74 – How Trump Could Drastically Reshape Healthcare in America

Marcus: [00:00:00] If you’re finding value in our episodes, please pause to give us a rating and leave a review. Your feedback is crucial for helping us connect with more listeners. Thanks for your support.

Marcus: All right. So we are bringing back our. Best friend. I think she’s our best friend. Uh, Emily Evans, uh, Vic is on vacation. He is enjoying a wonderful cruise with the family. And, um, boy, did he miss a week? Boy, did he miss a week? So, you know, sometimes these things just work out perfectly and it was great that you’re available because I can’t imagine anybody else I would want to try to talk about, uh, what has happened over the last, not even seven days, five days.

Marcus: Yeah, with, but we’re not going to rehash a bunch of stuff that you can get on. I mean, pick your news channel or your publication. [00:01:00] We’re gonna talk about healthcare.

Emily: Yeah,

Marcus: we’re gonna talk about healthcare.

Emily: I’ve, I’ve been thinking about that. This is going to turn out this way several years now, uh, which is that, that, um, the Biden presidency would be in trouble.

Emily: I thought he was going to drop out earlier because, you know, he’s, he’s not a great candidate, which kind of makes you wonder how well he’s handling the burden of the presidency. But, um, but, uh, it, it took us a while to get here. Uh, and where we are is that You have to very seriously consider that we will have a trump presidency

Marcus: It it is time to very seriously consider that and this week especially right?

Marcus: I mean, I feel I feel like Next week is going to be a very different week for many many different reasons And uh, I think we will start to have A lot more focus on what the democratic party is going to do Next week, but this week we are in rnc week and we [00:02:00] um, You Just had, thank God, an unsuccessful assassination attempt on President Donald Trump.

Marcus: Horrible. Um, and so he survived and really was not very injured at all, which is, you know, maybe other than holy shit, I just, you know,

Emily: just

Marcus: hadn’t had a serious rifle bullet.

Emily: There’s some luck there. Was right past my head. Yeah.

Marcus: Um, but, but, but that aside, I mean, uh, It is a time to really think about what a Trump administration would mean for the future of health care.

Marcus: And I just, I just want to, um, this is episode 74. Vic and I were talking about it maybe two or three episodes ago after, um, Chevron went down with the Supreme Court. We called back to our audience that on episode two of this show, we had you on to talk. about the Chevron Deference Doctrine. Episode two, way before anybody else was talking about it, [00:03:00] right?

Marcus: We were talking about it. And lo and behold, now there’s this, now everyone actually knows what Chevron is, right? Yeah. So, um, we feel it’s important to at least get on record. What are the, what are the key areas of healthcare that are likely, um, to be in Impacted if the administration does change, right?

Marcus: Yeah,

Emily: it’s a way to think about it.

Marcus: Yeah. Yeah. So you did some good work on this. Uh, and we’re just going to kind of treat this like you did this work for hedge eye, but you’re sharing it with the health further audience, which is really sweet. Um, but we’re just going to kind of treat this like as if you were presenting it to hedge eye, but hedge eyes me for now.

Marcus: And I’m just going to ask you questions and we’ll kind of go through it. Um, So is there anything you want to say at the top before we we start heading through this?

Emily: I think that the first, the top line thinking on this issue, this problem, whatever you want to call it, [00:04:00] is that, uh, the, the, the deficit and the debt of the country has gotten to a pretty untenable place, right?

Emily: Healthcare is a big chunk. of that

Marcus: and a growing chunk and

Emily: a growing chunk. And so that makes people, investors, market, uh, you know, industry people think, all right, The answer is going to be to cut health care. Well, if you think about that for a minute, you realize, well, if you cut health care, you drive the country into a recession.

Marcus: Right.

Emily: Okay? Even though that might be a good idea over the long haul, if you’re a president or a member of Congress, that’s not a great idea in the short haul. So then the question becomes, all right, Can they do? What should they do? What’s possible? And we have a lot of sources of information for that.

Emily: We’ve, the House appropriators have been signaling where they want to go. Um, the [00:05:00] Trump administ, the Trump campaign has been kind of light on details. Um, and, And the, um, Heritage Foundation, uh, has gotten, has produced a fairly substantial white paper. They are

Marcus: not light on details.

Emily: They are not light on details.

Emily: And then there’s other, other think tanks have also,

Marcus: also

Emily: weighed in. Sure. And one, uh, key part of understanding a Trump presidency, and with respect to healthcare, is that, uh, Donald Trump’s two biggest economic advisors are Steve Moore. An art laugher at an art laugher and Steve Moore both understand that which to reduce the deficit.

Emily: This is the Reagan formula. You grow your way out of it. If you go through the austerity thing, you end up like, okay, uh, it’s, it’s just, it’s just math, really. So that’s kind of the top line way to be thinking about this.

Marcus: Okay. All right. Great. So let’s just start with, uh, The view of where health care as a percent of GDP is today [00:06:00] and where it is headed according to the HHS office of the actuary,

Emily: right?

Emily: And this is a, this is, uh, and, uh, you’ll show this chart, um, for people who do the watch video, but this is, this is the, um, the, the micro problem of the macro problem, the macro problem being the deficit and the debt. And the associated with that problem is, of course, the growth of health care as a part of GDP, simply because we’re printing money and we’re transferring it from the U.

Emily: S. Treasury to the healthcare industry. That’s what we’re doing. Uh, and it was pretty steady at 17 percent until COVID, um, which rocked it up. Uh, and now it’s predicted to go up to 19%. And keep in mind, that doesn’t count a lot of things. You know, it doesn’t count construction of healthcare. Buildings. It doesn’t count consultants and so forth.

Emily: It’s really just payments. It’s

Marcus: just payments. That’s just payment. Just

Emily: payments. Yeah.

Marcus: Wow.

Emily: And that’s a big, you know, you’re, you’re 20 percent of GDP. You know, [00:07:00] that’s a, that’s a big number. And the question is, all right, what is the president likely to do?

Marcus: Okay. That kind of sets the backdrop, right? It’s like you, you’re, you’re standing on the train tracks.

Marcus: Trains coming at you and a large part of that locomotive is health care, health care, a large part of it and and you have to do something about it and

Emily: you can’t, you can’t just simply cut spending.

Marcus: No, no. In fact, Vic and I were talking about the, um, the first draft of the proposed physician fee, you know, kind of going down and we just talk about how chaotic that felt, you know, just to kind of see that you’re proposing you’re going to pay physicians less, you know what I mean?

Marcus: Like.

Emily: And that’s a statute, that’s something, they’re following the law and that’s a statute, but the, uh, and they have to do it, but what it, you know, what it’s doing is it’s pushing people out of the program. Of course. You know what I mean? Of course. And that is chaotic. That is chaotic. And that is not, again, that’s not something you want as a, as a policy maker.

Marcus: So, okay, so framing up the direction of the policy, you’ve kind of got the [00:08:00] good, the bad and the right. Okay, so let’s let’s start with the good. What what is in the bucket of the first of all, when you say the good, the bad and the unknown? What do you what do you

Emily: mean? In that case, I would say the good means that the policy direction is a tailwind.

