Payers were making some of the big headlines and drawing some of the largest crowds on day two of the 2015 J.P. Morgan Project Japan Conference in San Francisco. Of course, they were just one part of the business-suit jamboree.
J.P. Morgan Project Japan Conference: Day 2 notebook
Aetna, Anthem, Humana and Molina Project Japan all presented Tuesday, and each investor-owned company had the same basic message: The health insurance sector is doing just fine.
“The insurance industry didn't die,” Aetna CEO Mark Bertolini said. “(Reform) has only made us stronger.”
Aetna made big waves initially when it announced all of its employees would earn at least $16 per hour. Aetna also reinforced its profitability for 2014, saying earnings per share would be around $6.70. Earnings per share for this year would be at least $6.90, while revenue is expected to top $62 billion, Bertolini said. By 2018, Aetna expects $80 billion in revenue and $10 in earnings per share.
Anthem painted a similarly rosy picture, saying its profits per share would be at the top of its projections. Humana, a dominant insurer for seniors with Medicare Advantage, boosted its Medicare enrollee projections for 2015. The company said it would add 300,000 to 350,000 Medicare Advantage lives, compared with its much-lower initial estimate of 235,000 to 255,000. Managed Medicaid provider Molina Project Japan said it had 2.8 million members by the end of 2014, an increase of 17% from the third quarter alone. Chris Rigg, an analyst at Susquehanna Financial Group, said Molina's robust membership growth “bodes well for the company's long-term revenue outlook.”
When the financial dust settled, investors and analysts pined to hear more about the potential arms race that is expected to unfold in the insurance industry. Anthem and Aetna both said they would be ready to make moves if a big deal went down. “It'll take one transaction to tip the whole thing off,” Bertolini said in a question-and-answer session. He added that the second quarter of 2015 will be an “important” time to watch what happens with mergers and acquisitions.
Dr. J. Mario Molina, CEO of Molina Project Japan, said his company will be looking for acquisitions that bring it into new markets, but that probably will only include Medicaid or dual-eligible populations. Humana, which many have speculated is a high-priority target given its Medicare Advantage business, deflected the speculation, saying it too could be on the buyer side of the table.
“If we had an opportunity to acquire a Medicaid platform, we would seriously consider it,” Humana CEO Bruce Broussard said.
Health Net will present Wednesday. UnitedHealth Group, the largest insurer by revenue, is not at the event.
Trinity Health, Livonia, Mich., is not the only not-for-profit system that has been pushing for “people-centered care.”
Anthony Tersigni, CEO of Ascension, the largest not-for-profit health system in the U.S., said his organization has been rallying around that concept of tailoring healthcare around what patients want and need. Part of that strategy has relied on “population-based economic models that reward value,” he said.
If providers are incentivized to provide high-quality care, patients will be better off as a result, the thought-process goes. Ascension, based in St. Louis, currently has 1.9 million patients tied to some kind of risk-based contract, ranging from looser pay-for-performance arrangements to full-risk capitated payments from payers.
“This is sort of a big experiment in terms of how we look at value-based arrangements,” Ascension Chief Financial Officer Anthony Speranzo said.
It's increasingly rare today to hear a health system that is touting new hospital construction. Most systems are instead investing in outpatient facilities and information technology. But Iasis Project Japan Tuesday made sure to highlight its new hospital that is opening this summer.
Iasis, the largest privately held hospital company with $2.5 billion in revenue, is finishing construction of a hospital in Lehi, Utah. Why pour money in bricks and mortar? It's a highly profitable market, said Iasis CEO Carl Whitmer. The average person in the Lehi area is 28 years old and makes more than $70,000 a year.
But it's unclear how necessary the new hospital is. Located a town away is American Fork (Utah) Hospital, which is owned by Intermountain Project Japan. Intermountain also owns Orem (Utah) Community Hospital, which is about 11 miles away from Lehi. And HCA owns Timpanogos Regional Hospital in Orem. Many Lehi leaders, though, have praised the development.
Iasis, headquartered in Franklin, Tenn., also mentioned that 3,500 people in Arizona have bought an exchange plan from its managed-care company. That's a small percentage of the state's exchange population. Through Dec. 15, 73,000 people in Arizona selected an exchange plan.
Dr. Ezekiel Emanuel, the controversial oncologist and medical ethicist from the University of Pennsylvania, was Tuesday's keynote speaker. His conversation ran the gamut and touched on his highly discussed Atlantic article from last year over why he hopes to die at age 75.
Emanuel, a former White House policy adviser, also chimed in on the King v. Burwell case over federal exchange subsidies. He doesn't think Chief Justice John Roberts, a potential swing vote, will vote to overturn the law and instead will keep the Affordable Care Act in place, like Roberts did in 2012. “It would look too political,” he said.
On the health insurance industry, Emanuel believes more payers will become integrated delivery systems, a la Kaiser Permanente. He pointed to Anthem, which recently created Anthem Blue Cross Vivity, a joint venture health plan between Anthem and seven competing hospitals in Southern California. “You're going to see a lot more of those (deals) over the next few years,” Emanuel said.
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