• Login
    • Join
  • FOLLOW:
  • Subscribe Free
    • Magazine
    • eNewsletter
    Checkout
    • Magazine
    • News
    • Opinions
    • Top 30
    • Research
    • Supply Chain
    • Device Sectors
    • Directory
    • Events
    • Resources
    • Microsites
    • More
  • Magazine
  • News
  • Opinions
  • Top 30
  • Research
  • Supply Chain
  • Device Sectors
  • Directory
  • Events
  • Resources
  • Microsites
  • Current / Back Issues
    Features
    Editorial
    Digital Edition
    eNewsletter Archive
    Our Team
    Editorial Guidelines
    Reprints
    Subscribe Now
    Advertise Now
    Top Features
    Pharmaceutical Focus: A Look at Combination Products

    The Printed World: Additive Manufacturing in Medtech

    The Lost Year: 2020 Year in Review

    Extrusion Evolution

    Little Big Parts: Micromolding Under the Microscope
    OEM News
    Supplier News
    Service / Press Releases
    Online Exclusives
    Press Releases
    People in the News
    Product & Service Releases
    Supplier News
    Medtech Makers
    Technical Features
    International News
    Videos
    Product & Service Releases
    Live From Shows
    Top News
    CHF Solutions Appoints CEO

    Freehand Partners with Imperial Medial Solutions

    Intersect ENT Announces CMS Approval of Coding Application for Sinus Implant

    Hillrom to Buy Bardy Diagnostics for $375M

    Global Tissue and Organ Transplantation Market to Surpass $25.6 Billion by 2027
    From the Editor
    Blogs
    Guest Opinions
    Top Opinions
    Pharmaceutical Focus: A Look at Combination Products

    The Printed World: Additive Manufacturing in Medtech

    The Lost Year: 2020 Year in Review

    Extrusion Evolution

    Little Big Parts: Micromolding Under the Microscope
    Top 30 Medical Device Companies
    Market Data
    White Papers
    Top Research
    Fixing Face Mask Form and Function

    The Heart of the Matter: Trends in Cardiology

    Virtually the Same? The Challenges of Online Conferences

    Digital Health Delivers During a Year for the Ages

    Advanced Technology for Staking and Swaging Medical Plastics
    3D/Additive Manufacturing
    Contract Manufacturing
    Electronics
    Machining & Laser Processing
    Materials
    Molding
    Packaging & Sterilization
    R&D & Design
    Software & IT
    Testing
    Tubing & Extrusion
    Cardiovascular
    Diagnostics
    Digital Health
    Neurological
    Patient Monitoring
    Surgical
    Orthopedics
    All Companies
    Categories
    Company Capabilities
    Add New Company
    Outsourcing Directory
    Creganna Medical, part of TE Connectivity

    MW Life Sciences

    maxon

    Medicoil

    Spectrum Plastics Group
    MPO Summit
    Industry Events
    Webinars
    Live From Show Event
    Industry Associations
    Videos
    Career Central
    eBook
    Slideshows
    Top Resources
    Meeting Critical Ventilator Product Requirements Amid Pandemic

    Impact of COVID-19 on the Medtech Supply Chain

    Finding the Upside to a Challenging Year

    Preparing Your Design Controls for FDA Approval

    A 'Trial and Error' Approach to Micromolded Parts
    Companies
    News Releases
    Product Releases
    Press Releases
    Product Spec Sheets
    Service Releases
    Case Studies
    White Papers
    Brochures
    Videos
    Outsourcing Directory
    Medbio LLC