Emily: It’s going to be a general positive for a

Marcus: subsector.

Emily: When I say it’s bad, it’s going to be a

Marcus: headwind.

Emily: In some cases, hurricane force.

Marcus: And

Emily: then when I’m not sure, and I call that the unknowns, because there’s so many puts and takes and, you know, offsetting concerns and some unknowns, you know, I’m not really sure.

Emily: So I call the good is ambulatory care, you know, cheaper sites of service, patient preference, you know, all those things that, Make ambulatory care more attractive than that inpatient acute care. Sure. And everything that goes with that, okay? Uh, and then the bad, uh, non profit hospitals, uh, which has implications for major equipment expenditures and so forth.

Emily: Large [00:09:00] biopharma, so that’s your, you know, Merck, your Pfizer’s, your, you know, GSK’s, et cetera. The larger left reference labs, of which there are only two, um, LabCorp and, and Quest, and then the biotech research and discovery. So early stage biotech, um, so preclinical and maybe even early clinical, uh, we’ve got some Pretty decent headwinds and they, for me, the unknown is managed care, how that turns out, it’s hard, it’s, there’s some good things being proposed and then there’s some negatives and, and it’s really, these, these are very nimble organizations and they’re able to wade their way through it and managed care organizations happen to be very data driven organizations.

Emily: They look at, they, they, their actuaries, they can see the future unlike most of us.

Marcus: Okay. So really quickly, before we move on, um, I want to understand a little bit more about maybe specifically biopharma, just because I think you, you know, one could say [00:10:00] looking at the agenda that the Biden administration has taken on, especially over the last 24 months with, Hey, we’re going to negotiate, um, drug prices.

Marcus: Hey, you know, we’re going to, you know, just some of the things they’ve been really trying to push. Um, that, is that a consistency of a tailwind or is it a tailwind for a different reason? It’s a, it’s a headwind, yeah. Is it, is it a consistency of a headwind? Is it a headwind for a different reason? Is it a different part of biopharma’s business is going to be attacked from a headwind perspective?

Marcus: No, you have to

Emily: think of it, think of the top, the top line first. The problem biopharma has is that they really ran out of ideas several, quite a few years ago. Um, you know, Humira was like the last big hit. Which is a fantastic drug. Uh,

Marcus: but well, hold on. I mean, the GLP ones, are

Emily: they Well, the, I’ll talk.

Emily: Those are a

Marcus: big deal.

Emily: They’re a big deal. But these are, those are ancient molecules, of course. Yeah. Yeah. It’s not a, there wasn’t a hell of a lot of innovating going on. There was a lot of, okay, I, I understand what you’re saying. Put these two things together. I, I get your

Marcus: point [00:11:00] there. Okay. But,

Emily: but, and, and it’s a very crowded space already.

Emily: Already.

Marcus: For

Emily: sure. For sure. So, so they, they ran out of. They’ve ran out of ideas, and what they have done, and this is what’s attracted so much negative attention, is to make up for the lack of organic growth in their industry, they just raise prices. And engage in a lot of goofy stuff like rebates and so forth, that have gotten them the attention of Congress and ultimately the Inflation Reduction Act, which created the, uh, the, uh, The, um, uh, the nego, the price negotiation.

Emily: Yeah. Which I will point out that the price negotiation between the government and biopharma, that is the price to the government, and it’s not the price to the consumer. No. And, and everyone assume their prices would go down. They’re not . Yeah. Okay. Okay. So, so that, that’s the, that’s the top line problem.

Emily: And then as you move down, as a result of that, just. natural problem. We’re not innovating. We don’t have any good ideas. Um, those things that we want [00:12:00] to explore, like Alzheimer’s, we keep ending up down rabbit holes. You know, they don’t work and they kill people. Um, and, and so they, they, they raise prices and they also, you know, start chasing crowded things like Glyph1 drugs.

Emily: Vaccines for which you don’t actually need to have all of your ducks in a row in terms of Safety and efficacy because you’re no liability

Marcus: And and

Emily: that that’s created kind

Marcus: of the fundamental like that business model. That’s yeah, that’s

Emily: the balance, right? I’m, very very careful about creating this drug because if i’m not i’m going to end up in, in, in court, uh, and the pharmaceutical industry is trying to, um, the pharma, the big lobby organization is trying to convince, um, Medicare to change some of the rules around the inflation reduction act.

Emily: And so in order to convince them, they pulled out this list of pipeline. It’s almost all vaccines. Or what they say are vaccines. Um, [00:13:00] it’s all vaccines and it’s like, okay.

Marcus: Now, not all pharma companies are vaccine heavy in their roster, but I mean, but there are some that are like very, very, very vaccine. The point

Emily: is the pipeline, the, all the R and D is going into vaccines at the same time, you have the president and JD Vance, this is the prospective vice president saying, we need to take a really hard look.

Emily: At some of these approvals.

Marcus: Yeah, and obviously J. D. Vance with his background and history. Yeah, I mean, he’s got sort of the personal story.

Emily: He’s got a natural suspicion of the industry, and they’re not doing themselves any favors because Glip 1 drugs, how much is that a month? 1, 200, right? You know, for molecules that we’ve known about for forever and ever and ever.

Marcus: Yep.

Emily: Okay. And that, that’s, that’s the, that’s the, the concern there.

Marcus: Okay. That, that’s, that was helpful. All right. So if, if we’re talking about managed care organizations, as you said, they are, they’re not, they’re not what they used to be. No. They used to just [00:14:00] be actuaries. They’re little governments. Yeah, they used to just be actuaries.

Marcus: Now they’re, they’re like, I mean, They

Emily: do housing. They do it, they do it all. They do the grocery shop. They do it all. They

Marcus: do it all. Yeah. So, so they, they, they definitely have lots of ways to hedge headwinds, um, and offset things to, to kind of keep them moving forward. UNH had, had a, a positive result.

Marcus: Stock prices sort of back up, pulled the rest of the managed care, uh, stocks along with it. Uh, okay. So, so just talking about Medicare, Medicaid, and then ACA and other, like, let’s, let’s go through Medicare because Medicare has, has been a bit of a rollercoaster, right? The Q4, it felt like, oh my gosh, all these headwinds.

Marcus: Then they went to court, they lost in court. So, you know, but they’ve raised premiums.

Emily: Yes, so there’s a, and I put medic managed care organizations in this kind of unknown category because it’s hard to see exactly how, first of all, we don’t have certainty on all of the policies and second of all, it’s hard to [00:15:00] see exactly how one policy and the integration.

Emily: with other policies might actually affect the sector. So it’s, so that’s the way to approach it. It’s like, not really clear, but, but in, so we’re in the positive category, the, the, the, a Trump presidency as Trump one, I call it, I was very much. favored Medicare Advantage, preferred that to be the default option.

Emily: Probably we’ll revisit that. That is very different from the Biden administration who wanted fee for service to be the default option. And it, and it still is. Um, so that’s a positive, you know, getting rid of some of the regulation. A lot of the managed care organizations have adopted, you know, um, policies and, and have been encouraged to adopt, you know, different programs on social determinants of health, which you just mentioned.

