INFLECTION POINT/ Health Affairs Analysis Shows That Urban Hospitals Are Increasingly Able to Grab Benefits Intended for Rural Facilities
All hospitals are not alike. Some are big. Some are small. Some are struggling. Some have vast offshore investment holdings. Some are urban. Some are rural.
And some hospitals, apparently, are urban but like to cosplay as rural, earning the designation of “administratively rural.”
These hospitals are the equivalent of the guy driving an F-150, blasting Eric Church … on this way to pickleball, wearing a Patagonia vest.
Being “administratively rural” provides all kinds of advantages. They can get higher Medicare rates that come from being in urban areas, along with the benefits afforded to rural facilities (such as more graduate education slots and the ability to qualify for 340B more easily).
And, per a great new Health Affairs piece (and Fierce’s coverage), this is a trend that is accelerating. There were only three hospitals that were “dually classified” as both urban and rural in 2017. By 2023, that number was 425.
That includes a bunch of hospitals you’ve heard of (in places that are decidedly not rural): NewYork Presbyterian in NYC, UCSF Medical Center in San Francisco, Cedars-Sinai in LA, Mass General in Boston … and the list goes on.
The authors of the piece — Brown’s Jared Perkins and Christopher Whaley, and Hopkins’ Yang Wang and Ge Bai — suggest that Congress is going to need to step in to “direct federal support to geographically rural hospitals, where it is most needed.”
Given how important that rural/urban divide is across the board on everything from how the $50 billion in recently allocated hospital relief gets diced up to the future of 340, I suspect there is going to be a lot more scrutiny of those spotless (metaphorical) half-ton pickups.
Today in Cost Curve Apex:
Looking: There is one part of the supply chain where PBMs could instantly drop prices. Will they?
Surfacing: The lawsuits over the “STD loophole” in 340B are back in the news
The list of items in my stuff-to-write-about queue is growing. There’s more earnings, more pharm-to-table commentary, more Health Affairs papers, and more thoughtful analyses by my favorite thinkers.
What else should be on my radar? Hit me up.
THE ARC/ Are PBM-Owned Pseudo-Pharma Companies Cutting Their Prices? (lol no of course not)
I found this richly ironic.
Last week, after Donald Trump threatened pharma CEOs if they didn’t drop prices, PCMA pushed out a press release that was driven almost entirely by schadenfreude.
It includes some of the PBM lobby’s favorite lines, including this one: “Drug companies alone set and raise drug prices and can lower the list prices at any time.”
This is where the “richly ironic” part comes in.
QUICK TURNS/ An Easy $4 Billion in Health Savings, How the MFN Goalposts Are Moving
A huge chunk of the debate around drug spending is some version of “we don’t have the money for …” and you can fill in the blank: obesity meds or gene therapy or fertility services, or whatever. But that’s almost always needlessly narrow thinking.
Because there is a lot of money flowing through the system in ways that don’t bring a lot of benefit, and if we could just move those dollars to things that actually do make a difference, we could eat our cake and have it, too.
Anyway: I’m a huge fan of VBID kingpin Mark Fendrick’s work in this area, and he has a new paper with Chicago’s David Kim showing that Medicare plunked down almost $4 billion on 47 specific forms of low-value care. That’s a lot of money that could be better spent.
ELSEWHERE:
The whole Donald Trump-pharma-math thing is getting a second life, thanks to an AP “fact check” that confirmed that — indeed — you cannot cut prices for medicines by 1,500%.
The American Medical Association has released its latest stats on PBM concentration. There’s nothing new here, really. If you were worried about concentration and vertical integration before, there is still good reason to be worried.
This Barron’s piece on how the White House is moving the MFN goalposts — backing down from some of the positions taken in the original drug-pricing executive order — offers good perspective on how the ground is shifting. (Though I don’t think anyone quite knows how things will shift in the future.)
As a candidate, Donald Trump said that he was going to make sure that fertility services were covered for all. As president, eh, not really a priority, the Washington Post said.
Cost Curve is produced by Reid Strategic, a consultancy that helps companies and organizations in life sciences communicate more clearly and more loudly about issues of value, access, and pricing. We offer a range of services, from strategic planning to tactical execution, designed to shatter the complexity that hampers constructive conversations.
To learn more about how Reid Strategic can help you, email Brian Reid at brian@reidstrategic.com.
