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With the arrival of the Presidential Primary debates comes renewed discourse over the success—and future—of the Accountable Care Act (a.k.a. Obamacare.) This edition of our newsletter captures much of the ongoing discussion. The Policy Section includes a report that the Obama Administration is on track to reach its goals for the enrollment via insurance exchanges by 2015. Another selection reports that a federal judge has given House Republicans the green light to proceed with a legal challenge against the law. Ironically, two Republican-led states, which have opposed the ACA—Texas and Florida—are among the states receiving the most in premium subsidies. To round out the debate, a selection from Colorado attributes the reduction of that state’s uninsured rate from nearly 16% to 7% to Medicaid expansion under the provisions of the ACA.

Both the Strategy and Industry sections contain selections showing the continued rise of social media, population health and patient engagement as attractive investment opportunities. All three are fueled by continued progress toward the interoperability of data systems.

The Research section concludes this edition with a sobering statistic. A recently released survey of 2,716 Harvard Business School alumni found that the cost of healthcare was the top barrier to entrepreneurship in the US. Yet this same barrier is the least important of all 13 choices offered as part of the survey for entrepreneurs outside the US. Perhaps we should ask all the candidates in pursuit of the White House what they think about that.

All of us at Mansa hope you enjoy the fall and this 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

Policy

Federal

  • About 9.9M enrollees pay for health insurance on state, federal sites
    "Almost 9.9M customers selected and paid for health coverage on state and federal marketplaces under the ACA as of the end of June, reflecting a drop in overall paid sign-ups. The number released…by the CMS shows the Obama admin is still on track to meet its goal of 9.1M to 9.9M people who have paid for coverage through the insurance exchanges by the end of 2015. Robust sign-ups and premium payments are critical for the admin [because the GOP] hoping to repeal the health law would likely seize on lackluster enrollment as a sign the ACA [is] faltering…"
  • Federal judge allows part of GOP healthcare lawsuit to proceed
    "A federal judge…allowed House Republicans to proceed with part of a lawsuit challenging the Obama admin’s implementation of the 2010 healthcare law, opening the door for another legal battle over the ACA. U.S. District Judge Rosemary Collyer issued a mixed ruling that offered bright spots for both sides, though the ruling was clearly a disappointment for the White House, which hoped to put legal challenges to its signature health law behind it. Judge Collyer said the House has legal standing to bring claims alleging the Obama admin was violating the Constitution in how it was paying for part of the ACA. The judge rejected the Obama admin’s argument that the court shouldn’t referee a political dispute between the other two branches of government…"

State

  • Premium subsidies flow heavily to populous, poor states [California, Florida, Texas]
    "More than half of this year's $27B in ACA premium subsidies are going to five states, which has created a big but risky business opportunity for health insurers. Many GOP-led states with high numbers of low-income residents are also among the leading recipients of the law's premium subsidies, according to recent CMS data. California, Florida and Texas not surprisingly lead the list of states receiving the most in premium subsidies, which are provided to consumers as tax credits to help pay down the monthly cost of their health insurance. Insurers in [those] most populous states in the U.S…will receive $4.45B, $4.27B and $2.36B, respectively, this year…"
  • Medicaid expansion gives Colorado a boost [Colorado]
    "Colorado's uninsured rate has plummeted from a recent high of 15.8% four years ago to 6.7% this year, but the success of the ACA in Colorado is almost entirely the result of Medicaid expansion, according to a much anticipated survey from the Colorado Health Institute. The survey found that nearly one in three of the state's 5.3M residents now get insurance through Medicaid or other public health insurance programs. With nearly 1.3M Coloradans now on Medicaid, the state has the fourth fastest-growing Medicaid program in the country behind Kentucky, Oregon and Nevada, according to an analysis earlier this year from the federal Centers for Medicare & Medicaid Services…"

Strategy

  • Healthcare's Y2K moment is October 1st - Are you ready?
    "October 1, 2015 is being touted as the 'Y2K moment' for the healthcare industry. As nearly everyone in the healthcare industry knows, starting in October, U.S. health providers must begin using the codes from the latest International Classification of Diseases, ICD-10. Anyone who doesn’t know about ICD-10 will be an unwitting participant in the next stage of data-driven medicine. Hospitals, physician offices, medical records and billing statements are…where you’ll find ICD codes. The current codes, ICD-9, were created in 1975 and are in dire need of an upgrade. ICD-9 features numeric codes for every diagnosis, symptom description, and cause of death in humans. What ICD-10 will do is add letters to the mix, creating an alphanumeric code that will provide greater detail about severity, location and procedures. Under the current system, suturing a patient’s aorta, for instance, is coded the same as suturing a minor artery. This causes confusion for billing and insurance systems as well as systems that mine patient data…to improve the quality of care…"
  • Staying ahead of healthcare’s top trends
    "...Staying relevant in a highly competitive, quickly changing environment such as healthcare requires leaders to ask the tough questions. What trends must we address? How can we stay relevant and meet demands? We face new challenges and regulatory demands every day in healthcare, which makes our environment particularly difficult…As you’re evaluating your…growth strategy, here are four key questions to ask: As we treat increasingly savvy patients, do we have a strategy to address healthcare consumerism?...Are we poised for the best and broadest interoperability based on our current strategy?...Does our patient engagement strategy include a financial component?...Is our organization ready for ICD-10 and all the changes it represents?…"
  • New social media platform provides support for ill and injured
    "A new social media site is giving individuals suffering with life-threatening or life-altering injuries and diseases the opportunity to gain support and strength from friends, family members, and fellow patients online. DXsharelife allows patients to post their stories, create journals, update important events, upload photos and videos, and chat 24 hours a day with a registered nurse. The site also features an instant online chat with members dealing with similar health issues, giving these patients an important outlet as they deal with the enormous challenges of the disease or injury. '…Patients can learn from one another and offer key support, giving all members the strength that comes with being part of a true community,' says Angela Rollins, creator of DXsharelife…"