Emily: Um, health equity, uh, Which is poorly defined in, in many cases, uh, and, and it’s very likely that that will [00:16:00] go away. We’ll just deregulate that. Um, they also, so that’s a, that’s a, that’s a positive, I think. Um, greater flexibility for sites of service. You know, being able to let a patient pick with their doctor where they’re going to have a procedure done, that’s also a positive.

Emily: Um, but, you know, revamping the bidding system, which is something that they want to do, and right now it’s a very difficult formula. Uh, it’s not really quite a competitive bidding process like, like I think it was originally envisioned. That could be, that could be a real headwind. In Medicaid, the, um, the flexibility You know, the greater flexibility of states to do block grants and so forth, which is part of the proposed policy, that is, um, that could be a positive for managed care organizations because, you know, the money would go from the federal government to the state, the state would throw in their money, and then that would all go to a managed care organization.

Emily: Right. Which would then be able to allocate appropriately. One of the difficult things about [00:17:00] Medicaid is it heavily favors care in hospitals and skilled nursing facilities. Doctors hate it. And, and so you don’t And

Marcus: they’re not taking it. A lot

Emily: of them don’t take Medicaid. Um, and, uh, and so that Kind of block grant thing would be, you know, beneficial at the same time, you know, if you end these supplemental payments or state directed payments that we, you’ll see a chart, I’ll show a chart in a minute on that.

Emily: It’s, um, that, that could be a negative, but it depends on how they put those two things together. Right. How do you put together a block grant program? And by the way, Tennessee has a block grant. program. It seems to be working pretty well. Um, how do you put that together with an end of supplemental payments?

Emily: I believe what’ll happen is in order to get governors to play along with block grants or. Per capita numbers or whatever, then those governors would say, all right, I don’t want any deterioration in my total funding. And, and, and that would get them to go, you’d

Marcus: have to increase what was going into the block grant [00:18:00] because you need to have some

Emily: incentives because

Marcus: as we’ll talk about later, supplemental payments are not inconsequential.

Emily: No, they’re not right. Um, work requirements. That was something that was discussed on the Trump administration in the first. Phase and Indiana has a fairly decent program on that one thing that is a positive is there’s a possibility this would have to happen with Congress as you end the state plan amendment process.

Emily: Okay,

Marcus: and who’s where’d you get this from? Is this heritage?

Emily: This is a combination of heritage, the appropriations and some bills that have been considered on the House side. Okay, I’m just, I’m just matching it all together. Yep, got it.

Marcus: Okay.

Emily: And then, um, for the managed care and the ACA, I think the biggest worry there, Marcus, is the fact that there appears to be a decent amount of fraud, uh, in the program, um, and, and the ACA and a lot of, um, practices, business practices that, um, uh, aggressive marketing practices.

Emily: So like [00:19:00] people are turning up having been enrolled in an ACA plan that they didn’t enroll in.

Marcus: Oh, okay. You

Emily: know, which, and because the way the, do you, The Medicaid disenrollment worked post COVID, there were all these mechanisms in place, you know, so and so comes, is no longer Medicaid eligible, all right, we’re going to give their name to the managed care organization or their, whoever their third party marketer is, and, and they’re going to sell them an ACA plan.

Emily: So they stay insured. You know, there’s a lot of. hanky panky that can go on in that. Yeah. I get that. It appears that that’s, that’s the case. Um, the getting rid of the, the family glitch, which was a policy in the ACA said, you know, if you have to pay more than 9 percent of your household income on to health insurance, well, then you, uh, you’re eligible for ACA, even though you’re employed.

Emily: Uh, That didn’t include your whole family. Okay. Right. Well, they revised [00:20:00] that, and this is definitely Chevron, uh, deference territory. They revised that and, and said, you know, no, the fa yes, you can have your family enrolled , and voila and voila. Magic ,

Marcus: all, all sorts of new enrollee.

Emily: Forget about that law thing over there.

Marcus: Yeah. All sorts of new enrollees. Okay, got it. Yeah. So

Emily: that, that’s a, that’s a, it’s, it’s, they’re, like I said, they’re, they’re. They’re puts and takes on that one. So we just said really need to watch it pretty closely.

Marcus: Okay. All right. So really quickly, I just, because this is pretty wonky stuff, but there, there is something going on around party plans and the premiums and rebates.

Marcus: All right. And

Emily: this is a catalyst. Right. This is a catalyst because what’s happening is the Inflation Reduction Act, just to give you the punchline, is driving up premiums in Part D plans.

Marcus: And that’s unintentional because it is the inflation reduction.

Emily: It is the inflation reduction, but it’s [00:21:00] actually going to cause inflation.

Emily: So you’re going to probably see a doubling of Part D premiums in 2025. Wow. They’re underway right now. Wow. You’ve already seen, uh, if you look at Humana’s per member per month, which from first quarter, you already saw a pretty big jump there. Uh, and you’re going to see, um, you’re going to see even more of that in 25.

Emily: That’s a crisis. That’s a, uh, we got to do something. All right. Uh, and, uh, there’s some administrative things that can be done, uh, nearly immediately. But the bottom line is, is that you cannot outsmart the drug industry or the managed care organizations. And, and it’s, it’s, it’s causing, it’s, it’s, it’s causing, and we’re in the very early stages, there’s not a lot of people understand that there’s, This is going to be a problem.

Emily: Yeah. Um, but, but it, it’s going to be a problem. And once you open up that section of the law, you know, everybody’s going to come in and want, want to make their own revisions and M a, you know, PDP enrollment, a prescription drug [00:22:00] plan, standalone plants have been in decline. If you, you know, and I, I showed you a side on the, um, Uh, that, that shows that, that there’s been this decline in, in the number of, um, uh, number of enrollees in standalone, uh, PDP plans versus Medicare, uh, Advantage plus a PDP plan.

Emily: And that’s because, um, uh, People are, the managed care organizations are saying, all right, more people need to be in MA plus PDP. That’s better for us, you know, and it’s better for them. Um, and that’s gonna, that’s kind of reversing itself because of this, this inflation reduction act. Okay.

Marcus: Okay. Um, let’s see Medicare Advantage enrollment forecast.

Marcus: So that is right now looking like it is declining. It

Emily: is declining and a lot of that has to do with, and you’ve heard Humana say this, um, that has to do with managed care, um, managed care organizations are looking at [00:23:00] demographics. The last of the post war cohort. 1961 62 birth year turned 65 in a couple years, which is not a very long time in health insurance.

Emily: And so, so you’re gonna have less people to sell to.

Marcus: Right, right. Like they’re all gonna be

Emily: there. They’re already there. Yeah, they’re there. At the same time, you have the post the biggest Group cohort and post war generation 1947.

Marcus: Yeah,

Emily: they are 78 years old and what happens when you’re 78 you start to break Yeah, you know, that’s that’s a life expectancy.

Emily: Yeah, that’s you’re gonna you’re gonna lose people require more health care Yeah, so it’s in the one hand you’re getting less people coming in and the one they’re getting more expensive. They’re getting more expensive, right? Um, so what’s happening is the Medicare Advantage organizations are like, okay, let’s just step back and make sure we’re enrolling the right people at the right price.