    Concise Engineering

    Spectrum Plastics Group

    Creganna Medical, part of TE Connectivity

    Qosina Corp.
    • Magazine
      • Current/Back Issues
      • Features
      • Editorial
      • Columns
      • Digital Editions
      • Subscribe Now
      • Advertise Now
    • News
    • Directory
      • All Companies
      • ALL CATEGORIES
      • Industry Associations
      • Company Capabilities
      • Add Your Company
    • Supply Chain
      • 3D/Additive Manufacturing
      • Contract Manufacturing
      • Electronics
      • Machining & Laser Processing
      • Materials
      • Molding
      • Packaging & Sterilization
      • R&D & Design
      • Software & IT
      • Testing
      • Tubing & Extrusion
    • Device Sectors
      • Cardiovascular
      • Diagnostics
      • Digital Health
      • Neurological
      • Patient Monitoring
      • Surgical
      • Orthopedics
    • Top 30 Company Report
    • Expert Insights
    • Slideshows
    • Videos
    • Podcasts
    • Resources
    • eBook
    • Infographics
    • Whitepapers
    • Research
      • White Papers
      • Case Studies
      • Product Spec Sheets
      • Market Data
    • MPO Summit
    • Events
      • Industry Events
      • Live From Show Events
      • Webinars
    • Microsite
      • Companies
      • Product Releases
      • Product Spec Sheets
      • Services
      • White Papers / Tech Papers
      • Press Releases
      • Videos
      • Literature / Brochures
      • Case Studies
    • About Us
      • About Us
      • Contact Us
      • Advertise with Us
      • eNewsletter Archive
      • Privacy Policy
      • Terms of Use
    Columns

    The Big Squeeze Is On: An Examination of the Health Insurance Impact

    ...

    The Big Squeeze Is On: An Examination of the Health Insurance Impact
    Related CONTENT
    • Investing Time in San Francisco
    • Fifteen Years Later, the Growth and Vision Continues
    • Medtronic Names New President of Minimally Invasive Therapies Group
    • FDA Approval and U.S. Launch of Medtronic’s Next Generation Pacemakers
    • Medica 2017 in Photos, Wrap-Up
    Chris Oleksy, Founder and CEO, Oleksy Enterprises and Next Life Medical; CEO, Emergent Respiratory01.30.18
    As 2018 begins, there is unprecedented angst among the general population about individual healthcare coverage. MPO readers and I share this angst, though we are probably more likely than most to voice our concerns because of the nature of our jobs—we truly care about helping patients and improving their overall health. Of course, we also want our organizations to thrive in, or in some cases survive, the ever-changing healthcare sector. So when someone moves our “cheese” as Spencer Johnson, M.D., cleverly quips in his 1998 best selling book, angst is normal and expected.

    Before I dispense any supply chain wisdom, however, I think it’s important to disclose that I’m taking on a slightly different columnist role this year. Once every quarter, I will analyze current events, and with the help of my crystal ball, assess the possible impact on medtech companies as well as their supply, value, and care chains. Think of it as a proactive planning tool, of sorts.

    Faithful MPO readers know I’ve worn many hats during my 35-year tenure in the healthcare industry. I’ve held supply chain roles in Fortune 100 companies like Medtronic plc and Dow Corning, and I’ve also led contract manufacturing firms. I have been a consultant too, and now own a business that supplies emergency CPAP products to major U.S. healthcare providers. I will draw upon this wealth of experience to dispense some advice and a few Chris Tips (CTs).

    This quarter’s topic is the death of the individual healthcare insurance mandate and the ensuing premium squeeze. I’ll start by reiterating a prediction I made last fall at the MPO Summit— before open enrollment began and insurance premiums skyrocketed. I showed a bell curve (Exhibit A) to depict three population groups who will profoundly impact both payor P&Ls and the entire care chain.

    Group 1—The Millennials: Most healthy millennials cannot justify spending thousands of dollars on medical insurance. “There’s no way I’ll pay $4,000 for healthcare coverage while I’m renting an apartment and driving an old car that’s barely limping along,” this generation is likely to contend. “I’d rather spend the money on day-to-day expenses. Besides, if something happens, there is so much fine print in my insurance plan, it probably won’t be covered. I’ll just roll the dice and forego health insurance even if I have to pay a small penalty.”