Industry Activity

  • Healthcare M&A still expanding, but more slowly
    "Transaction professionals…predicted significant growth ahead for healthcare M&A, but not as much as they had forecast earlier in 2015, according to M&A’s Mid-Market Pulse (MMP)…While the forecast certainly suggests healthy activity…transaction pros see growth slowing in the future…In recent years, M&A in the sector has been driven by the ACA, which has fueled widespread consolidation as providers search for cost efficiencies. Over time, the impact of ACA on consolidation in the sector is expected to lessen. And, while [Middle Market’s] poll occurred before the stock market volatility of late August, some respondents mentioned uncertainty about the economy, including concerns about the impact of China’s economic deceleration…"
  • Partners forges huge pop health deal
    "In an unprecedented alliance between client and vendor, Boston-based Partners HealthCare, the client, and Salt Lake City-based Health Catalyst, the vendor, have agreed to share best practices, intellectual property, technology and training in an effort to take population health to new heights. Money is involved – at least $30M. Partners, which is already invested in Health Catalyst, raised its equity ownership stake in the growing health data warehousing and analytics company. Health Catalyst, meanwhile, is investing in money, time and effort in the initiative…"
  • GetWell acquires Skylight Healthcare
    "Patient engagement just got a boost with GetWellNetwork's acquisition of…Skylight Healthcare Systems. The financial terms of the deal…were not disclosed. Research firm KLAS has ranked the two companies No. 1 and No. 2 for patient engagement for the past five years. Both companies describe themselves as early pioneers in interactive patient care, or IPC. Each company brings…15+ years of patient and family engagement experience to the newly formed entity. They plan to leverage this expertise to accelerate product development and expand clinical transformation services. The goal is to continue to drive better patient outcomes and inspire individuals to improve their own health…"

Research

  • Marketplace health insurance funded by tax credits in most states
    “Nearly 10M Americans signed up for health insurance through the Marketplace exchanges in 2015, according to data released this month by the Centers for Medicare & Medicaid Services (CMS). As of the end of June 2015, [about] 9.9M consumers had enrolled: 7.2M through the federal marketplaces and…Healthcare.gov states and 2.7M through the state based marketplaces (CA, CO, CT, HW, ID, KY, MD, MA, MN, NY, RI, VT, WA, DC) Most…about 84%...were able to obtain coverage by taking advantage of the advanced premium tax credit (APTC), or healthcare tax credit, to help out with the cost of insurance…The top ten states receiving healthcare insurance by rate of consumers in each state who benefitted from the APTC are: MS (95.4%), WY (92.2%), NC (91.6%), FL (91.3%), AL (90.9%), LA (90.7%), GA (90%), AR (90%), WI (89.6%) and AK (88.8%)…"
  • Fewer people neglecting healthcare over cost: CDC
    "…The rate of people who didn't get needed medical care as a result of its cost reached a 16-year-low in the three months that ended in March, as the ACA continued to drive down the number of people without health insurance, according to a Centers for Disease Control and Prevention report. The percentage of people who didn't get needed healthcare as a result of its cost fell to 4.4%. It was nearly 6% as of 2013 and has been on a steady downward curve since 2011, as the ACA's toolkit to expand health coverage has kicked in. The CDC report also found that the rate of people without health insurance dropped below 10% in the first quarter, breaking a double-digit plateau that had persisted since the 1990s. And in another marked decrease, the percentage of adults who said they were regular cigarette smokers hit a new low, at 15.2%…down from 16.8% last year…"
  • U.S. Healthcare: What are we thinking?
    "A recently released survey of 2,716 Harvard Business School alumni found that the cost of healthcare was the top barrier to entrepreneurship in the US. For most Americans this finding won’t sound especially surprising. What is surprising, and should be alarming, is that this same barrier is the least important of all 13 choices offered as part of the survey for entrepreneurs outside the US. What are we doing wrong?...Most of what the press picked up [from the] HBS survey was concern over the rising inequality of income distribution in the US. In the context of a relatively robust US economy this crumbling of the middle class is certainly worrying. Yet still, jobs are being added…"

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. 2015 Mansa Capital©

Mansa Partner