Hospitals, drug companies strive to stand out virtually at JPM

Even without the jam-packed hallways, face-to-face investor meetings and nightly cocktail parties, this year’s virtual J.P. Morgan Healthcare Conference still proved itself a valuable stage for healthcare leaders to share their plans.

According to a J.P. Morgan spokesperson, the virtual conference drew a larger crowd than normal, too, saying, "We had little over 12,000 confirmed attendees as of the Friday before the conference started versus about 10,000 last year."

As is typical of investor conferences, this one had a fair amount of bragging about sharp revenue or volume rebounds even as the COVID-19 crisis rages on. But there were also blunt assessments of the challenges companies face in climbing out of the hole the pandemic left them in. For insurers, there was concern about what the future brings as people return for care they put off.

After nine months that felt like nine years, presenters at this year’s conference—including the CEOs of major drugmakers—shared their beliefs that the vaccine distribution process will pick up steam.

Until then, companies are doing their best to differentiate themselves in a tough market. Device companies are touting their data capabilities. Health systems are expanding their ambulatory surgery networks. And everyone is trying to get more comfortable living with uncertainty.

Medical software and device manufactures alike have pinpointed the same asset as they look to expand and differentiate themselves in competitive markets—data.

Paul Black, CEO of Allscripts Healthcare Solutions, cited the company’s payer and life sciences division as a business that distinguishes it from other electronic health record developers. The division, rebranded as Veradigm in 2018, serves as a source of de-identified patient data for biopharma research and sells analytics tools for providers.

Cerner Corp. CEO Brent Shafer also cited “data-as-a-service” as a substantial growth opportunity, calling out the company’s Learning Health Network, a project that collects de-identified patient data from systems including EHRs to share with researchers at health systems, universities and pharmaceutical and life sciences companies.

Devicemakers have launched digital tools and pursued acquisitions to build up a portfolio of products that add analytics and artificial intelligence insights to their equipment.

Bryan Hanson, Zimmer Biomet’s CEO, said his company plans to roll out a “smart implant” for joint replacements.

“It’s going to be more difficult in the future for players to compete in this market,” Hanson said of orthopedic devices. “It’s not just robotics—it’s also the data informatics around robotics.”

Intuitive Surgical, the company credited with popularizing robotic surgery with its da Vinci system, is planning to create tools that help hospitals analyze data from their surgical systems.

Intuitive Surgical’s CEO, Gary Guthart, said he doesn’t expect to monetize those analytics tools. He said hospital administrators and surgeons are interested in purchasing products that improve surgical procedures—a desire the company can better tap into by offering data tools that inform operations.

Long before COVID-19 struck, health systems were trying to figure out how to deliver more care outside of hospitals. This year’s conference showed the extent to which the pandemic has sped up that trend.

Not-for-profit Ascension and investor-owned Tenet Healthcare Corp. announced aggressive plans to scale up their ambulatory surgery platforms. Now that patients are more reluctant than ever to enter hospitals, the urge is strong to buy up ASCs so health systems can hold onto that business. 

For its part, St. Louis-based Ascension plans to double its current ambulatory surgical center portfolio in the next two years. Ascension currently has about 61 such facilities, but intends to grow that through acquisitions and new construction, said Eduardo Conrado, Ascension’s chief strategy and innovations officer.

“We think that it’s a balance between building our own and partnering and then, where it makes sense, going out and acquiring,” he said during the company’s presentation. 

Ascension is seeing 10% annual growth in the number of surgeries performed in its ASCs, Conrado said.

Meanwhile, Tenet says it will add up to 40 new ASCs to its existing portfolio of roughly 300 such facilities. That’s on top of the 45 ASCs it just acquired for $1.1 billion.

Before Tenet bought its ASC subsidiary, United Surgical Partners International in 2015, just 4% of its earnings before interest, taxes, depreciation and amortization came from its ambulatory division, CEO Ron Rittenmeyer said during the company’s presentation. Tenet expects that to reach 40% by the end of 2021.

In addition to adding new facilities, Tenet started up 73 new ambulatory service lines in 2020, including orthopedics, robotics and bariatrics. The company also added 3,700 physicians to its USPI staff, Rittenmeyer said.

Musculoskeletal procedures were especially quick to return to Tenet’s ASCs after facilities reopened in 2020, Dr. Saum Sutaria, Tenet’s chief operating officer, said, adding that the company performs more than 500,000 musculoskeletal procedures annually.

Health insurers will rely heavily on Medicare Advantage and Medicaid managed-care to deal with the financial uncertainty caused by the COVID-19 pandemic.

A 15% decline in Medicare members doctor's visits in November and December will likely impact Humana’s 2021 profits, since physicians didn't include risk codes that Humana usually sees for doctor appointments. That's making it hard for the insurer to price these visits appropriately, CEO Bruce Broussard said. Still, the insurer is counting on Medicare Advantage to prop up the balance sheet.

The Louisville, Ky.-based insurer expects to end its fiscal 2020 with up to 475,000 new Medicare Advantage members, with the boost thanks to high sales and member retention. In 2021, Humana aims to invest in these enrollees’ services and grow its network of dedicated primary-care centers for the 200,000 members who frequent these sites.

At Centene Corp., Medicare Advantage represents the fastest-growing part of the company’s business. CEO Michael Neidorff is also bullish on Medicaid managed-care. Neidorff said several states are interested in accelerating the introduction of long-term care services for their Medicaid population, with the idea that cost savings will help offset the financial shortfalls caused by the pandemic. Neidorff expects to grow its Medicaid rolls by 1.9 million this year.

Molina Healthcare is also counting on its managed-care business to offset the high costs of caring for COVID-19 patients, as well as the requests from 10 states aiming to recoup Medicaid funds the Long Beach, Calif.-based insurer saved as consumers avoided the doctor’s office during the pandemic. Over the past few years, Molina has acquired small Medicaid plans and entered new markets.

“Diversification is the best risk-management strategy one can execute,” CEO Joe Zubretsky said.