Welcome to Mansa Capital
Welcome back. As the seasons begin the gradual progression from summer to fall, the US healthcare economy continues to evolve in interesting directions. Our first selection in the Federal Policy section provides excellent historical perspective. In 1965, there were no Fortune 100 healthcare companies. By 2013, there were 15. Moreover, the federal government is now the largest purchaser of healthcare in the US. What a difference 50 years makes. The barriers to care for California’s Latino Medi-Cal population are the lead story in our State Policy section. In the Strategy section, two tenants of Mansa’s investment strategy shine through: Internet of Things and Social Media in healthcare. The Research section closes with news that wellness centers, previously described as loss-leaders have become money-making population health engines.
With the return of Congress–and football–it won’t be long before the chill is in the air again. We hope you enjoy this month’s edition of our newsletter.
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 Operating Officer
- Medicare at 50: Looking back, and looking forward
"…[Nat’l Law Review has] identified four ways [Medicare and Medicaid]…have shaped the healthcare industry. 1.) There is no stopping the healthcare juggernaut. [Consider this stat:] In 1965, there were no [Fortune 100] healthcare companies. By 2013, there were 15…2.) The federal government is now the largest purchaser of healthcare in the US…The Kaiser Family Foundation estimates that 14% of the $3.5T spent by the…government in 2014 was spent on Medicare (approx. $505B total)...3.) [The programs are] driving innovation, but have they run out of gas? US News & World Report estimates that today, one in three Americans is covered by Medicare or Medicaid...however, innovation is beginning to outstrip the programs’ ability to keep pace…4.) One lesser-known effect: these programs helped end segregation, at least at healthcare facilities…"
- Cadillac Tax: A portion of Obamacare both parties hate
"…One area ripe for bipartisan reform is the ACA’s unpopular tax intended to discourage employers from offering expensive health insurance. Nicknamed the 'Cadillac tax,' it was originally intended to help pay for other portions of healthcare reform and to keep employers from offering overly generous plans that allow for what can often be unnecessary and expensive procedures…ultimately reducing strain on the healthcare system. When the tax takes effect in 2018, employers who offer plans with an annual cost of more than $10,200 for an individual and $27,500 for a family will have to pay a 40% excise tax on the amount above that limit…Projections show that the rising cost of healthcare will contribute to more plans being considered generous in nature…[Consulting firm] Mercer…found that a third of employers will face the tax in 2018…almost 60% by 2024. The tax [will impact] premiums, but also health savings accounts and flexible spending accounts…"
- Road to healthcare bumpy for Latinos on MediCal [California]
"Even though Latinos make up nearly half of California's 12.5M Medi-Cal enrollees, a report by the independent California HealthCare Foundation found that 36% of the Spanish-speaking Medi-Cal population has been told that a doctor won't take them, compared to 7% of the…Medi-Cal pop. Even those who speak…English and Spanish reported similar difficulty accessing doctors…Sarah de Guia, executive director of the California Pan-Ethnic Health Network…said the study doesn't explain why Latinos—whether they speak English or Spanish—are being turned away at higher rates, but public policy officials say the biggest obstacle is finding doctors who are willing to take the lower payments offered by Medi-Cal. Language barriers also play a role. The study…found Latinos and Asian-Americans [had] the highest rate of needing language assistance to understand their doctor…"
- Florida to audit 31 hospitals over managed Medicaid [Florida]
"Florida will audit 31 hospitals which failed to meet a deadline to certify that their contracts with Medicaid managed-care plans comply with state law…Gov. Rick Scott's office…released the list [that did not meet] the August 1 deadline [that] was imposed by Elizabeth Dudek, secretary for the Florida Agency for Health Care Administration. In a July 17 letter, Dudek expressed what she said were 'grave concerns that hospital contractual arrangements may have ballooned to unreasonable proportions and higher than what is allowed by state law.' Dudek requested hospitals receiving payments and health plans reimbursing healthcare providers to certify none of the contractual arrangements are above 120% of the Medicaid fee schedule, the allowable limit…"
- Microsoft posts Windows 10 for medical devices
"When Microsoft made Windows 10 widely available at July's end, the company foretold subsequent versions for both mobile and Internet of Things, or IoT, devices. Two weeks later, amid a smattering of post-release concerns about the operating systems' privacy, security and stability, Microsoft posted Windows 10 IoT Core with less fanfare than the broader OS. Indeed, the healthcare industry is…peppered with devices that run any number of embedded operating systems, from ECG, ultrasound, X-Ray, CT and MRI machines, to the ever-expanding fleet of wearables and fitness trackers, not to mention robotics. With the Windows 10 for desktops, notebooks and tablets release, Microsoft added a number of features for healthcare, i.e. tools [enabling] clinicians to view an EMR alongside a home health app, business intelligence functions for visualizing quality of care data, and a…Power Map for combining a healthcare provider's information with population health statistics…"
