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Anne Law

Industry Lowdown: Reforming the Medical Care and Health Insurance Markets

by Anne Law | Dun & Bradstreet Editor

November 14, 2016 | No Comments »

Companies in the medical and insurance sectors face numerous challenges and opportunities as health care reform efforts shake up existing business models. Take a look at some of the emerging trends from industry profiles updated by D&B Editorial in recent weeks.

Trend: Hospital Ownership of Physician Practices Continues to Increase
The number of physician practices owned by hospitals is rising rapidly as changes in medical payment systems prompt providers to seek efficiencies in new operational structures. Some 31,000 practices were acquired by hospital groups between 2012 and 2015, leading to an 86% jump in the number of hospital-owned doctors’ offices, according to a recent study from Avalere Health and the Physicians Advocacy Institute (PAI). In total, nearly 40% of physicians in the US are now employed by hospitals or health systems. Typical acquisitions include employment contracts for multiple physicians’ services, along with physical property and equipment assets. The study found that Medicare payments for some common outpatient hospital services are up to three times higher than if they’d been performed at a physician-owned office, leading to concerns that the acquisition trend could drive up overall health care costs for payers. Physicians wanting to stay in private practice face increasing cost pressures, according to PAI.

For more insight into the Health Care Sector, see our report.

Challenge: Real Estate Investment Trusts Shift Away from Skilled Nursing Holdings
Some major real estate investment trust (REIT) companies are shifting commercial real estate investments away from nursing homes as tenants struggle to generate profits. Skilled-nursing homes, which depend on government reimbursements, are struggling with reduced rates and shorter lengths of stay under new Medicare care-delivery models that focus on value of care rather than volume of services, according to The Wall Street Journal. Companies including Ventas, HCP, and Sabra Health Care REIT are selling or spinning off skilled-nursing holdings in favor of more profitable health care facilities to reduce risk exposure from tenants who may struggle to pay rent. However, other REITs that continue to focus on skilled-nursing assets feel the payment change impact will be minimal and see a recovering market as the number of seniors in the US continues to rise.

To learn more about this and other industry trends, see our Nursing Homes & Long-Term Care Facilities profile.

Challenge: Reduced Competition, Higher Rates Thwart Health Plan Marketplace Progress
Enrollment for individual health care coverage on state exchanges will be challenged in some markets this year by a reduction in the number of health plan options, as a number of health insurance companies are pulling out of state marketplaces due to financial losses or low profitability. While competition remains strong in some regions, many face reduced participation. About 31% of counties could only have one plan option for 2017 coverage (up from 7% in 2016), impacting 19% of enrollees primarily in rural areas, according to a study from the Kaiser Family Foundation. The trend is resulting in higher premium rates for individuals that don’t qualify for subsidies in select markets. For instance, Blue Cross Blue Shield of Tennessee was granted a 62% rate hike for 2017 plans, according to Kaiser Health News. Insurers are withdrawing from markets or adjusting premiums due to higher-than-expected illness rates and medical costs among newly insured members. President Obama has called on Congress to increase financial assistance for those who don’t qualify for subsidies but can’t afford higher premiums, and some politicians are calling for state or federal public-option plans to increase competition.

See our Insurance Carriers report for more on this and other industry trends.

Trend: Startups Seek to Shake Up Home Care Model
Several home-health startups are looking to change how care is provided by empowering caregivers and implementing technology tools. Companies including Honor, Hometeam, and HomeHero are shunning the independent-contractor model popular with home-health agencies in favor of hiring full-time employees with higher wages and full benefits. Employees are carefully vetted and screened. The companies have also developed proprietary software and apps that match patients with an appropriate caregiver and provide data to doctors and family members. Hometeam is looking to increase a patient’s ability to set up telehealth doctor visits or schedule grocery deliveries via technology. So far, the companies operate in select markets, primarily metropolitan areas, but support from venture capital investors indicates that expansion efforts will continue.

Find more information in the Home Health Care Services profile.

D&B Editorial compiles the latest industry intelligence to give professionals a deal-making edge. In 2016 editors added profiles on high-growth emerging industries including Marijuana Stores, Food Trucks, and Casino-Hotels.

Where can you find D&B Editorial industry content? Visit the First Research site, our add-on to a Hoover’s subscription, and other select D&B products. In a hurry? The call-prep sheet is a popular way to quickly get up to speed on an industry.

Anne Law has been a member of the D&B editorial department for more than a decade, providing content for the Hoover’s and First Research products. She currently covers the health care and insurance industries for First Research. For industry news, follow Anne on Twitter.

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