Welcome to Mansa Capital
Happy Holidays! It is customary during this season to look back at the past year for its accomplishments and missed opportunities while also looking forward to the New Year with anticipation and guarded optimism. Yet, as reflected in the selections in this month’s edition of our newsletter, there is plenty of activity to keep us focused on the present. In the Policy Section, you’ll find an article indicating that 1.5M Americans will enter the New Year with health insurance purchased through the Obamacare exchanges. Another article in that section describes how proper, affordable, coordinated care for dual eligibles remains a top priority for State Legislatures across the nation. While the Ebola outbreak no longer dominates the media, the nation’s delivery system is still grappling with standards of care and practical precautions. Mobile apps and wearables are featured heavily in this month’s Strategy Section. The Industry Activity section offers two articles underscoring the continued strength of M&A and investment activity in the healthcare sector. Finally, the Research section reminds us that along with the proliferation of mobile apps and connected health comes persistent concerns about privacy. Please enjoy this edition of our newsletter, and look for the next edition in February. Happy New Year!
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
- 1.5 million sign up for insurance on health exchanges
"With [the deadline looming] to buy individual health insurance that begins Jan. 1, experts say sign-ups are on course to hit or exceed the Obama admin's projection of about 9M enrollees in 2015. Several weeks into the second year of the ACA’s insurance exchanges, about 1.5M people have enrolled in coverage, according to data from state and federal exchanges. As of Dec. 5, almost 1.4M had enrolled through the federal insurance exchange, which serves 37 states, the Centers for Medicare & Medicaid Services reported. Another 183K chose plans through state exchanges, including nearly 49K in California, according to a Kaiser Health News analysis of state exchange data. Enrollment figures were not available for exchanges in New York, Idaho and Rhode Island…"
- HHS: Medical errors decline
"An estimated 50K lives were saved, 1.3M fewer patients escaped harm and healthcare avoided $12B in spending. This according to a report released by the Department of Health and Human Services earlier this week. Much of the improvement was the result of a reduction in hospital-acquired conditions from 2010 to 2013. The efforts were due in part to provisions of the ACA such as Medicare payment incentives to improve the quality of care and the HHS Partnership for Patients initiative, according to HHS. Preliminary estimates show that in total, hospital patients experienced 1.3M fewer hospital-acquired conditions from 2010 to 2013, which translates to a 17% decline in hospital-acquired conditions over the three-year period…"
- Ebola watch: 35 US hospitals designated to accept patients
“Health officials…[have] named 35 U.S. hospitals that can accept future Ebola patients. State health officials worked with hospital leaders to select the hospitals, and CDC infection control teams assessed each facility's preparedness in terms of staff, training, resources and equipment, a senior White House official told the Washington Post. Establishing a network of hospitals prepared to accept Ebola patients has been difficult due to hospitals' concerns over the potential stigma among other patients. 'This is a big step forward in terms of domestic preparedness in terms of any Ebola cases that might arrive here,' the official said, and the chosen hospitals are within 200 miles of where the vast majority of travelers returning to the United States will end up…Of the hospitals, nearly 24 are within close range of John F. Kennedy Airport in New York; Newark Liberty in New Jersey; Washington Dulles; O'Hare in Chicago; and Hartsfield-Jackson in Atlanta. Travelers arriving from the West African nations stricken by the Ebola outbreak must use one of these five airports…”
- States aim to improve health needs of dual-eligibles [Nationwide]
“Twelve states are teaming with the Centers for Medicare & Medicaid Services (CMS) to establish three-year dual-eligible demonstration programs with the hopes of improving the health needs of the Medicare-Medicaid dual-eligible population, reports Healthcare Payer News. With the goal of aligning Medicare and Medicaid services, states are taking matters into their own hands by integrating major aspects of the programs—finances, delivery of benefits and overall experience. California, Illinois, Massachusetts, Michigan, New York, Ohio, South Carolina, Texas and Virginia are testing a new capitated financial alignment model. Colorado is toying with a fee-for-service payment model, while Washington is testing both a capitated and FFS model. Minnesota is focusing on an integration of administration…Medicaid directors [stress] that ‘integration and alignment between the two programs continues to be a top priority for states,’ wrote Darin Gordon and Thomas Betlach, Medicaid directors for Tennessee and Arizona, respectively, who also serve as president and vice pres. of the National Association of Medicaid Directors (NAMD). [They] also note the need to ‘exchange existing integration pathways and develop new approaches.’…”
