The JP Morgan Healthcare conference is a great place to check the instruments and see how the industry is doing. Today we take a look at what we heard.
Today in health, it we're going to talk about the tree P Morgan conference. We're going to do a recap. I'm just going to go for the modern healthcare story. , and we'll talk about it. My name is bill Russell. I'm a former CIO for a 16 hospital system. And create, or this week health instead of channels, dedicated to keeping health it staff current and engaged.
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I think I'll hit those and talk about. Some of the other stories that I've, I've heard in the process. All right. Number one, health systems need to cut costs. , this is not rocket science and it's not a surprise, but this was a general theme. That you heard across the board, how systems came in and generally said, Hey, 20, 22 was very difficult year. , a lot of things, contract labor, spending, staffing, shortages, you name it. ,
And they are looking to reestablish a new baseline and that will require making some, , cost cuts. And you know, it didn't matter. Do you go common spirit to Intermountain Intermountain traditionally comes in. With a pristine balance sheet doing great and that kind of stuff. And I don't think. , that their balance sheet is bad by any stretch of the imagination, but even Intermountain was talking about costs.
, cost cuts and cost reductions. And a realignment. , based on the new, , , contracts that they have, the labor shortage, labor spending and those kinds of things. So, , lot of, a lot of plans in that area, as you know, if you're listening to this, you already know that. , number two, service integration is growing priority. Integrating services will be a key for healthcare organizations this year. Executive said health systems and insurers.
View it as a longterm savings opportunity in a path. Toward higher quality care. So you have Walgreens boots Alliance is open to additional acquisitions to diversify its services, CEO, Rosalyn. Brewer said Walgreens village MD closed an $8.9 billion deal to acquire summit health, city, MD, and plans to expand its multi-specialty and urgent care operations. Later this year, Walgreens will fill acquire care. Centrics.
And add home care business, CVS health CEO, Karen Lynch said the company. Is in the market for primary care assets as well. And I think, you know, from a provider standpoint, this is another thing that's happening. There's a battle and the battle is going on. At the, , primary care level, that's one area it's going on and it's going on at the, , alternate.
Locations of care, let's call it that, , alternative locations of care. So you're seeing surgery centers and, and, , alternative, , urgent care centers and whatnot. And so you're seeing care shift to lower costs. , caravan use. And that is going to continue that trends going to continue. You have the outsiders who are essentially.
, sort of skimming the top coming in. , with their strategies, targeting primary care, targeting those kinds of services that they can deliver a high quality and lower cost. And they don't have the legacy infrastructure that helps us some stew. So this is one of the reasons that health systems.
The legacy health systems have to cut costs in order to adjust to a new reality. And the new reality is, , we can't continue to raise costs. Forever and labor costs are going up. There has to be a different model and that model is being sought out. , and the transition to that model is not an easy one.
, number three, Medicare advantage remains crucial to insurers health insurance companies, health insurance companies. Presenting at the conference reported mixers all in their Medicare advantage business, but the lucrative growing program remains a top priority regarding, , regardless of recent performance Centene CEO, Sarah London described the company's Medicare advantage growth as soft during open enrollment in 2023, the insurer wants to boost profitability by signing up.
More dually eligible, Medicare, Medicaid beneficiaries. And by improving its star ratings. Which came in worse than expected last year. You may have so much better results with Medicare advantage and additive at least 625,000 new members. At a, during open enrollment, a sick. 13.6% increased Cigna reported its Medicare advantage membership grew in the high single digit range. So Medicare advantage continues to be incredibly important for the insurance.
, the space between the payers and the providers is going to get tense. So this is number four, tents rate negotiations will continue. Expect difficult conversations this year as providers look for ways to cut costs and insurers try to avoid significant reimbursement hikes, economic uncertainty will further complicate this dynamic. So while looming Medicaid eligibility redeterminations, which are expected to resume, as soon as COVID-19 public health emergency declaration expires.
And lead to millions, losing benefits, Centene chief financial officer drew. Asher said the company expects to lose 8 billion in Medicaid revenue. Do to read determinations, including 4.5 billion this year, and aims to transition Medicaid, enrollees to other forms of coverage. , there are going to be rate negotiations.
