Below are five things analysts Moody's expects to see in the coming year:
1. Medicaid redeterminations, ACA competition a negative for insurers. Molina Healthcare and other payers concentrated on Medicaid could see a decline in revenue if Congress ends the public health emergency, which paused program eligibility requirements. Moody's noted that insurers will aim to transition the 4 million individuals destined to fall off Medicaid rolls to Affordable Care Act coverage. Analysts expect ACA enrollment to remain high in 2022, but noted that profitability of the exchanges will remain lower than pre-pandemic levels thanks to COVID costs and increased competition. The report said conditions linked to the "long COVID" will cost insurers $22 billion this year.
2. Coverage changes to upset health system finances. Medicaid redeterminations and growth in Medicare will result in lower reimbursement for health systems, which will leave providers more dependent on government funding, the report said. Additionally, the shift to lower-cost sites of care and increased telehealth use will cut revenue. Analysts do not expect emergency department volume to return to pre-pandemic levels. Across the industry, Moody's anticipates providers' patient mix to mirror what Bon Secours Mercy Health in Cincinnati experienced during its most recent quarter–inpatient admissions slightly lower than 2019, but outpatient visits exceeding pre-COVID levels. Staff shortages will also constrain health systems ability to take on new patients and cut into their bottom line.
3. Senior housing to return to pre-pandemic levels by 2023. Moody's expects occupancy in senior housing facilities to increase up to 6% in 2022 thanks to a drop in number and severity of COVID-19 cases and new treatments. Labor costs will also fall as competition increases among workers who no longer qualify for supplemental unemployment benefits.
4. No medical device mega-deals, but lots of M&A. Moody's expects the number of medical device megadeals to fall from 2021, when acquisitions worth more than $5 billion reached a record high of 99, according to PwC. The consultancy expects smaller, tuck-in deals to dominate the market.
5. No Surprises Act will constrain physician staffing firms' cash flow. The federal ban on surprise medical bills will hit ER staffing, air ambulance and anesthesiology and radiology providers' revenue hard, the report said. ER staffing companies such as TeamHealth will be the most affected, since they remain out of most commercial insurers networks. Air ambulance carriers will also be vulnerable, although in-network contracts now make up more than 50% of their patient mix.