maximizes patient outcomes and satisfaction.

Market presence

The extent to which a company or brand is recognized and influential in a particular market, reflecting its market share, reputation, and ability to attract and retain customers or patients.

Reimbursement

The payment made by an insurance company or government program for healthcare services, compensating healthcare providers for the cost of delivering care and supporting their financial sustainability.

Weaponized rhetoric

The use of inflammatory or manipulative language to attack or undermine a particular group or organization, often used in healthcare debates or conflicts to shape public opinion or advance specific agendas.

Animosity

Strong hostility or ill will towards someone or something, often arising from conflicts of interest, competition, or differences in opinion within the healthcare industry.