    Group 2—The Baby Boomers: Healthy or not, baby boomers are unwilling to bear the costs of high insurance premiums. Well-off boomers take comfort in knowing they can afford emergency care and choose their own doctors, while those struggling to make ends meet are unlikely to afford Obamacare. Regardless of finances, though, boomers have a similar mindset to millennials: “The fine print prevents payors from covering so many things, I’ll be paying for issues whether I have insurance or not. I’d rather forego health insurance even if I have to pay a small penalty.”

    Group 3—Everyone Else: Pity Generation X, the population cohort caught between the boomers and millennials. This group is really feeling the squeeze of skyrocketing insurance premiums and stagnant or declining net pay, prompted primarily by the mass exodus of older and younger generations opting out of healthcare coverage. Although companies are absorbing much of the costs of insurance dropouts, their bottom lines will eventually be affected. Something has to give.

    Without an individual mandate and subsequent penalty, the squeeze to Generation X will only accelerate as more people exit their healthcare coverage plans. Hence, those who are covered by their employers or themselves will pick up the tab for all canceled plans. Quite generous, no?

    It’s shameful (and ironic) that baby boomers who have paid into healthcare for decades now cannot afford coverage. This generation has nothing to show for all the years they helped finance their insurance plan. Indeed, boomers are consciously forgoing coverage, but it’s downright criminal they were forced to choose between economic security and health insurance. Millennials are making a similar choice and risking financial ruin by opting out of coverage. Neither group, however, is in as tough a spot as Generation X, which is being penalized for these bad decisions.

    So what does all this mean for the healthcare eco-system? Cost pressure. This cost pressure will almost certainly manifest itself in two types of scenarios; and while there are opportunities to thrive or fail in either one, both require a different operating modality for companies.

    Scenario 1—Eat or Be Eaten: Aggressive Cost Pressures Rolling Downhill
    Each element of the eco-system is now more pressed than ever because payors are losing funding from those renouncing coverage. And that payor “rock” rolls downhill. Since one of the payors is still responsible for a very large portion of America’s healthcare plans, the loss of funding will have a material impact on caregivers through their reimbursement strategies. Those caregivers then aggressively drive cost reduction requirements downstream. Expect this cost pressure to accelerate due to the unprecedented squeeze taking place.

    Keep in mind, this pressure was high when the single mandate was in place. Now that it’s gone, funding is coming from payors’ profits and losses, and such a practice is unsustainable (short of insolvency). Therefore, be prepared for more aggressive and creative approaches from payors.

    Scenario 1 CTs: OEMs should consolidate their supplier bases and seek cost reductions based on volume cost absorption savings. The well has run dry for low-margin contract manufacturers and suppliers that have steadily been losing margin surplus in recent years due to cost down requirements and the lack of additional volumes. With their margins squeezed, OEMs must pick their “go-to” suppliers, make them primary partners, and drive consolidation to them. It’s a simple concept, yet a challenging one to execute from a quality and regulatory perspective because of the qualification requirements associated with changing suppliers. Nevertheless, it’s an effective strategy and a feasible goal.

    Additionally, work with payors to ensure products are an in-network reimbursement item rather than out-of-network co-pay merchandise. Suppliers should consider taking a creative approach with payors and caregivers to create more volume for their OEM customers.

    Scenario 2—Care Chain Consolidation: The Free Enterprise System at Its Best
    I believe that care chain consolidation is inevitable. In the not-too-distant future, major portions of the healthcare system will conjoin to create “in-network care chains” with all the necessary players: caregivers, OEMs, payors, manufacturers, pharmacy providers, etc. This one-stop shopping model represents the free enterprise system at its best. In early December, CVS Health announced it would buy Aetna for $69 billion in a deal that potentially could reshape the healthcare industry. Who will pair up next? United Health and Boston Scientific Corp.? Blue Cross Blue Shield and Medtronic? It’s quite possible. Care chain consolidation makes sense—systemically and economically.