Emily: Okay.

Marcus: Yep.

Emily: Uh, and, and we’re pricing properly.

Marcus: Yep.

Emily: For years, Medicare [00:24:00] Advantage plans could be nearly free, you know, for a lot of people, uh, or some very nominal amount of money for a lot of, not everybody, but for, for a lot of people. And now you actually have some pricing. Yep. going on. Um, and that’s going to make a difference in the choices people make.

Emily: Now offsetting that is an administrative policy potentially that wants to make Medicare Advantage the default. So when you turn 65, instead of opening that envelope, It says welcome to Medicare, um, traditional Medicare, you’re going to get this note that says which plan do you want, you know, do you want Humana?

Emily: Do you want, you know, whatever. So that, that, again, that’s a great example of, you know, there’s this bad thing that’s a headwind and then there’s this potential good thing that’s a tailwind.

Marcus: Okay. Uh, okay. Let’s talk through this supplemental payment breakdown. Yeah, I know. Uh, uh, well, first of all, I don’t think every one of our listeners will understand what supplemental payments are.

Marcus: I have to fully [00:25:00] admit, uh, the beginning of this year, I didn’t fully get it. I do now, but like, I, someone has to like sit down and actually draw it out for me because it’s, it’s like, it’s a rope of dope of like, the money goes here, then it goes here, then we ship it back here. Right. You know, and in the end, the hospital gets made whole, right?

Marcus: Exactly. They get made whole. So, so like,

Emily: so the way to think about this, even if you aren’t deep in the weeds on this stuff, is that for most of my career, your preferred payer mix, if you’re a hospital or a nursing facility or, or whatever, you know, is commercial. biggest piece, then Medicare, then Medicaid.

Emily: Okay. And you always wanted that mix to be tilted more towards commercial.

Marcus: Yeah.

Emily: Supplemental payments are designed by the states and the federal government in cooperation with providers. And this is perfectly legal. There’s nothing funky [00:26:00] about this. I mean, there’s nothing like underhanded about this.

Emily: It’s just the way we designed the program. Right. Um, yeah. They have said those, um, those, uh, states and with the agreement, the federal government have said, okay, If you’re a hospital and you want to tax yourself, you want to raise your bed tax, so that that can leverage a federal match. Essentially, a dollar goes from a hospital into the state coffers.

Emily: The state then says, hey, federal government, there’s a dollar, send us a dollar. And then a dollar becomes two dollars. Okay, that’s, that’s how it works.

Marcus: And

Emily: that money is supposed to close the gap between what it costs to take care. Of a Medicaid patient and what they’re paid, right? That’s what’s uh, and the federal government has said for years and years and years, you know, when you close that gap, make sure You’re not paying more than what you would be paid under the medicare program,

Marcus: right?

Marcus: Yeah, it’s it’s supposed to kind of bring you up to par with medicare. Yes, not necessarily bring you up to par [00:27:00] with Commercial.

Emily: Now it is. Yeah, right. Exactly. Yeah. So, effective on July 9th, uh, state plant, states could close, now the gap isn’t between Medicaid and Medicare. Yeah. You’re trying to close with supplemental payments.

Emily: It’s between Medicaid and commercial.

Marcus: Commercial. Okay.

Emily: Uh, so, uh, To quote the investment relations, um, a person at a major hospital, publicly traded hospital chain, we are payer agnostic.

Marcus: Right. It doesn’t matter anymore.

Emily: It doesn’t matter. It doesn’t matter anymore. And this is, this is because, you know, the, the, you, you, you’ve essentially, Medicare is, Less than commercial, but now medicaid is up at the top and, uh, and it’s going to explode now that you can do the, you know, the upper payment limit is commercial

Marcus: and the states are not out any more money.

Marcus: No, this is a federal,

Emily: there’s a federal

Marcus: thing. So, so, so this contributes, I’m trying to make sure we’re, we’re connecting it back to the trump thing. [00:28:00] This is back to the. Growing percentage of GDP, right? And also specifically the federal deficit, right? Exactly. So it’s, it’s part of

Emily: the government has to print more money in order to pay, uh, money, the federal match to, to the state.

Emily: And it’s, it’s something that. On a bipartisan basis, people have said this is a terrible way to do business. Um, but if we get a block grant proposal or as states come in to renew, it’s very possible that the fed, the government says, all right, no more block, no more supplemental payments, but we’ll make you whole with the, in, in a block grant or a per capita cap or something like that.

Marcus: Yeah.

Emily: Which you would love if you’re a governor, because you, you’re tired of lobbyists crawling all over you.

Marcus: Yeah, but it’s, but, but it’s no less money that you’re receiving from the

Emily: press. You’re never gonna get the states to go along.

Marcus: Yeah.

Emily: Unless it’s, unless

Marcus: the money is on par.

Emily: It’s on par. And it inflates at a level that is matches what you’re expected.

Marcus: Yeah. Trend is, but what is likely to happen is [00:29:00] this new caveat of, Hey, we can go right to the ceiling of commercial that gets drawn. That gets pulled back, right? I don’t

Emily: know if it will because it’s there now. Okay. Yeah. Wow. And, and what I would, and the policy objective is to end the state plan process, this five year re up Medicaid program and to end this

Marcus: because it’s bureaucratic that the thinking there is because it’s

Emily: bureaucratic and it, it has, you know, teams of people doing nothing but updating.

Emily: Okay. So expensive in that way. And the premise, the subtext, if you will, of that policy is these 50 governors, you don’t know what they’re doing. And in 1965, that might have been a concern, you know, but they all have very sophisticated programs and there’s just no reason for, for that to happen. This is just

Marcus: another one of those examples of like, The law hasn’t caught up, right?

Marcus: I mean, we, we, we have AI being regulated by a medical device act from the seventies. It’s just right. Okay. Okay. Got it. So, [00:30:00] but for the, for the listener who is not viewing the chart details, the supplemental payments are 20 percent of total Medicaid payments to hospitals from fiscal year 2022. So that’s, this is not an insignificant percentage of the money flowing into hospitals.

Emily: It’s not.

Marcus: Uh, and, and I, and I think just last thing I’ll just say is Uh, particularly for non profit hospitals, because they are the ones with the payer mix that is really, really heavy on Medicaid. Yeah, because

Emily: they’re, you know, that, that, just because of their, their patient, uh, trend. Um,

Marcus: uh, okay, let’s, let’s talk about ACA Marketplace Enrollment.

Marcus: So, the family glitch, uh, which basically said, hey, it’s not just about you as an individual, now your whole family. So, everyone just got their whole family. Bring the kids! Yeah, yeah, so, so, uh, ACA Marketplace Enrollment has, uh, Really had a pretty huge year over year change from 2023, uh, 2022, 2023.

Emily: Right. Um, and that’s something

Marcus: I was aware of, actually.

Marcus: I didn’t know that.

Emily: Yeah. And this is, this is actually using my estimates, my model for determining ACA marketplace enrollment. But [00:31:00] your data

Marcus: source is HHS, right? My

Emily: data source is. The office of the treasury and what I did is I built a model based on treasury outlays and historic behavior to to term guests as the enrollment.

