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When Congress was writing Obamacare, its biggest backers said the new law would help small businesses. Instead, they’re complaining about it. It was also supposed to take the cost pressure off businesses in general. Instead, those same businesses say it’s just adding more pressure.

It’s one of the biggest political ironies of the health care reform law commonly known as Obamacare: Some of the loudest complaints about the law are coming from the employers who were meant to benefit from it. The reality is, from the smallest startups to the largest corporations, employers have to sort through a lot of new, often complicated rules and reporting requirements. In some cases, there are new costs and tax obligations too. These additional assessments are required to make the law work — but it’s also a headache for most, if not all, employers.

Wherever you sit on the subject of Obamacare, one thing is absolutely true. The law now is a complicated reality that even the most knowledgeable healthcare executives and healthcare policy makers struggle to interpret and execute.

Over the coming months, and in fact years, Mansa will do its best to highlight those issues that are most relevant to our LP's.  As specialists on the healthcare economy with a team of seasoned executives in the HCIT, services and healthcare finance sectors, we will use our understanding of the markets to take advantage of the investment opportunities that follow.

This newsletter highlights the issues Ruben, Jason, Dick and I find most relevant today.

As always, the partners at Mansa are grateful for the continued support of our LP's

 Jim

Policy

Federal

  • Obamacare Website functions smoothly on deadline day
    The Obama administration said it has met its self-imposed goal to have the online federal health exchange working smoothly for most consumers who use it and the site can now handle 50,000 users at a time (800,000 a day) with the effort to date cutting error message rates to less than 1.0% per page from about 6.0% in October but the results will be known only in January when the government brings out the enrollment figures
  • CMS to pay primary-care docs for complex services outside office visits
    The CMS will implement a proposal in 2015 to pay primary-care physicians for complex chronic-care management services such as modifying care plans and coordinating care with clinicians in other practices, provided outside of face-to-face office visits
  • $150.0 million grants by ACA for community health centers’ expansion
    The Hill reports that the government has announced $150.0 million in new grants through the Affordable Care Act that will help more than a million patients across the country access community-based healthcare, the largest allocation to community health centers since 2011. It will allow 236 facilities to hire medical staff and in turn, extend care to an additional 1.3 million patients, and establish new health centers
  • HHS issues final mental health and substance use disorder parity rule
    The Departments of Health and Human Services, Labor and the Treasury jointly issued a final rule increasing parity between mental health/substance use disorder benefits and medical/surgical benefits in group and individual health plans which ensures that health plans features like co-pays, deductibles and visit limits will generally be not more restrictive for mental health/substance abuse disorders benefits than they are for medical/surgical benefits
  • First month enrollment for Obamacare falls short
    As per HHS, more than 106,000 consumers, against the expectation of 500,000, were enrolled for health insurance under the new federal healthcare law during the first month since its rollout. Most of those who were fully processed by health exchanges did so through state-run operations and not the glitch-ridden federal website which only enrolled 26,794 people
  • Healthcare association calls for the repeal of SGR
    With the introduction of Sustainable Growth Rate formula, medicare physicians will get a 24.0% payment cut on Jan. 1, 2014. But American Medical Association (AMA) and Healthcare Information and Management Systems Society (HIMSS), along with other industry heavy weights, are wielding their influence to spur congressional repeal of the Sustainable Growth Rate (SGR) formula for determining physician payment under Medicare and consider a pay-for-performance option along with the alternative payments models
  • Bill proposes expanding Meaningful Use incentives to mental health
    A new legislation, the Behavioral Health Information Technology Coordination Act, proposes to ensure mental health providers are part of the nation's EHR network. The bill would add mental health professionals to legislation passed in 2009 to assist healthcare providers in adopting health information technology systems. Currently, mental health providers are not eligible to receive federal electronic health record incentive payments under the meaningful use program
  • Medicare payment for Dialysis facilities not to be cut
    Medicare payments to dialysis facilities will remain flat next year, CMS announced, almost 4 months after proposing a 9.4% cut. The agency will also increase by 50.0% what it pays providers to train patients to do dialysis at home, much to the delight of home dialysis advocates. The news came as part of the announcement for CMS' finalized 2014 end-stage renal disease prospective payment system