    Scenario 2 CTs: OEMs should start thinking about life in a consolidated care chain world. In such a system, their products will be considered “go-to” items within the care chain since they’ll be the only in-network products. Alternatives will be non-existent. Back orders will be filled by a competitive care chain, which will be costly and potentially damaging to a company’s reputation. To avoid this misstep, suppliers should start aligning themselves with the OEM partners with which they want to navigate this new world. Some of the best opportunities may be in generic devices, as they will enable suppliers to fill in products missing from their own care chains with those from competitive chains. OEMs may play a larger advisory role, since suppliers will no longer be competing against partners within their own care chains but rather against other chains.

    CT: Free Enterprise System Please!
    The free enterprise model allows for multiple care chains to form and vie for supremacy. Simply stated, it gives payors the opportunity to cleverly market their insurance plans—selling the quality of the complete care chain, for example, rather than pitching a plan based solely on price.

    If the free enterprise system is allowed to operate unreservedly (i.e., without governmental interference), it will create a competitive environment where care chains will compete for patients by selling value instead of cost. It would be a historic change if open enrollment was a time to think about wellness or recovery rather than new doctors and/or rising premiums.

    Eliminating the individual mandate and supporting the free enterprise system is exactly what the U.S. healthcare system needs. Obamacare must undergo a further restructuring though, to allow the free enterprise system’s competitive powers to work. The Affordable Care Act must be repealed and/or re-configured differently so uninsured patients can obtain quality, affordable coverage. Maybe the reconfiguration can feature a governmental supported care chain that improves the use of the V.A. system or perhaps a health savings account plan that helps the less fortunate instead of providing funding to states to purchase policies that will never be used.

    Care chain consolidation should be encouraged and supported because competition will help reduce healthcare costs. It makes everyone a better player because it emphasizes value-based care over price. The ultimate victory will be achieved the day patients choose quality over cost. I think that day is looming somewhere in our future, as long as politicians are willing to listen and accept help. If anyone in Washington is listening (or reading this), I’d like to quote Bill Murray in “Ghostbusters” and say, “I’m here to help.” Just ask.

    Happy New Year! 


    Chris Oleksy is founder and CEO of Oleksy Enterprises, Next Life Medical and Emergent Respiratory. He can be reached at chris@oleksyenterprises.com or chris@nextlifemedical.com.
    Related Searches
    • medical
    • market
    • change
    • next life medical
    Suggested For You
    Investing Time in San Francisco Investing Time in San Francisco
    Fifteen Years Later, the Growth and Vision Continues Fifteen Years Later, the Growth and Vision Continues
    Medtronic Names New President of Minimally Invasive Therapies Group Medtronic Names New President of Minimally Invasive Therapies Group
    FDA Approval and U.S. Launch of Medtronic’s Next Generation Pacemakers FDA Approval and U.S. Launch of Medtronic’s Next Generation Pacemakers
    Medica 2017 in Photos, Wrap-Up Medica 2017 in Photos, Wrap-Up
    Medica 2017 in Photos, Part 3 & App Competition Winners Medica 2017 in Photos, Part 3 & App Competition Winners
    Dow Launches Strong, Versatile Liquid Silicone Rubbers at Compamed Dow Launches Strong, Versatile Liquid Silicone Rubbers at Compamed
    Left Side...Strong Side: Teachable Moments of 2017 Left Side...Strong Side: Teachable Moments of 2017
    Scenes from the MPO Summit 2017 Scenes from the MPO Summit 2017
    MPO Summit Conference Program Notebook MPO Summit Conference Program Notebook
    Medtronic and Mercy Will Share Data to Accelerate Medical Device Innovation Medtronic and Mercy Will Share Data to Accelerate Medical Device Innovation
    Medtronic to Establish Innovation Center in Chengdu Medtronic to Establish Innovation Center in Chengdu
    FDA Approves Medtronic’s Stent Graft System for Short Neck Anatomies FDA Approves Medtronic’s Stent Graft System for Short Neck Anatomies
    Compensation Conundrum: MPO Compensation Conundrum: MPO's Industry Salary Survey
    Top 10 Tips to Get Your Medical Device to Market Top 10 Tips to Get Your Medical Device to Market

