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This month we highlight some recent milestones—and a few setbacks in the field of healthcare policy. Despite the rough roll out, the Obama Administration reported 7.1 million enrollees via its web portal prior to the April 1st deadline. That good news was paired, however, with further extensions of deadlines for other provisions of the Affordable Care Act. Separately, the Administration announced the delay of ICD-10 and Meaningful Use Stage 2. In addition, The President and the US Congress once again put off addressing the Sustainable Growth Rate formula, which sets Medicare payment rates for physicians. Instead, Washington followed in the footsteps of the past and opted for a temporary “fix” to avoid a 24% formula-driven reduction to the Medicare physician fee schedule. Industry is not waiting for Washington to take decisive action. Patient engagement strategies leveraging hand-held, mobile applications are coming to market. Big data platforms and pricing transparency businesses, which support consumer choice, continue to find market adoption—and investor support. We are pleased to bring you another edition of our newsletter. For those of you in the Northeast, welcome to Spring. Finally!

Ruben J. King-Shaw Jr., Managing Partner & Chief Investment Officer &

James Renna, Operating Partner and head of the Mansa Operations and Advisory Group

Jason P. Torres, Partner and Chief Operation Officer

Policy

    Federal

    • Obama Admin announces 7.1M enrollees + final deadline is April 15th
      The White House announced another health insurance enrollment extension for those who needed more time to complete their application if they had troubles in the process on/before March 31st. The Obama Admin’s continued extensions have been criticized for being politically motivated.
    • Obama signs "Doc Fix" bill
      President Obama signed into law legislation that gives doctors temporary relief from a statutory Medicare payment formula that would cut 24% of their fees. The $21 billion bill postpones the cuts just until 2015 and provides an extension on other expiring provisions including high payment rates for rural hospitals. Cleared through Congress, the law also delays ICD-10 diagnostic codes until 2015. The legislation is paid for by cuts to healthcare providers, but half won't to effect for a decade.
    • ICD-10 delay dismays prepared vendors
      Industry response to additional extensions to changes in ICD-10 ranges from relief to resentment. While some welcome the “breathing room,” Athenahealth exec vice president and COO, Ed Park, said the extension is a "significant distraction to providers and inappropriately invokes massive additional investments of time and money for all. The issue is even more serious when considered in association with another short-term SGR fix and 2013's meaningful use Stage 2 delay."

    State

    • Transitional policies risk corridor tweaks bring new market implications [Nationwide]
      From the extension of non-ACA compliant individual and group health plans to the flexibility granted to state regulators to the complexity of the risk adjustment and reinsurance programs, insurers right now are facing numerous unknowns. Depending on how many states extend the non-compliant plans through 2016 and how many decide to further extend those plans, there may also be a delay in the expansion of the small group market from 51 to 100 employees until 2017.
    • Managing risk after reform: Facing the new underwriting landscape [Nationwide]
      In accordance with the ACA, insurers are re-calculating needs and rates, and in turn, health plans must broaden the definition of risk. This year, risk transfer payment programs for individuals and small groups were implemented in each state, and according to Dan Rachfalski, vice president of actuarial at Independence Blue Cross of Philadelphia, the programs "shift premiums from health plans with a healthier member population, compared to statewide average, to health plans whose population has a higher than average risk profile." With this shift, insurers will increasingly be pushed to differentiate themselves, and providers will be paid for quality, not quantity of services.
    • Faulty state Obamacare exchanges weigh joining HealthCare.gov [Idaho, Oregon, MA, MD, NM]
      States including Oregon, Maryland and Massachusetts that struggled with rollout of their own healthcare exchanges may opt to go with the federal-run Healthcare[dot]gov. Out of the 36 states that went through the federal exchange, Idaho and New Mexico will run online enrollment in 2015.

    Strategy

    • Wellpoint CEO: Technology, smart phones will shape healthcare’s future
      Smartphone[s], social media and data mining will drive change and shift the future of healthcare, said Wellpoint, Inc. CEO, Joseph Swedish. "Mobile telehealth...allows consumers to have a physician experience whenever they want with online chats, video sessions and on the phone. Physicians can recommend treatments…prescribe medication remotely, depending on state laws. As a health plan, our responsibility in this revolution is to be the connective tissue that binds the ecosystem.”
    • Smart data key to patient engagement
      Stage 2 meaningful use mandates that at least five percent of patients view, download and transmit their own health data, and many providers are concerned about whether it's possible to meet that number. There is an important difference between providers accessing data to identify chronic patients in need of the most care and having the ability to provide appropriate data to patients that can be used to customize treatments and drive behavior change. But patient engagement also requires some ownership and participation and accountability on behalf of the patient as well.
    • Medical software brings intuitive interface to health records
      Modernizing Medicine vastly simplifies electronic health records and medical coding on the iPad. Its Electronic Medical Assistant (EMA) software makes medical coding and speed note taking easier. By harnessing the power of touch, providers no longer must type in notes or fill in forms, and instead access 3D anatomical models to record diagnoses such as rash, tumor, broken bone or cataract. Using pinch and zoom gestures to zero in on the affected area, providers can then select from context-sensitive lists of afflictions and treatments that may be personalized by the physician.