- Yelp expands its hospital reviews: ER wait times, doc communication now available to consumers
"Along with online patient reviews, consumers will now have easier access to federal data on hospitals—including average wait times to see a doctor in the emergency room—under a new partnership between Yelp and ProPublica. Yelp will update its hospital listings with ProPublica's own research and data from the Centers for Medicare & Medicaid Services' Hospital Compare website. Yelp, known for its reviews of restaurants and hotels, plans to update the data each quarter for 4,600 hospitals, 15,000 nursing homes and 6,300 dialysis clinics in the U.S. Clicking on a hospital listing will produce a pop-up that provides consumers with data on the organization's ER wait times, quality of doctor comms and patient room noise level, based on patient satisfaction surveys…"
- 10 healthcare technology disruptors to watch (all led by women)
“…Women seem to be flourishing in healthcare tech. Here are ten to watch in 2015 [all women-led]: Wellthie – making it easier... to explore health insurance options in a simple way...Naya Health – the world’s first smart breast pump…Caremerge – platform that allows family members to communicate in real time with...providers caring for their loved ones…Humetrix – health risk appraisals, chronic care management software, and consumer-friendly mobile device-based solutions that give consumers their own health IT systems…Cohero Health – medical device that captures important respiratory performance metrics that sync with its AsthmaHero mobile app. Force Therapeutics – a recovery platform that enables patients and providers to help support post-acute rehab. Flextronics – biotech [& smart tech] co. (200k employees in 30 countries)…Maven Clinic – a telehealth platform that creates video appts with…providers. AbilTo – behavioral change therapy programs [by] phone and/or video. MMJ Labs – drug-free, palm-sized needle pain blocker for both adults and children…"
- Capital One buys GE Capital healthcare finance unit for $9 billion
"Capital One will take over the healthcare finance arm of GE Capital in a $9B deal…turning a company known best for its 'what's in your wallet' credit card business into a powerhouse in the healthcare lending sphere. Under terms of the deal, Capital One will take on $8.5B in existing healthcare-related loans held by GE. The deal is expected to close in Q4 2015. Darren Alcus, president of the GE division, will join Capital One as president of the healthcare finance business…"
- Premier acquires financial management software vendor
"Premier, a…group purchasing and performance improvement company, has acquired yet another tech company, the second in just a week. The publicly traded firm acquired Healthcare Insights, a…developer of financial management software that helps hospitals with budgeting, forecasting, labor productivity and cost analytics. Premier paid $65M in cash for the acquisition...Software subscriptions are an increasingly important revenue source...Now, with the acquisition of Healthcare Insights, Premier will add clinical financial management and productivity analytics to its existing cost and quality applications, allowing it to have a more complete enterprise resource planning solution. The deal also brings new customers: 49 of Healthcare Insights' 94 health system customers…"
- Report: Billions wasted in verifying benefit eligibility
"A new report shows $342B in taxpayer money is wasted each year in improper healthcare payments due to challenges in verifying benefit eligibility. 'The Economics of Eligibility' report…reveals 11% of people who receive government healthcare benefits are not actually eligible. Case workers estimate 89% of their agency's current beneficiaries list is accurate. [Over] one in ten beneficiaries are misdiagnosed, [per] the report by MeriTalk, a public-private partnership focused on government IT, working in collaboration with the U.S. General Services Admin [which] surveyed 155 healthcare IT execs and program managers working with healthcare, other social service benefits…"
- Community hospitals replacing EHRs
"...Nearly 20% of community hospitals polled for a recent report are 'actively looking to replace' their electronic health record vendors. Smaller hospitals are…tasked with more physician documentation for MU…extra time required, disrupted workflows and frustrating EHR functionality [has worn]…patience…thin, [per] research group peer60 that polled 277 providers. Many [said] 'usability and functionality’ were not [vendor priorities]...Hospital consolidation may account for some…(7%...polled are going through M&A...)…54% were dissatisfied with usability…53%...attested for Stage 2 meaningful use; [over] a third, 36%, are still in the middle of [it]…Meanwhile, 11% had yet to start with Stage 2…some [noting] that 'their vendor was not ready.'...[Over] one-quarter 28% meanwhile, said ‘support for strategic objectives’ was missing from their vendor…"
- Wellness centers, no longer hospital gimmicks, become money-making population health engines
"Hospital-based wellness centers…have become a major part of a hospital's population health management program in the era of quality over quantity of care...Wellness centers attached to hospitals have evolved…beyond the local gym toward a medically integrated model. Most use exercise physiologists and other ancillary medical specialties offering a broader range of services. [They can also] set…goals for their customers, holding them accountable for their own health… Studies by the Medical Fitness Association suggest wellness center construction offers returns on investment between 6 and 10% with contribution margins around 30%…”
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. 2015 Mansa Capital©