- Big data offer new strategy for public health campaigns [Chicago]
“Chicago health officials had a serious problem. The city had long been trying to attack breast cancer among minorities with a program offering uninsured women free mammograms at Roseland Hospital in the predominantly black South Side. But black women—who are far more likely than white women to die of breast cancer—weren't getting screened. Because traditional public health outreach didn't seem to be working, the city's Department of Public Health decided to do something new: It turned to a Chicago-based data mining company, Civis Analytics, for help…A private company with offices in Chicago and Washington, D.C. [Civis] was formed by members of the data analytics team from President…Obama's re-election campaign…they used their skills to identify Obama voters for a get-out-the-vote effort. Later…Civis employees worked with Enroll America…to find people to sign up for health insurance under the ACA…New York City, Baltimore and San Diego [are also now investigating how population data can be used in health programs]…”
- Apple, EHR vendors get down to business
“Despite an early stumble out of the gate, some blue chip EHR vendors have begun their collaborations with Apple's HealthKit platform. The newest iPhone operating system was released Sept. 17, but the hotly anticipated HealthKit technology wasn't part of it. A coding snafu discovered in Apple's new wellness platform [had] developers in Cupertino, Calif., rushing to fix it. By October, that much-discussed piece of iOS 8 was ready for prime time, and fitness…app developers that had long been tailoring their technologies to connect with the HealthKit platform, were ready to enable consumers to feed data quantifying exercise, diet and sleep patterns directly into the Health app for easy aggregation [including Epic], which provides care to over 170M patients a year [who] will be able to use HealthKit through Epic's MyChart application—the most used patient portal in the U.S... Cerner and athenahealth also say they'll develop apps that interface with the platform…”
- Wearables make hardware the new software
"…Arguably, until recently wearables [such as the Apple Watch and Google's Android Wear] had been an experimental market…As we turn to 2015 and beyond, however, wearables become an explosive hardware design opportunity—one that is closely tied to both consumer and healthcare markets and that could pick up steam the way software did during the smartphone app explosion…Perhaps the most…recognizable…is the Fitbit line of devices, which accounted for approximately 67% of the 3.3M fitness bands and activity trackers sold [in the U.S.] between April 2013 and March 2014, by NPD Group estimates. But the handy wristband is only the start… According to IDTechEx, the wearable electronics business will climb from more than $14B in 2014 to a more than $70B market in 2024… The dominant sector is expected to remain healthcare, which merges medical, fitness, and wellness…A large amount of the development for healthcare wearables will come from the North America sector, unsurprising as…Baby Boomers age and serious health issues including diabetes that could benefit from monitoring and other wellness wearables…rise.…”
- Enlist mobile apps in diabetes fight
“Mobile apps can help diabetes sufferers get ahead of their symptoms and live healthier, more carefree lives…according to the U.S. Centers for Disease Control and Prevention. Approximately 40% of Americans will develop Type 2 diabetes…[per] the Centers' National Diabetes Statistics Report, 2014…To date, there are more than 29M in the U.S. and over 350M worldwide diagnosed with diabetes…To combat the health decline that [it] can cause, individuals can manage their disease through daily oral medications, blood glucose testing, and healthy lifestyle choices. Unfortunately, many patients struggle with the inconvenience and potential inaccuracies inherent in handwritten treatment plans and blood sugar logs, and guessed biometric data, plus manual (and often inaccurate) estimates at dosage amounts and times. According to the American Diabetes Association, poor management of the disease can cause additional—and perhaps more severe—health complications, including high blood pressure, stroke, kidney disease, and heart disease…”
- M&A in healthcare sector to set records in 2014