State

  • 18 Arkansas counties get cash to connect to state HIE
    Healthcareitnews states that Delta Regional Authority and Arkansas' Office of Health Information Technology will provide more than $195,000.0 for hospitals unable to connect to State Health Alliance for Records Exchange, the state HIE, due to financial barriers. Each facility could receive up to $10,000.0. Currently, EHR vendor costs for these hospitals typically range from $6,000.0 to $15,000.0 for implementation
  • South Dakota doctors urge state to expand Medicaid program
    South Dakota doctors are urging Gov. Dennis Daugaard to expand Medicaid under Obamacare, warning that a failure to do so will hurt hospitals financially and raise health care costs for people with private insurance. In South Dakota, 15.0% of the adult population lives at or below 100.0% of the Federal Poverty Level, which works out to be about $11,500.0 per year for an individual. But just 8.0% of adults are covered by Medicaid
  • Medicaid expansion still possible in New Hamshire
    Republican and Democratic legislative leaders remain upbeat about the odds of expanding Medicaid to an estimated 49,000 poor New Hampshire adults despite the recent failed vote. Discussions will continue with Republicans and new legislation will be taken up next year
  • California Rejects Insurance Cancellation Fix
    Per Bloomberg, California officials implementing President Barack Obama’s health-care overhaul rejected a one-year extension of insurance plans that are to be canceled under the law. States have been urged to give people with substandard medical plans an additional year to meet the law’s requirements after hundreds of thousands received cancellation notices and were told new policies to meet minimum rules for coverage would cost more
  • Wisconsin pushing back deadline for transition to health exchange
    Bizjournals states that Wisconsin Gov. Scott Walker is seeking a three-month delay to the deadline for some state residents to transition into the federal health care exchange. The state officials set a Jan. 1, 2014, deadline for people to make that transition. Walker said a bill will be introduced in the Wisconsin Legislature after Thanksgiving to delay that deadline to April 1 for which he expects bipartisan support for the bills to extend the deadline and life of the insurance risk-sharing plan
  • Bill proposes expansion of telehealth to active duty service members
    A pair of California Congressmen has submitted a bill that would expand telehealth coverage to active-duty service members, their dependents, retirees and veterans. The bill would establish and expand current reimbursement policies for telehealth coverage under the Veterans' Administration and The Defense Department's TRICARE