    Industry Activity

    • IMS seeking $1.4 billion in IPO promising no healthcare shakeup
      Sixty year old, IMS Health Holdings, Inc. and its backers including TPG Capital are looking to raise up to $1.37B, making it the second largest U.S. IPO in 2014. The company, which "gathers data including how drugs are marketed and prescribed and sells that along with analytical tools and services," serves customers spanning drug makers, pharmacies and government agencies. IMS' sales rose 4% to $2.54B last year. "The market is rewarding innovative, disruptive models… IMS is not one of those healthcare disruptors,” said LA-based healthcare technology analyst, Gene Mannheimer.
    • Community Health Systems closes Florida, Pennsylvania hospital deals
      With the acquisition of Sharon Regional Health System now complete in addition to the signing of a 40-year lease of Munroe Regional Medical Center in Florida, Tennessee-based CHS (NYSE: CYH) is making inroads as part of its larger strategy to develop networks in other key states. CHS, which has the second largest state presence in Penn, now boasts through the Sharon deal a 218-bed medical center, outpatient centers and affiliated physician practices that serve NE Ohio and NW Penn.
    • Health IT soars with Castlight Health IPO
      At the forefront of price transparency, Castlight Health has gone public. Health IT investors and entrepreneurs sent the stock up from an IPO price of $16 a share to nearly $40, which values the company at more than $3 billion. Castlight is considered an industry barometer. Asked whether the prospect of a bubble weighed on his shoulders, Giovanni Colella, Castlight’s founder and CEO, said, “We’re focused on building an iconic company.” Founded just six years ago, Castlight has an impressive client-base including CVS, Microsoft and Wal-Mart Stores.
    • Healthcare data security provider Imprivata files for $115M IPO
      Imprivata has filed with the SEC to raise up to the $115M in an initial public offering. The Lexington, MA-based company, which provides authentication and access management technology solutions for the healthcare industry, was founded in 2001 and cleared $71M in sales for the year ending on December 31, 2013. Imprivata plans to list on the NYSE under the symbol IMPR. The company initially filed confidentially on January 17, 2014. JP Morgan and Piper Jaffray are the joint book runners on the deal. No terms were disclosed.

    Research

    • States failing price transparency
      According to the second annual Report Card on State Price Transparency Laws completed by Catalyst for Payment Reform and the Health Care Incentives Improvement Institute, all but five states received a failing grade this year on providing price transparency. Only two states (Maine and Massachusetts) earned a B and Colorado, Vermont and Virginia earned a C. No states earned an A. "Access to meaningful price information is more important than ever as consumers continue to take on a rising share of expenses," said CPR Executive Director, Suzanne Delbanco.
    • PCMHs a boon to providers and payers
      Between 2009 and 2011, researchers at Independence Blue Cross—a Philadelphia-based insurer—tracked 700 commercial HMO members with multiple chronic conditions treated at patient-centered medical home primary care practices, and comparing them with 300 members with analogous health problems treated at traditional practices. Out of the 700 tracked by IBC, the highest-risk patients had "significantly reduced costs and utilization" primarily due to avoiding hospital admissions. In the study, published in the American Journal of Managed Care, researchers also found there were increases in specialty care utilization for a range of chronic conditions including asthma, heart failure, COPD. The study is compared to a similar one by Rand.
    • Job market changes bring HIX membership uncertainty
      In a study by UC Berkeley that examined the longitudinal demographics of California’s pre-65 population and those eligible for subsidies and Medicaid, a few economic trends were found likely to drive Covered California’s future membership pool churn. The study found that only just over half of the healthcare exchange members would be retained in a changing economy and workforce. Over a one-year period, 20-21% of new plan enrollees are expected to experience lower income levels, and may therefore become eligible for Medicaid while 18-19% are likely to find higher-paying jobs and leave the exchange once eligible for employer-sponsored healthcare plans.

Website:  http://www.mansacapital.com/


About Mansa Capital:
Mansa Capital is a healthcare private equity investment firm specializing in high growth companies in the healthcare services and healthcare technology sectors. Mansa focuses on companies as they prepare for expansion, acquisition, privatization or IPO. We integrate strong expertise in healthcare policy, regulation, and reimbursement with vast experience in healthcare operations, marketing, finance, and medical administration. Mansa makes equity investments in operating companies with enterprise values up to $150 million. We build shareholder value by working with management to implement strategic initiatives that grow top-line revenues. Mansa's Managing Partner and CIO, Ruben J. King-Shaw Jr., directs the firm's investment activities, in addition to managing the firm's equity portfolio. The firm has offices in Boston, MA, New York, NY, and Miami, FL.

This newsletter is provided for information purposes only. The information is believed to be reliable and is based on publicly available information, but Mansa Capital does not warrant its completeness or accuracy. Opinions, estimates, and assumptions constitute our judgment as of the date hereof and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. 2013 Mansa Capital©

Mansa Partner