"…2014 is shaping up to be the most active in healthcare M&A in decades, the AP reported. The worldwide value of healthcare-related deals will reach $438B, about 14% of the value of all M&A. The sector is on track for the largest volume of M&A since 2007, and possibly since the booming 1990s…'Healthcare has been a sleepy niche of M&A until recently, but the giant has been awakened,' [said] Ken Menges, a senior partner at the law firm Akin Gump in New York…Among the drivers: drugmakers are buying up co’s to control their costs and use up excess reserves of cash, the stock market continues to rise and interest rates remain low. And hospitals have indicated they will continue to buy up medical practices to better consolidate their operations. More than half of hospital leaders indicated last year that they intend to purchase practices, up significantly compared to prior years. And last month's $12.2B purchase of CareFusion by Becton, Dickinson & Co. is a major contraction in the healthcare supply business…Providers also face the challenge of cutting costs… The sector's stock value is up 23% so far this year, the best-performing group in the S&P's 500 index…”
- Healthcare M&A to continue in 2015, KPMG survey says
"Mergers and acquisition activity in the health and life sciences sector is expected to keep gaining momentum in 2015…Respondents to the KPMG survey placed the biopharmaceutical sector second behind technology when it came to M&A expectations for 2015, while 27% said the healthcare sector would see more consolidation. When it comes to healthcare providers, as well as insurance companies…M&A is directly driven by the ACA, which has led to consolidations as value and coordination is rewarded under the legislation…Easy credit access and larger stockpiles of cash also drive mergers, the survey concluded. The KPMG M&A Outlook Survey polled 738 financial execs…"
- McKesson makes aggressive move into health IT venture capital
"Healthcare giant McKesson Corp. plans an aggressive move into venture capital funding for healthcare technology, expecting to commit several hundred million dollars to the effort over the next five to eight years, and hiring long-time venture capitalist Tom Rodgers as managing director of strategic venture capital operations. McKesson's new undertaking joins a crowded list of corporate venture capital firms investing in healthcare and digital health. Qualcomm Ventures seems to be the most active corporate digital investor, said Stephen Kraus, a healthcare-focused partner with Bessemer Venture Partners. Companies like Merck & Co. and Blue Cross and Blue Shield also have active healthcare funds. McKesson's venture capital arm will invest in roughly 15 to 25 companies over the next two to three years, with the potential of ‘several hundred million’ dollars to be spent over the next five to eight years, Rodgers said. It has already made one undisclosed investment…"
- Healthcare Security In 2015: 9 Hotspots
“Healthcare organizations must tighten security or risk getting breached, penalized, and potentially ostracized by a public fed up with seeming carelessness with their personal information. Unfortunately, the task of securing protected health information (PHI) is only becoming more challenging for even the best-prepared organizations. Fitness bands, hospital portals, electronic health records, health information exchanges, insurance networks—the list of Internet-connected devices, tools, and sites containing personal and medical data keeps growing. The healthcare sector has been under attack for some time. In 2014, despite headlines dominated by JPMorgan Chase, Home Depot, and other retail or financial entities, the healthcare industry accounted for 43% of all major breaches, according to the Ponemon Institute...Within healthcare orgs, a whopping 93% of information held requires protection, according to EMC's The Digital Universe report…But IT professionals must balance security needs against healthcare professionals' need for fast access to data and applications; extra clicks can make a difference in a patient's life, after all…"
- mHealth, privacy top consumers' list of 2015 health industry issues
“Financial incentives continue to lead more healthcare providers to adopt electronic health records, according to a data brief from the Health and Human Services Office of the National Coordinator for Health IT. Among physicians who adopted EHRs after the passage of the HITECH Act, a part of the American Recovery and Reinvestment Act, the incentive payments authorized under the 2009 federal stimulus were a major part of the decision for 62%, according to the 2013 National Ambulatory Medical Care Survey. Prior to that, financial incentives, largely by commercial payers, were a major factor for only 23% of physicians. Electronic exchange of information…was a major factor in the decision to adopt EHRs for 27% of physicians prior to the incentive program and for 36% afterwards…Advocates for EHRs tout their benefits in patient-centered healthcare…since information follows them wherever they [receive] health services, especially in…emergency cases…”
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. 2014 Mansa Capital©