Strategy

  • Obama administration delays online insurance enrollment for small business
    HHS stated that the Obama administration announced a one-year delay of online enrollment, through Small Business Health Option Program (SHOP), for small businesses looking to purchase healthcare coverage for their workers in the 36 states served by the federal insurance exchange through the HealthCare.gov website. But they will be able to sign their workers up for coverage immediately through an insurer, agent, or broker
  • Implementation of Obamacare payment system to insurers delayed
    Parts of the Obamacare enrollment system used to pay insurers are being pushed back from January in the latest technology delay for the president’s U.S. health-care overhaul. The administration is setting up a temporary process to send companies the federal subsidies used to help millions of Americans buy coverage because the online system won’t be ready as planned
  • Federal Government to offer insurers options for offsetting losses
    The Obama administration will offer aid to insurers that suffer financial losses by allowing people to keep plans that do not comply with the benefit standards in the Patient Protection and Affordable Care Act which became necessary after insurers began sending cancellation notices to millions of policyholders. The losses may occur by allowing relatively healthy people to keep their low-cost plans
  • Hospital revenue to stagnate in 2013
    According to Moody’s, hospitals' will continue to suffer stagnant revenue growth in 2014 as problems mount in the Affordable Care Act's rollout with growth projected between 3.0% to 3.5%. In the previous ten years, annual revenue across the sector had always grown by at least 4.5% and often exceeded 5.0%
  • Federal EHR payouts hit record highs
    Per CMS, as of September, they have paid out more than $16.5 billion to eligible providers and hospitals, representing an expected slight decrease in attestation rates from earlier months. The reimbursments are expected to see an upward trend as we move into January and February. 91.0% of the 5,011 hospitals in the U.S. are now registered for the meaningful use program
  • Healthcare M&A on the rise in Q3
    According to a report from M&A data publisher Irving Levin Associates, deal volume was up but deal value was down 4.2% ($50.8 billion) compared with the second quarter of the year ($53.0 billion). However, deal value increased by 35.1% compared with the third quarter of 2012 ($37.6 billion). Overall, the healthcare services sector posted a 6.0% gain, with 160 deals, over the second quarter of the year and a 13.5% gain over the third quarter of 2012
  • October jobs report beats expectations but healthcare growth weakens
    Bureau of Labor Statistics reported that the healthcare industry added more than 15,000 jobs in October, slightly lower than its average of 17,000 jobs per month this year, and far less than the average monthly gain of 27,000 jobs per month in 2012. No losses were reported in the various sectors within healthcare, although nursing care facilities neither gained nor lost jobs. The sectors with the biggest gains were physician offices (3,500), home healthcare services (2,800) and hospitals (2,200)
  • Healthcare costs on the rise
    According to a report from the Assistant Secretary for Planning and Evaluation and the U.S. Department of Health & Human Services, U.S. health spending reached an estimated $2.7 trillion dollars in 2010 and the health share of the gross domestic product is projected to increase from 17.6% in 2009 to 19.8% by 2020

Portfolio Companies

  • E4 Health Acquires Wellness
    Kinderhook Industries, LLC and Mansa Capital, LLC announced the acquisition of Wellness Corporation by E4 Health, Inc., a Kinderhook and Mansa portfolio company. The deal represents the 17th and 14th healthcare services transactions completed by Kinderhook and Mansa, respectively, and the third add-on acquisition for E4 Health. Financial terms of the transaction were not disclosed

Industry Activity

  • Team Health Holdings acquires Wolverine Anesthesia Consultants
    According to Bizjournals, Team Health Holdings, a provider of outsourced physician staffing for hospitals, announced it has bought the operations of Orlando-based Wolverine Anesthesia Consultants on Nov. 8th. Wolverine has 60-plus doctors and certified registered nurse anesthetists who care for more than 33,000 patients annually at three Orlando Health Inc.-owned hospitals and an outpatient surgery center
  • Premier Health adds Dayton neurological institute to its outpatient facilities
    Per Bizjournals, Premier Health has acquired the Ohio Neurological Institute, which includes four physicians, into its own neuroscience practice and research organization, The Clinical Neuroscience Institute. The move comes as Premier has worked to increase its neuroscience staff and capabilities
  • Xylem Consulting sold to iVantage Health Analytics
    Columbia-based Xylem Consulting has been sold to iVantage Health Analytics of Maine, according to a news release. Xylem specializes in managed care contract analysis and negotiations. The addition of Xylem complements iVantage's recent acquisition of Professional Data Services (PDS) and enables clients to leverage both robust business intelligence and advisory services to drive contract negotiations and combat the eroding margins associated with the healthcare reform reimbursement mandates
  • AMN Healthcare acquires ShiftWise
    According to Bizjournals, Health care staffing firm AMN Healthcare Services Inc. has acquired Portland-based healthcare software firm ShiftWise, which makes software that manages healthcare staffing as well as vendors for hospitals and health care systems. The addition of ShiftWise’s robust suite of vendor management software will complement AMN’s current workforce solution offerings
  • Experian acquires Passport Health Communications
    A recent article by Bizjournals states that Experian PLC, an Ireland-based data and analytical tools provider, has agreed to buy Franklin-based Passport Health Communications, a SaaS solutions provider which handles 400.0 million transactions and serves more than 2500 hospitals and 9000 physicians, clinics and ancillary services, for $850.0 million
  • Advisory Board acquires Care Team Connect
    Bizjournal states that, Advisory Board Co. has acquired Care Team Connect Inc., a Chicago-area tech firm that uses electronic medical records to devise treatment plans for patients as they navigate between hospitals, doctors and home. Advisory Board plans to merge the Care Team Connect product with its own Crimson software, which gathers and analyzes detailed data on physician behavior and treatment decisions
  • Tryko Partners LLC acquires Radius HealthCare Center for $3.8 million
    As per Bizjournals, New Jersey-based private equity real estate firm, Tryko Partners LLC, said it has acquired the 159 bed nursing home in Danver for $3.8 million and would invest $2.0 million into renovating the facility and rebrand it as Brentwood Rehabilitation and Healthcare Center
  • Senior Home Care to be acquired by Kindred in $95.0 million deal
    Kindred Healthcare Inc. has signed a definitive agreement to acquire Clearwater-based Senior Home Care Inc., which provides care for seniors through 30 Florida offices and 17 in Louisiana, for $95.0 million. The transaction is part of Kindred’s redeployment of assets to focus on integrated care markets and Kindred at Home, the company’s care management division
  • InVentiv Health acquired Catalina Health
    A recent article by Boston Business Journal states that InVentiv Health, the parent company of Palio+Ignite in Saratoga Springs, NY, has acquired Catalina Health, a provider of analytics to companies relating to medication use