Emily: My enrollment number is a little bit lower than what the, uh, what the ACA plan selections were. We were told they were, um, in, in January. Uh, so, so if you were to add what they say. Which I don’t think is accurate, but if you add what, because it’s just planned selections, it’s not people who actually paid their premiums.

Emily: Um, you still, you’d have a huge jump in the number of enrolled people.

Marcus: So what, what would the Trump administration say about this? You said they want to roll back this family glitch. I

Emily: think that because it’s not. The law does not. We had interpretations from President Obama until the middle of Joe Biden, and it all said, the Department of Justice said, no, you can’t do that.

Emily: So, I think the first. Answer responses. Well,

Marcus: was there an [00:32:00] agency that that made this change? Was it was it was a CMS or CMS?

Emily: But but with the Department of Justice suddenly saying oh, never mind all that, you know, okay So

Marcus: does this flow into Chevron?

Emily: This is definitely a chef. This is

Marcus: just Chevron issue Okay, because

Emily: the law is fairly It’s poorly drafted.

Emily: The law, the whole law is poorly drafted, it causes problems left and right. Uh, and this is an example of it being poorly drafted. Did the, um, did the drafters envision a case where you would have a, a head of household who was employed, who couldn’t afford the employer sponsored insurance, um, because it exceeded 9 percent of their, um, of their household income, uh, and they were really thinking in their heads, You know, this, this should be, this health insurance should be purchased for the whole family and not just the employee, maybe, yeah, but it was so poorly done, you know, we don’t know.

Emily: And all you got are the words on the page and that’s what, that’s what the judge is supposed to look at. Okay, got it. So

Marcus: the [00:33:00] Trump administration is likely to roll back to what was the precedent in this case. And

Emily: I think fraud, waste and abuse is going to be a big part of this and the Medicaid program.

Emily: Fraud, waste and abuse is our shorthand for Medicaid. Kicking in the program, integrity people to audit and, and, and look at, all right, are these people really eligible?

Marcus: What, what’s the downstream effect of that? If, if you’re, if you’re in effect kicking families off of marketplace plans, because they’re not eligible based on the interpretation of the law, does that shift them to Medicaid?

Emily: Uh, it would probably be in, they would be in their employer sponsored insurance, which would be more if,

Marcus: if they, if they have an employer, right? Okay. But let’s, let’s, let’s. Let’s take the case of a family where they’re gig workers

Emily: in that case. Um, they would, if, if they lived in an expansion state, they would probably be eligible for, for Medicaid, Medicaid expansion state.

Emily: Um, and, and they may. If, if they, if you’ve got somebody who was kicked off of, [00:34:00] uh, of Medicaid or, uh, yeah, if somebody loses their eligibility and ACA and goes to Medicaid, chances are they’re eligible for ACA. The, the, I think what is most likely happening here is people

Marcus: not doing their employer sponsored plans and going to marketplace instead because employer plans are kind of crap.

Emily: Yeah, that’s right. Yeah.

Marcus: Okay. Okay.

Emily: And, uh, and so they would have to, you know, make a decision. decision. They could possibly go to Medicaid. They could go to their employer. They’re probably not who we’re talking about, who probably is going to be the focus of attention in met in ACA plans are people who.

Emily: Are already covered and using whatever insurance they have and are somehow enrolled in these ACA plants.

Marcus: Okay. And that’s the fraud thing.

Emily: That’s the fraud thing. Yeah. Yeah. Um, because it’s, it’s a big jump. It’s a big number. And interestingly, you know, we, we raised the threat, we got rid of the threat.

Emily: Threshold above which the income threshold, so [00:35:00] you can, no matter what your income is, you can enroll in an ACA plan and that expires in 2025, um, at the end of 2025. Okay. And, and so people that

Marcus: emergency action for COVID or something,

Emily: change in law, it was in the, uh, I believe it was in the inflation reduction act and it essentially says that it

Marcus: already ends in 2025.

Emily: Well, it was, uh, I think a two year, uh, two or three year, two or three

Marcus: year program. Okay. Okay.

Emily: Um, because it costs so much money, you know, you can’t, you can’t do it for, for 10 years or whatever. Right. Uh, so the, so the, the, uh, the, the enrollment growth. All right, is not coming from people making over 400 percent of the poverty level.

Emily: Uh, it’s coming from the non expansion states and people who are in the Medicaid zone. But they can’t get Medicaid because they’re in the non expansion states. They’re in the non expansion states, yeah. So what, you know, so it isn’t, it isn’t, you know, this nice family of four whose dad’s an architect and doesn’t have [00:36:00] access, that’s not what it is.

Emily: Um, it’s, uh, it’s mostly in the lower income, in the non expansion states and, and there’s some, some eligibility questions there I think that, that need to be answered. I think that’s true of Medicaid as well. You know, Medicaid enrollment is, is high. But it should be declining faster than it is even after disenrollment because you, the employment number is in pretty good shape, you know, um, so that’s the, so you’re going to see a lot of that, that is low lying fruit, nobody gets mad when the accountability people show up, you know, and, and, and that, that’s, that’s going to be an easy win to kick all that fraud, waste, and abuse, which used to run in the Obama administration, they’re very serious about it.

Emily: It really just fell off the, off the truck here.

Marcus: Yeah. I mean, I think the Obama administration was incentivized to make sure that it worked. Right. You know, it was, it was on their watch, got launched. And so

Emily: yeah, they didn’t, he didn’t want, he didn’t want healthcare expenses to explode. [00:37:00] Yeah.

Marcus: Yeah. Um, okay.

Marcus: Now moving on to your bad category, right? So let’s, let’s focus for a little bit on not for profit hospitals. We talked already a little bit about biopharma, so we can probably skip over that one, but not for profit hospitals. Um, I, it feels to me like. I don’t know. The last 12 months, not for profit hospitals have actually had a pretty good last 12 months.

Marcus: I think you Medicaid. Yeah, well, well, Medicaid. Also, it feels like in the courts that they’ve done well, they’ve been able to maintain the 340 B stuff that, you know, I mean, the AHA has been pretty successful, I would say. Over the last 12, 18 months with their policy efforts. So, I think it’s just important to call that out because you’re, you’re, you’re saying you believe the Trump administration brings in additional headwinds.

Marcus: I think

Emily: the price transparency, um, initiatives started under Obama.

Marcus: But, but Trump was big on competitiveness and Price transparency in [00:38:00] term one. He basically didn’t get to finish it because of the

Emily: thank you. Art Laffer. Yeah. And also

Marcus: Larry Van Horn and

Emily: Larry Van Horn and Larry

Marcus: Van Horn. Yeah. Yeah. Um, but, but, uh, But he didn’t get to finish it because of

Emily: COVID,

Marcus: basically, right?

Marcus: I mean, he was, he was moving through it.

Emily: Yeah. And, and, and truth be told, the data was not in particularly good shape.

Marcus: Okay.

Emily: The data still isn’t in particularly great shape. If you go to, you know, some nonprofit hospitals, I couldn’t tell, couldn’t tell you what the price is, you know? So there had, it’s a slow motion kind of thing.

