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Hospitals want you to look here, not over there

Hospital leaders took pains to draw investors’ attention to their sizable cash and investment reserves at JPM. Notably absent from many presentations, though, was mention of their losses on patient care, my colleague Tara Bannow reports from the conference.

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It’s a different face than they put forward in their communities and to Congress when asking for money. In those settings, hospitals tend to emphasize how poorly they’re doing on operations. But at the industry’s largest and most exclusive investor conference, they need to project strength to drum up demand for their bonds.

Nonprofit health systems like Intermountain Healthcare, CommonSpirit Health, and Mass General Brigham each have unrestricted cash and investment pools north of $12 billion. That money can help prop up operations in a down year. It can also help pay down debt and build buildings or fix elevators. And having a large cash reserve tends to translate into better credit ratings, which makes borrowing cheaper.

Tara met with some hospital CFOs at JPM, who told her they try not to dip into that money, though. “You wouldn’t want your paycheck dependent on this quarter’s returns,” CommonSpirit’s CFO said. Read her final dispatch for more.

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What you may have missed at JPM

JPM has long been a boy’s club. But surely, in the year 2024, things are good now, right?

Wrong. Tara anchored this team’s coverage of JPM out in San Francisco, and as a new mom traveling to a health careconference, she had one basic expectation: a lactation room to pump. Tara was told there would be one. It turned out to be an undesignated hotel room that was routinely locked, forcing Tara to pump in a bathroom stall for 25 minutes on one day. I highly encourage you to read Tara’s essay about her struggle — and to ponder not just what it says about the conference, but what it says about the hurdles that working moms still have to jump over.

Here’s more of our coverage from #JPM24:

• Hospitals told investors they’re fully throwing their weight into other ways of making money, outside of patient care — things like developing drugs or selling insurance, Tara reports.
• CVS Health made it clear that its Medicare Advantage enrollees are getting a lot more outpatient care than expected (more on this in the next item as well).
• Remember Morgan Health, the company that J.P. Morgan created in the wake of its failed Haven experiment? It wants you to know it still exists, although we don’t really have any measure of its success, Tara reports.
• Walgreens is really focused on profitability, not acquisitions, under new CEO Tim Wentworth, Brittany Trang reports.

When the billions of today won’t cut it

Here’s some Wall Street logic for you: UnitedHealth Group posted $5.5 billion of profit in the fourth quarter, bringing its total profit to more than $22 billion in 2023. That was up more than 11% year over year. UnitedHealth has more money that it knows what to do with it. But the stock market punished the company’s stock price by more than 3% on Friday after it reported those earnings.

Stock prices mostly reflect futureearnings, not just present earnings. And investors are worried about UnitedHealth’s short-term future. That’s because, yet again, UnitedHealth said its insurance members — particularly older adults on Medicare Advantage — have been seeing the doctor a ton. Increased “utilization” has been the message for the past six months now.

“Investors will remain squarely focused [near term] on utilization trends in the Medicare complex,” Scott Fidel of Stephens wrote in a research note Friday.

A lot of seniors also got their RSV vaccines in the fourth quarter, and for those who trekked into the physician office to get those shots, it often led to additional care, executives said Friday. Other insurers that are big in Medicare Advantage, like Humana and CVS Health, got battered by association — and we’ll hear more from them in the next few weeks.

The state of Medicare Advantage, in one chart

I’ve watched a fair number of MedPAC meetings over the years. Some would say those meetings, which dive into the deepest nuances of Medicare policy, are dry. I’d disagree. And you certainly can’t say that about this past Friday’s meeting.

MedPAC debated the state of Medicare Advantage, and it looks bleak, at least from the perspective of the general public: The federal government is overpaying Medicare Advantage plans more than ever, costing taxpayers an estimated $88 billion in 2024 alone.

That was just the start. One MedPAC commissioner, Brian Miller, who is a researcher at the conservative American Enterprise Institute, then got on his soapbox and claimed the advisory group is being “hijacked for partisan political aims.” He believes the MedPAC staff’s report is “fundamentally flawed” and overly “negative” toward the Medicare Advantage program — which nobody else really agreed with. Read a recap of the meeting.

The lawsuit attracting hospital lobbyists

I’m a sucker for interesting lawsuits. The big one between hospital giant AdventHealth and health insurance vendor MultiPlan got a lot more interesting last week.

New filings show AdventHealth called MultiPlan an “economic parasite,” and even the American Hospital Association filed an amicus brief supporting AdventHealth and decrying the state of hospitals’ finances (although AHA’s filing excludes information that provides a more complete assessment, and a much rosier financial picture, of hospitals; see the first item of today’s newsletter). The AHA routinely files amicus briefs, but this struck me as odd because those mostly come in cases that involve the government.

The lawsuit has national implications for out-of-network payments among the commercially insured — and shows just how far hospitals and insurers will go to get a bigger chunk of the golden goose that is job-based health insurance. Read more.

Industry odds and ends

• Presbyterian Healthcare Services, the hospital and health insurance network in New Mexico, is suing the federal government over unpaid Covid-19 relief funding. Presbyterian, which has collectively lost $52 million from operations since the pandemic started in 2020, argues HHS owes it $10.6 million after inappropriately denying its most recent application.
• CommonSpirit is considering issuing $3 billion of debt in the first quarter, mostly to refinance existing debt and fund other projects, according to a new disclosure to bondholders.
• Last month, Brittany Trang told you about the Senate’s bipartisan probe into private equity-owned hospitals. Now, the Private Equity Stakeholder Project has a report on two of the companies the Senate is investigating — LifePoint, a large hospital chain, and Apollo Global Management, LifePoint’s owner and the second-largest private equity firm in the U.S. The report discusses the web of complex mergers and spinoffs Apollo’s health care division has undertaken to avoid antitrust scrutiny, as well as the excessive debt and bad conditions at the LifePoint hospitals, Brittany writes.
• David Burda of 4sight Health has a good post showing how “alternative payment models” — which are a type of “value-based care” that attempts to reward hospitals and doctors for high-quality, low-cost care — still aren’t really a thing.
• Olympic gymnast Mary Lou Retton made headlines last year after her family raised money for Retton, who was very sick but uninsured. Retton apparently has health insurance now, but the rest of the details are fuzzy, Christine Brennan of USA Today reports.
• Nine health care workers at St. Francis Medical Center in Lynwood, Calif., were fired in December for “trespassing” while delivering documents in support of their union contract negotiations. High-profile lawyer Gloria Allred has taken up their case, suing Prime Healthcare, the for-profit hospital chain that owns St. Francis, Brittany reports.

The Meme Ward

For more on Agilon’s brutal start to the year, read this from Hospitalogy’s Blake Madden.