Becker's Hospital Review

31 CFO / FINANCE ACA insurers saw financial success in 2017 amid repeal efforts: 8 things to know By Kelly Gooch M any insurers on the ACA's exchanges ben- efited financially from individual plans last year, despite various Republican efforts to dismantle the health law, according to an analysis from Politico. Here are eight things to know. 1. For the analysis, researchers examined financial filings for 29 regional Blue Cross Blue Shield plans. Various other insurers exited or scaled back their footprint on the ACA exchanges last year amid polit- ical uncertainty. Therefore, Politico notes, Blue plans often controlled their markets, with the 29 studied plans representing about one-fifth of the total market for Americans who purchased their plan themselves. 2. Kurt Kossen, president of retail markets at Health Care Service Corp., which oversees BCBS plans in five states, told the publication the insurer lost $2.5 billion on its individual market business during the first three years of the ACA marketplaces. 3. However, the analysis found things turned around in 2017 as many plans posted a profit. 4. Premium increases were cited as the top contrib- utor to health plans' improvement. According to the report, premiums for BCBS plans rose by an average of more than 25 percent last year. 5. Amid the premium increases, BCBS plans, on average, used 80 percent of revenue generated from premiums to pay for medical costs in 2017. This represents a 12 percent improvement over 2016 and means many insurers were able to cover people's medical costs for the first time since 2014, according to Politico. 6. The analysis specifically found Health Care Service Corp. spent 77.7 percent of premiums on medical claims in 2017, improving 18.5 percent compared to 2016, and BCBS of North Carolina improved by 10 percent last year compared to the year prior, ac- cording to the report. 7. Still, Politico notes, eight of the 29 studied plans nearly certainly lost money in 2017 after spend- ing more than 90 percent of premium revenues on medical costs. 8. As lawmakers continue to look at ways to sta- bilize the insurance market, it remains to be seen how recent financial performance will factor in, re- ported Politico. n Dana-Farber ends 2017 with $36.8M operating loss By Ayla Ellison B oston-based Dana-Farber Cancer Institute ended 2017 with an operating loss of $36.8 million, compared to oper- ating income of $29.7 million in the year prior. Dana-Farber saw revenues increase 8.4 percent year over year to $1.52 billion in 2017, according to bondholder documents. The hospital's patient service revenue and research revenue grew 6 percent and 12.3 percent, respectively, year over year. Higher expenses offset the hospital's revenue gains. In 2017, Da- na-Farber recorded operating expenses of $1.56 billion, up from $1.38 billion in the year prior. After factoring in strong investment gains, Dana-Farber ended 2017 with net income of $21.2 million, compared to $36.8 mil- lion in 2016. n Why a Walmart-Humana giant scares hospitals By Morgan Haefner A potential deal between Walmart and Humana would strengthen Walmart's position as a competitive threat to hospitals, industry con- sultants and executives told e Wall Street Journal. Reports surfaced March 29 that Walmart is in preliminary talks with Humana about developing a closer partnership, and one possibility is Walmart acquiring Humana, people familiar with the matter told WSJ. Here are five reasons why hospitals fear a possible Walmart-Humana behemoth. 1. Randy Oostra, president and CEO of Toledo, Ohio-based nonprofit health system ProMedica, told WSJ the prospect of a Walmart-Humana deal "should be a concern to everybody in healthcare." Competition from inexpensive healthcare options and stagnant growth are among hospitals' chief concerns, with a possible Walmart-Humana deal heightening anxiety. 2. While a deal isn't guaranteed, it comes on the heels of two healthcare me- ga-deals: CVS Health's $69 billion bid for Aetna and Cigna's $54 billion offer for Express Scripts. ese insurer pairings could mean a shi toward cheaper care provided at clinics and pharmacies, cutting into spending on hospital services. 3. Zack Cooper, health economist at Yale University in New Haven, Conn., told WSJ, "ese vertical deals are super exciting, mostly for the potential to keep people out of the hospital." When asked about a possible Walmart-Hu- mana deal, he said, "ere is scope for this new entity to, in a sense, offer a product that has less bells and whistles and is more efficient and lower cost." 4. ose efficiencies could partially come through Walmart's 4,700 pharmacies nationwide. However, Walmart's clinic footprint — it operates 19 in clinics and providers operate 50 others — is limited. Given its colossal retail presence, ex- panding these outpatient capabilities could make Walmart a direct competitor for low-cost outpatient offerings, the consultants and executives told WSJ. 5. Aside from offering cheaper, more efficient healthcare, industry consultants and executives look to Walmart's negotiating power for employee health ben- efits as a reason for hospitals to be nervous. Combining Walmart's employee benefit negotiating clout with Humana's data and infrastructure could posi- tion a combined entity to offer competitive health plans. Hospitals excluded from those networks would see increased operating pressure, WSJ reports. n

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