Research

  • Number of hospital have doubled in the recent past
    A national study by the Center for Studying Health System Change (HSC) found that the proportion of retail clinics owned by hospital systems doubled (from 9.0% to 18.0%) between 2007 and 2010 while traditional investor ownership dropped from 24.0% to 16.0%. Hospitals have been looking at various strategies to meet the high volumes of urgent care needs that have been increasingly on the rise. Retail clinics fit the bill because lower-acuity patients or those with episodic needs like the flu can get care in these facilities at a cost much lower than in the ED and also act as feeders to hospitals
  • Nurses could help save $2.2 billion in outpatient primary care visits
    A recent report by Health Affairs states that retail-based clinics, already a proven healthcare cost saver, can even further reduce costs when nurse practitioners are allowed to practice and prescribe independently. If retail-based clinic visits make up for 10.0% of all outpatient primary care visits by 2015, national cost savings would be $2.2 billion, adding on an additional $810.0 million if nurses in all 50 states practiced independently. That savings could grow even more, by $472.0 million, if nurses could prescribe on their own too
  • ACA causes rise in total healthcare spending as a percentage of GDP
    Per Bizjournals, even factoring the recent slowdown, growth in health care spending per person has outpaced growth in GDP per capita by an average of 1.5% per year since 1985. Net government spending on health care is projected to increase from 4.6% of GDP in 2013 to 8.0% of GDP in 2038, more than half of which would be spent on Medicare
  • Giving docs lab cost price data reduces costs
    According to a new Atrius Health study, doctors who regularly viewed lab test cost data in the electronic health record both decreased their ordering rates for certain tests and saved up to $107.0 per 1,000 visits per month
  • ACA, Health IT changing job landscape
    A recent report by ‘College For America’ states that due to health IT advances, the Affordable Care Act, and baby boom retirement, jobs such as records technicians, medical assistants, patient navigators and other frontline and nonclinical positions will be on the rise. These six positions profiled in the report are projected to add more than 2.0 million new job openings this decade, with growth rates ranging from roughly 20.0% to 40.0%

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


About Mansa Capital:
Mansa Capital is a health care private equity investment firm specializing in high growth companies in the health care services and health care technology sectors. Mansa focuses on companies as they prepare for expansion, acquisition, privatization or IPO. We integrate strong expertise in health care policy, regulation, and reimbursement with vast experience in health care 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