HMOs and Hospitals: 20 Questions and 20 Answers

April 13, 2020

Terms like “unprecedented” have been used to describe impacts a lot lately, and the health insurance and facilities industries are no different.  We’ve been observing a lot over the last few weeks, poring over data, spending lots of time with healthcare companies comparing notes, and quite often relying on our substantial experience and perspective to (try to) make sense of it all.  All this knowing there “has been limited (perhaps no) public company commentary since the managed care companies discussed this topic publicly at a Healthcare conference in mid-March”.

With that in mind, last week Josh Raskin and team decided it was time to try and answer some of the more pressing questions in managed care.  The broad takeaway was that:

“Broadly speaking, we see a favorable financial impact to the health insurance segments, partially offset by their other businesses in the very short term. Additionally, we see economic pressures in the commercial segment, that actually create positive impacts for Medicare Advantage.”

In an exhaustive, 50 page note to clients, Raskin isolated “20 Questions and 20 Answers” which represent the most pressing variables affecting managed care including both effects of COVID as well as the impact of a recession.

Importantly, the team also developed a COVID Impact Analyzer which allows clients to adjust inputs and measure the impact on the companies.

The upshot was looking at price reactions relative to our 2021 EPS impacts which led to the quantification of EPS impact and even some ratings changes where reaction and projection differed meaningfully.

In times like these, we believe our brand of in-depth analysis can truly add value to our clients investment processes.  For more information on Nephron Research, please email: info@nephronresearch.com