HSC's 15th Annual Wall Street Comes to Washington Conference

The Center for Studying Health System Change's 15th Annual Wall Street Comes to Washington Conference, held September 28, 2010, brought together leading Wall Street health care analysts and health policy experts to examine the major trends reshaping health care markets in the wake of the Affordable Care Act's passage. The conference featured three panel discussions covering health insurance market trends, hospital and physician trends, and pharmaceutical and medical technology trends.

Health Insurance Market Trends

The first panel addressed the sweeping changes health reform would bring to insurance markets. Analysts discussed the creation of health insurance exchanges, the individual mandate, increased regulation of the insurance industry, and the future of Medicare Advantage. Panelists examined how large national insurers were preparing for reform implementation, including their strategies for participating in exchanges and adapting to new regulations around medical loss ratios, which required insurers to spend specified percentages of premium revenue on medical care.

The Medicaid expansion was expected to significantly increase enrollment in public programs, and panelists explored whether commercial insurers would compete for newly eligible Medicaid populations. Insurance premium trends received considerable attention, with analysts noting that while the law imposed new requirements that could push premiums higher, competitive pressures and regulatory oversight would constrain how much plans could charge. The panel also discussed emerging benefit designs, with employers increasingly interested in wellness programs, health risk assessments, and incentive-based approaches to encourage healthier behaviors.

Hospital and Physician Market Trends

The second panel examined trends in hospital and physician markets. Hospital consolidation continued to accelerate, with major systems acquiring community hospitals and physician practices at an increasing pace. Analysts discussed how health reform's emphasis on accountable care organizations, bundled payments, and other alternative payment models was driving provider integration. Hospitals were investing heavily in information technology, including electronic health records, to position themselves for new payment approaches that rewarded coordination and efficiency.

The growing trend of hospital employment of physicians was a major topic. Hospitals were hiring specialists and primary care doctors at unprecedented rates, driven by several factors: physicians' desire for more predictable incomes and manageable schedules, hospitals' need to secure referral streams and meet quality reporting requirements, and the economies of scale in purchasing and administration that larger organizations could achieve. Panelists debated whether this consolidation would ultimately lead to higher or lower health care costs, noting that while integration could improve care coordination, it also gave hospital systems greater bargaining power over insurers.

Pharmaceutical and Medical Technology Trends

The third panel focused on pharmaceutical and medical technology industries. The pipeline for new drugs was shifting toward specialty medications and biologics, which commanded far higher prices than traditional pharmaceuticals. Analysts discussed the implications of patent expirations for blockbuster drugs and the growth of the generic market. Health reform's provisions for biosimilars -- less costly versions of biological drugs -- represented a potential new avenue for cost savings, though the regulatory pathway for approval remained uncertain.

Medical device manufacturers faced new challenges from a device excise tax included in the ACA, as well as growing pressure from hospitals to demonstrate the value of new technologies through comparative effectiveness data. The panel discussed how health reform's emphasis on evidence-based medicine and cost-effectiveness could reshape purchasing decisions for medical technology, potentially slowing adoption of expensive new devices and treatments that lacked clear evidence of superior outcomes.

Throughout the conference, a recurring theme was the tension between reform's promise of expanded coverage and the challenge of controlling costs. Wall Street analysts generally viewed health reform as creating both opportunities and risks for health care companies, with the ultimate financial impact depending heavily on how implementation unfolded and how effectively the law's cost-control mechanisms worked in practice.

Sources and Further Reading

HSC's 15th Annual Wall Street Comes to Washington Conference, September 28, 2010, Washington, D.C. Panelists included Christine Arnold (Cowen and Company), Charles Boorady (Credit Suisse), Matthew Borsch (Goldman Sachs), and Gail Wilensky (Project Hope), moderated by HSC President Paul Ginsburg.