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Health Industry Digest

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by

Mark Van Sumeren

on 28 September 2016

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Transcript of Health Industry Digest

Problem: System geared toward acute care
Real Driver is Chronic Conditions
$1.25
Monday October 3, 2016
Vol XCIII, No. 311
Effect could last for decades
Demand For Healthcare Could Return To Elevated Levels
Overall, fairly well - although supply chains are lagging
Health Industry Digest
2016 Industry Update: Change, Challenges & Opportunities
Healthcare Expense
=
f
(changes in GDP, inflation)
Chronic Conditions:
A major driver of Healthcare cost$
6 or more conditions: >70% of inpatient readmissions
Despite modest revenue growth & lagging operating income; stock performance has been strong
however, supply chain metrics haven't progressed.
Summary/Questions
Source: Company websites; SEC filings
Source: Centers for Medicare & Medicare Services, "Chronic Conditions Among Medicare Beneficiaries: Chart book: 2012 Edition"
Use rates increase with the # of conditions
Source: Centers for Medicare & Medicare Services, "Chronic Conditions Among Medicare Beneficiaries: Chart book: 2012 Edition"
Source: Centers for Medicare & Medicare Services, "Chronic Conditions Among Medicare Beneficiaries: Chart book: 2012 Edition"
Source: "Assessing the Effects of the Economy on the Recent Slowdown in Health Spending", Henry J. Kaiser Family Foundation, April 22, 2013.
Sources: US Bureau of Economic Analysis;
US Bureau of Labor Statistics,
Federal Open Market Committee
The economy is expected to improve . . . and inflation to return
# of chronic conditions increase with age
. . . and, spending rises as the # of chronic conditions increases.
Medicaid Expansion
Periods of significant growth driven by major shifts in insurance coverage
ACA is succeeding in increasing coverage
Economic recovery


Access to insurance


(Uber-) aging

Source: Beth Kutscher, "Affordable Care Act's benfefits for hospitals aren't yet clear", Modern Healthcare, February 27, 2015
Source: Beth Kutscher, "Affordable Care Act's benfefits for hospitals aren't yet clear", Modern Healthcare, February 27, 2015
10.8%
2.2%
Expansion
States
Non-Expansion
States
Revenue Per Case
7.4%
(12.9%)
Inpatient Admissions
Expansion
States
Non-Expansion
States
$33k
$2K
v.
4+ conditions
=
74% of spend
9M
23M
45M
23M
30%
15%
70%
Source: ycharts.com. Accessed October 27, 2015
Source: Company websites; SEC filings
Source: Company websites; SEC filings
Population Growth 2014 - 2030:
41M
Number 65 & Older:
28M
% over 65:
2014:
14.5%
2030:
20.6%
Oldest boomer:
69
Youngest:
51
Use increases with age, peaking at age 96
Increasing
Demand
Chronic Care
Challenge
Year of
Consolidation
Device
Supply
Chains
Regulatory &
Payment
Changes
Sections
Long Range
Forecast
Long Range
Forecast
3.0%
23M
9M
Newly Insured
Americans (Net)
2014
Since
2010
Uninsured
Americans
Impact of Insurance
on Use Rate
Inpatient
ER
Outpatient
2012
2023
GDP
CPI
Source: " The Rising Cost of Living Longer: Analysis of Medicare Spending by Age for Beneficiaries in Traditional Medicare", The Henry J. Kaiser Family Foundation, January 14, 2015.
McKinsey & Co.
CMS: Spending 5.8% per year
2014-2024:
2.0%
Revenue CAGR%
2010 - 2014
Operating Income %
% Change: 2010 - 2014
Price - Earnings Ratio
% Change: 2010 - Present
Cost of Goods Sold%
% Change: 2010 - 2014
SG&A%
Change: 2010 - 2014
Days in AR
% Change: 2010 - 2014
Days Inventory
% Change: 2010 -2014
How Well Have Device Companies Performed?
- 2010 v. 2014
- SEC filings, company websites
Median: 5.9%
Median 2014 Value:
33.5%
Median 2014 Value:
164.7
Median: 8.0%
Median: (5.2%)
Median 2014 Value:
59.9
Median: 4.1%
Median 2014 Value:
34.5%
Median: (21.6%)
Median 2014 Value:
22.6%
Median: 4.3%
Median: 80.4%
Median 2014 Value:
25.0
Full transcript