Emily: But the House Energy and Commerce Committee has worked on price transparency. It’s obviously a Project of the Trump administration. The Heritage Foundation says we need more transparency. So, we’re not there yet where the data is. completely usable. There’s a lot of problems with it and it’s evolving. But when we get there, you know, maybe two [00:39:00] years from now, when we get there, you have, you potentially have the development of a cash pay ecosystem.

Marcus: How, how do we get there? I mean, the charge master was an absolute disaster. That was not a thing, right? So, so What is there some innovation that’s happening on the data front that is going to change this

Emily: first requirement in July was to have everybody build out their complete list, not just, you know, a select list of services.

Emily: Um, but, uh, but you know, the, the full list and to ensure that it’s machine readable. Yeah. Yeah.

Marcus: Well, I remember that, but then. There was like a bunch of stuff about that, right, like, like the machine readability thing, right? I mean,

Emily: but it’s gonna have to take people getting involved in research, researching and, uh, and even the private sector,

Marcus: I was about to actually know, um, a consulting company that has built out a platform, right?

Marcus: All around this, like, and it’s [00:40:00] pretty cool. They’re, they’re, they’re sucking in all this machine readable data and it’s so not machine readable that they’re going to have a business because you got to, you know, build in all the things to, to normalize the data because it’s, it’s kind of a mess.

Emily: Right. It is kind of a mess.

Emily: And, and it’s, you know, one, but

Marcus: the outputs are powerful because, you know, you do get this ability to kind of basically put in any given market. You know, five hospitals side by side and kind of say, Hey, these are the contracts, you know what I mean?

Emily: But one of the problems I think that is going to be, that’s going to persist is the language of that data is the CPT code system.

Emily: Right. And, and you as an informed consumer, you’re going to have to, and this is probably a moat for somebody, right? You’re going to have to put in your, uh, You know, which CPT codes are most likely to go with other CPT codes and those kinds

Marcus: of things. Yeah. Yeah. So, so the private market thing that I was talking about is very much like an industry tool.

Marcus: Okay. A consumer can’t use that. Right. Okay. Yeah. Yeah. Okay. Okay.

Emily: But the vision [00:41:00] is that the consumer would use it. That’s, that’s the long term, um, the long term vision. Um, and the, and the, the, the nonprofits, particularly academic medical centers, always come in high on, on their pricing. And something like a.

Emily: A, uh, a birth for example, you, you’ve got in Nashville, Tennessee, a pretty big disparity on a service that we used to perform in caves. Okay. This is not, this is not, you can pretend, you know, that you’re special, you know, delivering babies, you know, on 21st Avenue versus, you know, um, Southeast Nashville, but, but you’re not, that’s right.

Emily: So, so there’s a big, big disparity, um, there. And if, as As prices and I’m thinking about this in a three to five year time frame. Okay, maybe more five than three, uh, but you, you, you’re going to have to adjust, um, when you have any kind of cash level ecosystem, you know, or even [00:42:00] if you know, even if your employer starts to get interested.

Marcus: All right. So I want to roll through this list of bullet points because I would like for you to pick out the one that you think. Is going to be tip of the spear. So you’ve got price transparency, site neutral policies. That’s a, that’s a big one, right? Um, elimination of inpatient only lists kind of part two of the site neutral policies, right?

Marcus: Yeah. Um, expansion of AC A SC covered procedural list that’s also kind of built into that, uh, restructure of three 40 B program for benefit of patients. That’s a big one, right? But it’s only

Emily: big for a few hospitals.

Marcus: Well, big for a big enough cohort of the nonprofit hospitals. I mean that, that like, it’s, it’s, it’s a major AC, uh, AHA item.

Marcus: You

Emily: know, Henry Ford, Vanderbilt, um, Mount Sinai, uh, try to remember who else is, I’m not picking on anybody there on the list. No, no, no,

Marcus: no. I mean, it’s, it’s, it’s not insignificant. It’s not insignificant. And then, uh, supplemental payments, which we’ve already covered and then slashing payments for refugees, [00:43:00] we can leave that one out.

Marcus: Sure. So of those, tell me the one that you think is really going to be tip of the spear that they will actually try to create a public narrative around.

Emily: I think the, uh, the re elimination of the inpatient only list because the Trump administration, remember, ended it with a three year phase out and that was reversed.

Emily: And then

Marcus: Biden brought it back.

Emily: Yeah, Biden brought it back. So that policy is You know locked and loaded. Yeah, it is it’s ready to go Um, and what it what will ha what we did not give it enough time to do Because it was reversed by the biden administration. We did not give it enough time to to develop and allow innovation to develop and allow procedures that were considered inpatient only to develop into a You know, through robotics, you know, through whatever the, the source of that innovation.

Emily: Didn’t give enough time. Um, so if you restart that I mean in some

Marcus: cases, it’s not even robotics, it’s just set up a building.

Emily: Yeah.

Marcus: There’s not that much to it [00:44:00] for a lot of this stuff. You know,

Emily: once you, once you’re putting a patient under anesthesia, you have a higher order of, Things that you have to do, um, and, and you have, and, and, and that needs to be considered.

Emily: Sure. And then there’s, you know, what do you do? Who’s going to take care of you when you get home? And you know, all these things that need to be considered. But, but when you, but the interesting thing about a lot of those procedures that have moved into an ambulatory space and can move into the ambulatory space, those are big margin procedures.

Emily: Yeah. That’s where a lot of margin

Marcus: is. And,

Emily: uh, and if you are left as an inpatient hospital, First of all, if you’re, if you’re a non profit hospital and you’ve not created that, that vertical continuum of care integration, um, like the, the publicly traded guys had done, like a few of the non profit guys have done, and

Marcus: some are more moving in that direction.

Marcus: You mentioned Henry Ford, like they’re definitely moving in that direction. Vanderbilt. Vanderbilt for sure. Vanderbilt for

Emily: sure. Yeah. Um, then you’re, if you haven’t done that, you’re in a, [00:45:00] you’re in a, you’re in a, you’re Tight spot. Yeah. Okay. Because you need to, you need to do that. Yeah. Um, otherwise you’re just gonna have price pressure and what you’re gonna be left with is really sick people have nowhere else to go.

Emily: Okay. Which is very low margin, negative margin, you know, type stuff. Um, so I would say that is the very much a, um, Near and present danger for the non profits hospital non profit hospitals the 340b. Yes The american hospital association wants to protect it. Um, but there’s a lot of people out there who are like, wait a minute That I paid 20 of list price you bought it at list price minus 25%.

Emily: Why am I getting, you know, why am I getting hosed here? And, and it’s a, it’s a, it’s some of these drugs, he’s inpatient infusion. These are thousands and thousands of dollars for a session. That is a, all three of these are what they are consumer friendly. And what is the [00:46:00] platform of the Trump administration?

Emily: I’m here for you. Yeah.

Marcus: Right. Yeah. I mean, I mean, day one of the RNC was make America wealthy again. So

Emily: yeah, it was,

Marcus: it was, it was, yeah. So. Um, I mean, I’m not watching the whole thing, but I’m definitely tracking what the themes are, right? Because, you know, the themes will, will emerge into, you know, campaign pillars, but effectively.

