Mergers, Elections, and Plan A vs. B

Whether or not Anthem/Cigna or even Aetna/Humana, or the giant hospital mergers bear any fruit, the message is clear. We are grinding up against the total revenue ceiling as a nation. As a good friend once compared, HCC, STAR and the MA Payment levels above FFS cost, it is like rain in the desert. It causes things to bloom and look pretty and living looks easy, but it is still a desert and the rain will stop.

To continue the analogy, there is a consolidation effort underway in anticipation of the drought. The Presidential election may change a rainstorm or two, but the climate maximum has been reached. Employers never liked getting increases and certainly with Medicare/Medicaid becoming the true drivers, there is no tax increase in the political future. There is not more rain, and with the aging population and resulting taxpayer to health care consumer ratio, there will be less total rain and more demand "Per capita".

These mergers are like ranchers reasonably easily staking out large swaths of the landscape. And certainly it is far better to be the consolidator vs. the consolidated (unless perhaps you are the founder or the startup) but it is still a desert and the drought is looming. Adding to the woes, there are new invasive species taking up resources and space: MACRA/MIPS, EMRs, all sorts of procedures, social media expectations, and a consumerism that most established ranchers are simply finding difficult to grasp and efficiently incorporate.

There may be some relief, and reasonably permanent. In keeping with the analogy, it is moving from the surface water to the underground aquifer. It takes work, proper technique, knowledge of where and how to access it. For those of us that have been through a couple of cycles of rain and drought we have a very good idea of where and how, indeed we have been preparing for the drought for a couple of years now.

The take away: it is better to be the consolidator vs. consolidated in the desert land grab, better yet is to know where the aquifer is and move from water from the sky to your own underground supply. I have taken enough of your precious time – Aquifer access will be in the second installment, or if you are at NAACOs conference this week look me up. Breaking the “Lodge” of Healthcare