, I think the payers recognize that there are additional costs in the provider side. There's a lot of different conversations that are being, having happening. It's market dependent. It is competition dependent. You know how much competition is there in the marketplace? Who has the upper hand? , who has a strong hand at the table?
, but at the end of the day, the, , the payers benefited from the premiums they collected during COVID that they really didn't have to spend because of an awful lot of care. Got deferred. And that cared never really reappeared. It did not create a big backlog. And, , so that never really appeared. So that, that, , that flood in that backlog.
Never made its way to the healthcare providers. And it really did make its way to the payers. , and so the payers are flushed with cash. And what they're doing with that is really competing with the providers. And so there's a. It's an interesting dynamic that's brewing now. There's also incredible, incredibly interesting partnerships forming as well. And that's going to be an area to keep an eye on.
And I'm number five. And the last one in this article, competition heats up in the health tech space. The healthcare technology industry is growing more competitive as providers shift towards virtual platforms and digital tools to improve patient care. Teladoc health CEO, Jason Gorevic. Express confidence in his tele-health company's position relative to competitors, which he said lack the skill needed to achieve strong financial results.
There are a lot of virtual care companies out there, and that are more narrowly focused, smaller in scale and are nipping at the edges of single solutions. Gorevic said general Colosseum Heymont Tenasia caution investors about a tricky year ahead. As digital health companies have been forced to shift their focus from revenue growth to profitability.
That's the thing, I'm not sure about the Teladoc CEO he might be. Right. I don't think scale really matters in his space as much as he thinks it matters. , and you can quote me on that and he'll tell you that I don't know what I'm talking about, but at the end of the day, I didn't wildly overpay for an acquisition either. That's me getting a little snippy at the end of the day here. , but Hey, Montenegro is absolutely right that, , this shift from revenue growth to profitability has changed the landscape.
, we did not see an awful lot of, , funding rounds or, , really announcements in general, no mergers, , very little in the way of announcements at, , JPM. And that is uncommon. That doesn't happen all that much. Right. And one of the things that is going on is the health tech space has heard from the private equity partners from the VCs.
To make sure that they have enough runway to make sure that they have a path to profitability. That that is the story they need to tell. It's not a scale story anymore. It is a profitability story and it's a value story. How much value are you delivering? To whoever your end user client is. And is that a value that they're worth that they see and are worth? ,
Willing to pay for not worth paying for willing to pay for clearly value is worth. , are they willing to pay for it? That's always been one of the tricks in healthcare. It's not coming up with a really cool idea. , that's not the track. The truck is coming up with a financial model that actually works because most people feel like their insurance carrier should pay for it or should be included in their care should be included some other way. So it's hard to get money from consumers.
And then you either have to get it from the employers, the payers, or the providers, and each one of those has its own challenges. If you decide to go down those roads, So, , I agree with Heymont it's going to be a tricky year ahead. In the health tech space. And, , I think we will see more mergers and acquisitions.
, we will see things that look like acquisitions, which really are. , fire sales, assets, assets, sales, clients, sales, essentially, , buying, , clients and whatever, just to, , pick things up. I think we'll see that throughout the year. I think we'll see some strategic investments. From VC and private equity, as they look at assets that are struggling.
And they can really have a, , , I don't know. Really pushed their advantage in some of these companies. So anyway, tricky year is a great way to say it. So, , I don't know if it's a. If it's safe to say that this was a muted year. For healthcare at the JP Morgan conference, but it, , it definitely had a different tone and at different, , different fields. So, , we we'll see what that, what that means for healthcare going into 2023. But.
Usually great conversations. Great way to, , , determine what people are thinking about and talking about, don't forget to tune in next Friday. Next Friday, we do an interview with, , , with Rob de Michelle. Shave former CFO for UPMC, and he will give us a rundown of what he heard. And, , give us a rundown of the presentations that he sat through. All right. That's all for today. If you know someone that might benefit from our channel, please forward them a note.
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