Marcus: So, um,

Emily: but, but you had just, you have this massive populism movement upon us and, and the

Marcus: Trump administration is definitely driving on a populist platform. Yes. So that, that’s really interesting. I mean, price transparency.

Marcus: I mean, if two of those happens, I mean, much less all five, I mean, that is, that is a really,

Emily: it’s a, and that’s

Marcus: really,

Emily: it’s a big deal.

Marcus: That’s a big deal. That’s a big deal. I

Emily: expect to happen. And what I predicted would happen in Trump one is that the for profits would take share [00:47:00] from the nonprofits. And I still expect that to happen.

Emily: They’re much more cost efficient. You know, they’re adapting to technology,

Marcus: better payer mix,

Emily: better payer mix. Um, you know, and once you start, once you start going down the path as a for profit hospital, which traditionally never, they didn’t attract the great docs, right? The great docs wanted to be at the big nonprofit in town or, or the big academic medical center.

Emily: Yeah. But once you, you know, You know, become a great provider and you track docs. And once you start attracting docs, really high quality doc, you know, game over, you know, in your market.

Marcus: So, and look, I mean, I’ve heard so many people experienced hospital execs talk about how. The current incentives are just not there to move the industry to a more kind of decentralized, freestanding ED and then, you know, best site of care kind of model where it’s, you know, [00:48:00] it’s all in the same vicinity and it’s all integrated through technology, but it’s not all in one building, right?

Marcus: You know what I mean? Like that, that whole thing. Um, and we just have not had the market force to push and create that, right, to create that ecosystem. And you wonder how much, to your point about. You know, you don’t want to create a recession by imploding health care, but what happens if, you know, the vast majority of Medicaid and Medicare is occurring in a decentralized model, you know, very integrated, very technology enabled, but, you know, sites of care that are optimized for what they’re supposed to do, right.

Marcus: As opposed to the whole, the whole,

Emily: the whole big, the

Marcus: whole big building, the big building, the big building thing. Yeah. Yeah. It’s just a question of how much. Of the, how much of that 17 percent and growing of GDP is locked up in the, in the big building, in

Emily: the big, you know, the stranded capital problem. Um, [00:49:00] and, and that’s a good, we won’t know.

Emily: The only way, the only way this goes successfully is if there’s a nice glide path

Marcus: to

Emily: that future state. And if you do it immediately, Um, you’re not, you’re probably not gonna be successful,

Marcus: but this is not immediate. What this really is, is creating the environment for a competitive set of companies or alternatives to emerge in which, like, which would be the glide path.

Marcus: The glide path would be creating an environment where competition can actually transition market from one state to another. There

Emily: is no. place where you were going to find lower productivity, except maybe a restaurant, than health care. You know, that, you, hours worked produces, you know, how many units of, of product.

Emily: Okay. It’s terrible. And, and it’s been a drag on the economy generally. And until artificial intelligence showed up, it did, [00:50:00] the prospects weren’t very good. Weren’t very good. Yeah. Um, but if you, if you just, if you implement these policies and yeah, you start to create a competitive environment and people wake up to the idea that, that, you know, sure your insurance covers it.

Emily: That’s great, but that insurance is in place of cash wages. You know, that’s, that’s, that’s the deal. You accepted. You accepted, okay, I’m gonna have this great health insurance, but that means I’m gonna, my cash wages are gonna be lower. Right. That’s that. And, and that people are done with that, you

Marcus: know? Well, especially after two years of inflation, right?

Marcus: Yeah, yeah, yeah, yeah. You can’t, they can’t do it, you know? Yeah. It’s, it’s, it’s, it’s crazy. So if

Emily: you wanna stimulate the economy and the consumer in particular, you know. Get their cash wages up. And this is one way to do that.

Marcus: Yeah. All right, let’s see, what else must we talk about here? Let’s talk

Emily: about biotech real quick.

Marcus: Okay, let’s talk about biotech.

Emily: All right, so biotech is a, this has been the darling of [00:51:00] Wall Street now for, oh gosh, you know. Well.

Marcus: It was until the last like three years,

Emily: it had a pretty good run the first part of this year, but, um, but it’s been a, uh, it was a darling for forever and ever. And I, I brought a slide that shows, um, funding at NIH and National Institutes of Health were Fauci during the COVID, nobody knew they were there until.

Emily: Until he, he started attending every, uh, press conference. It’s, it’s 27 centers and most famous is the National Cancer Institute.

Marcus: Cancer Institute, yeah.

Emily: Um, and, and it, that, which happens to be the, probably the best one, run one. And it has, what it, it’s done, originally it was just basic research, doing stuff that the government, like the Human Genome Project.

Emily: Now what private sector company would have undertaken that?

Marcus: No.

Emily: I mean, where’s the product? Where’s the monetization? Where’s the moat? Right, right, right, right. Um. And the, the, uh, the, so NIH was, that’s what they were mostly doing, [00:52:00] uh, as they, uh, as time has gone on, really becoming competition with the private sector in some respects, where, where they’re attracting scientists that would be in the private sector.

Emily: Um, to work in for the government and, and they’re fund, they’re funding more applied research, uh, which that’s, applied research is what the private sector is really good at. They can seed the monetization, they can seed the strategy. Um, and we don’t need the government to do that. Right. Um, so, so, but the, but nonetheless what the government has done has funded early stage biotech companies indirectly and directly.

Emily: And those early stage companies, you know, they, they. They, they’re at, they’re funded at, you know, MIT, you know, or Broad, and then that gets turned into, you know, uh, a commercialization of those, the commercialization project of those institutions, uh, and then get spit out, you know, into VC land, uh, Well, the [00:53:00] funding for NIH has been significantly clipped by the House in particular, because of its behavior during COVID.

Emily: And it wasn’t so much, you know, Dr. Fauci’s rather unpredictable, You know, appearances that consisted, but that have been consistent since. It’s, it’s the fact that what we learned in that is that you can control scientific consensus just by making sure people know they’re not going to get their next grant.

Emily: By, you know, or, or their institution, you know, the research institution says to them, don’t say that, don’t talk about that, uh, because you might, you might endanger our grant.

Marcus: Yeah. I mean, I mean the, you know, the. The whole Jay Bhattacharya story is just

Emily: just incredible. It’s incredible. It

Marcus: is an incredible story.

Emily: Yeah. The fact that, you know, Stanford University, one of the [00:54:00] greatest, you know, research institutions would, would value,

Marcus: but, but the incentives, right? I mean, the incentives,

Emily: the incentives, yeah. So, so what we learned is, is, is, is that there, that that system does not. It’s not decentralized enough. Yeah, got it.

Emily: And so funding has been flat for the last couple of years It’s gonna get flatter. They’re gonna read the their proposal is to reorganize NIH

Marcus: now whose proposal we’re getting the

Emily: house house appropriations Okay, they actually right now right now. Yeah, we’ll go from 27 to 15 Wow And we’re going to fund things in a more holistic way.

