MIZUHO SECURITIES USA INC. | US EQUITY RESEARCH
If we had to pick one conference to attend each year, the UCI HC Forecast Conference would be it: no where else can we get real-time insights from DC budget & HC players, updates on California's unique HC markets, a glimpse into coming innovations, academic theories & business realities and a healthy dose of politics from a distinguished group of speakers. Pain for subacute, change for Medicare Advantage & Alternative Payments for all.
Continuity is important: this was our 18th appearance (this analyst is the 'Wall St. View' and wrap-up speaker) at the 25th HC Forecast conference, which has had many of the same speakers over the years, so we know when something changes. This year was especially good and hot: with the Presidential election taking on unforeseen dynamics, how could it be otherwise? The high level important points are as follows: Look for discussions around moving Medicare Advantage rate methodology from a fee-for-service benchmark to an 'alternative payment system.' That could be either a blessing or a curse depending on whether a new system cuts rates or lets the private sector redesign the benefits and make a little money. MSUSA's post-acute view confirmed: a much faster pace and scope of change is real. There is real movement in DC to both push volumes to lower cost post-acute settings, but likely with constraints on reimbursements and excess utilization FIRST. Not good for subacute volumes (SNFs), good for home health - but watch out for more scrutiny of utilization as payments rise over time. Neg for KND, subacute volumes; potentially LT positive for UNH if MA moves away from FFS; hospitals mixed, but okay in ST.
The Politics (of HC and generally) are still extreme: the conservative think tank presenters were even more conservative than before, while the more liberal presenters defended the ACA. That's 'as usual.' But it was clear from the keynote by Norm Ornstein and the commentary around election year politics that the establishments on both sides of the aisle are shocked by Trump's supremacy this late in the game. They have no idea how the health policy/ACA debate would fare under a Trump presidency and can't predict that even a fully Republican DC could work with Trump to repeal/replace. But House Speaker Ryan seems to be preparing for this...watch the House Task Force on health for the next 'replace' blueprint, under either a Trump or Democratic administration, assuming the Senate stays Red, which might not happen.
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