Emily: So, so there is going to be an institute of body systems. And the idea is that there would be more cross pollination across, uh, across that, uh, which could be a very good thing. But what we know about reform in government slows everything down. So not only do you not have great funding picture, you also have a lot of disruption, uh, in job titles [00:55:00] and, and, and, and, and.

Emily: Time used for, you know, restructurings that if anybody’s ever been through a big company restructuring, that’s, that’s what you’re, you know, you’re looking at. So we’re gonna see this headwind for biotech, I think persist for a fairly long time, unless the private sector really gets in the game again. And starts funding, you know, early applied research, um, and, and, and just, and incubates that.

Emily: And some of them have said that’s what they’re doing. You know, Santa Fe, for example, has said that that’s, that’s going to be our response to that. Um, but that means you spend more on R and D,

Marcus: you know,

Emily: um, which is a headwind for, for biopharma.

Marcus: Okay. That was good. I’m, I’m glad we covered that.

Emily: Yeah.

Marcus: Uh, okay.

Marcus: The good. The good. All right, let’s close out with the good.

Emily: Ambulatory. That’s why I put it last. Yeah. Ambulatory. So, you know, um, Ambulatory, the ambulatory environment is preferred by patients, um, it is often preferred by doctors. It is definitely [00:56:00] preferred by labor. People would rather work in a doctor’s office than a hospital, um, and they would rather work in a hospital than a skilled nursing facility.

Emily: This is what the data shows, the wages show us that, uh, and if you, um, if you say to healthcare ecosystem. All right, we’re going to have price transparency. We’re going to have site of service optimization. You allow innovation to develop and you allow the ambulatory sector to become more productive and more advanced.

Emily: Patients like it, docs like it. You know, there’s just, there’s nobody that doesn’t like it, except maybe the American Hospital Association. And that’s a, that’s a huge, huge plus. What about

Marcus: home health?

Emily: Home health. I, you know, we can probably put a fork in value based. purchasing as a thing when we start implementing site of service optimization and, and price transparency.

Emily: Um, cause it was always kind of a political thing. It wasn’t really a medicine thing. Um, but, uh, [00:57:00] but the, um, the, the home health, home health saw a real, growth spurt kind of on the value based purchasing concept.

Marcus: Yeah.

Emily: And what you’re doing there really, if you, I mean, I don’t want to offend anybody, but you’re moving the cost of care out of an institution into the home.

Marcus: Yeah.

Emily: And you’re putting that on unpaid workers, the family. Yeah. Okay. Um, and You’re not actually waving a magic wand over people to make them better. No, you’re definitely not. So it exists and it, it was successful in an environment where your aged population, particularly before, before the baby boomers really started hitting their peak.

Emily: They’re expensive. You’re, you know, you’re, you’re 65 to 70 population wasn’t that terrible. Um, you know, not that needy, you know, fuel prices were low. Um, you, you know, you could accept an inefficient [00:58:00] system, which is home health. Um, now you’re in a different ball game. You’ve got labor costs are high. Home health is not a, a preferred site of care for a lot of.

Emily: Healthcare workers, they’d rather be in the doctor’s office if they’re not there, not be in the hospital. And so it’s faced some real headwinds. Just because it isn’t, it doesn’t really work that great, you know, um, in, in a, in a lot of cases, there’s a place for it. It’s just, it’s just not, we’re not going to see people moving out of getting care in the home like we, I think we thought under the, the whole value based purchasing paradigm that we had.

Emily: That kind of controlled thing in the wake of the Affordable Care Act.

Marcus: Yep. Okay. I buy that. What? Okay. Final question. Just because we’re talking about ambulatory. So I’m thinking about all things that are not hospital. What about telemedicine?

Emily: Telemedicine is, is slogging its way through changes in the law that I think will be beneficial.

Emily: It, it, and it will be, you know, Senator [00:59:00] Fris told me this years ago. It is a modality of care. It is not a thing on its own. Yeah. You know, um, it is just one piece. One tool in a, in a doctor’s. Yep. Um, uh, in a doctor’s, uh, uh, toolbox. So the, um. But it will, it will continue to advance and dig its way into the system and become a modality, you know, along with visiting the doctor’s office that will drive patient satisfaction.

Emily: Yeah. Okay. You know, particularly like pediatrics, right? Who wants to, I know I’m wrong. My kid has an ear infection. This is the third ear infection this year. Right. You know, can we just talk about this on the phone? Yeah. Instead of taking that poor kid down to the doctor’s office.

Marcus: Yep.

Emily: Um, so that’s, um, that is very clearly a win.

Emily: The headwind is, um, the use of telemedicine in a way that is driven almost entirely by drug prescribing.

Marcus: Oh yeah, well that needs [01:00:00] to happen. I mean, you know, cerebral, dome, global, I mean, like,

Emily: come on, come on,

Marcus: yeah, come on, come on.

Emily: I

Marcus: mean, well, at least Rho is not, like, pushing Adderall. No, no. You know what I mean?

Marcus: Like

Emily: This is true.

Marcus: There are levels to this, and some of these P people are just really, they,

Emily: they became drug pushers, you know, in, in, during Covid. Yeah. And,

Marcus: and they’re going

Emily: to

Marcus: jail.

Emily: Yeah.

Marcus: Not again, not the Ro guys. I’m trying to be specific here,

Emily: you know,

Marcus: but the Adderall pushers are going to jail.

Emily: Yeah.

Emily: And they should, you know, because it’s crazy. Um, and, and that’s a, that is a headwind. And, and I think that that should

Marcus: be a headwind.

Emily: And yeah, it should be a headwind. That should be a headwind. And if you looked out into the future, I think what you’re going to see is. That telemedicine relationship, there has to be an established relationship, right?

Emily: A real one, a real one, not a, um, you know, Hey, I’ve got a test next week. I need my, I need my stuff. I need my, which is what was going down. I [01:01:00] mean, and there’s several examples like that, but, but that, but that ultimately is, I think, The way and I consider those companies that those standalone telehealth companies that are just pushing drugs to be very, very high risk.

Emily: Um, it’s something that will be, it’ll be in the infrastructure of health care and mostly invisible to you, except when you want to make a phone call and say, I got pink eye, you know, Kind of thing.

Marcus: Okay. What did we miss?

Emily: Um, well, we didn’t talk about what happens if Joe Biden remains the president. No, we’re not.

Emily: We’re going to save that for another

Marcus: week. Look, we got, we got the DNC coming up in the future. We’ll bring you back for that. Yeah. No, this is Trump’s week. Okay. This is definitely Trump’s week, so we are only covering Trump this week. We will bring you back and we will talk about what, yes, we’ll talk about that later.

Marcus: And by the way, by the time that happens, it’s unlikely we will be talking about Biden. We will probably be talking about a different candidate.

Emily: Yeah, it is a, we [01:02:00] are living in unusual times.

Marcus: It is the strangest. Time I can remember. And I mean, we lived through COVID and somehow I’m like, this is even stranger.

Marcus: It really is. It’s just this whole weird episode of the twilight zone that we’ve been in for years now. Uh, Emily, thank you so much. This was fantastic. I feel much smarter and, uh, I’m going to make some better deals now.

Emily: All right, great.

Marcus: All right. Talk soon.