    Related Columns

    • Fixing Face Mask Form and Function

      Fixing Face Mask Form and Function

      Masks for the general public are varied in both style and effectiveness.
      Sam Brusco, Associate Editor 11.04.20

    • Cardiovascular
      The Heart of the Matter: Trends in Cardiology

      The Heart of the Matter: Trends in Cardiology

      Of the three major segments of coronary stents, bioabsorbable stents are expected to have the highest growth between now and 2022.
      Maria Shepherd, President and Founder, Medi-Vantage 11.04.20

    • Virtually the Same? The Challenges of Online Conferences

      Virtually the Same? The Challenges of Online Conferences

      Like everyone else on the planet, I’m turning increasingly to virtual solutions to our physical challenges in the midst of a pandemic.
      Dawn A. Lissy, Founder & President, Empirical 11.04.20


    • Digital Health
      Digital Health Delivers During a Year for the Ages

      Digital Health Delivers During a Year for the Ages

      Internet of Medical Things technologies have emerged as the key enabler of a much more holistic and complete disease-state management toolbox.
      Brad Womble, Senior Director of Strategy, Marketing, and Mergers & Acquisitions, Jabil Healthcare 11.04.20

    • Advanced Technology for Staking and Swaging Medical Plastics

      Advanced Technology for Staking and Swaging Medical Plastics

      It reliably assembles heat- and vibration-sensitive components, and works with a wide range of plastic materials.
      Priyank Kishor, Global Product Manager—PulseStaking, Branson at Emerson 11.04.20

    • Quality Assurance When Supply Chain Disruptions Arise

      Quality Assurance When Supply Chain Disruptions Arise

      From supply chain disruptions to impromptu manufacturing modifications, the medical device industry has faced a whirlwind of complications in 2020.
      Sandi Schaible and Peter Steen, WuXi AppTec Medical Device Testing 11.04.20


    • The Top 30 and M&A in 2021: What’s Next?

      The Top 30 and M&A in 2021: What’s Next?

      With three of the top five companies appointing new CEOs in the last year and the global pandemic eroding earnings, M&A strategies could look a lot different.
      Florence Joffroy-Black and Dave Sheppard, MedWorld Advisors 11.04.20

    • COVID 19: Supply Chain Professionals’ Ultimate Reality Challenge

      COVID 19: Supply Chain Professionals’ Ultimate Reality Challenge

      Having been a part of the medtech supply chain for 40 years, I can say there has never been a more difficult time for supply chain professionals.
      Chris Oleksy, Founder and CEO, Oleksy Enterprises and Next Life Medical; CEO, Emergent Respiratory 11.04.20

    • Congress Examines Additional COVID-19 Relief and Recent Regulatory Changes

      Congress Examines Additional COVID-19 Relief and Recent Regulatory Changes

      The legislative year is nearly coming to a close as Washington survives yet another tumultuous election cycle.
      Jeffrey J. Kimbell, Eric P. Juhl, JD and David C. Rudloff, Jeffrey J. Kimbell & Associates Inc. 11.04.20


    • 3D/Additive Manufacturing
      Additive Manufacturing: Debinding Fluids Must-Haves

      Additive Manufacturing: Debinding Fluids Must-Haves

      As the pressure to produce more complex biomedical parts increases, medical device manufacturing using 3D printing is gaining widespread acceptance.
      Venesia Hurtubise, Technical Chemist, MicroCare Medical 11.04.20

    • Diagnostics
       How COVID-19 is Reshaping the Diagnostics Testing Sector

      How COVID-19 is Reshaping the Diagnostics Testing Sector

      The short-term impact on the diagnostics sector is readily apparent as the pandemic has fueled overwhelming demand for effective SARS-CoV-2 testing solutions.
      Eric Williams, Managing Director, Capstone Headwaters 11.04.20

    • Will Industry’s COVID-19 Recovery End Prematurely?

      Will Industry’s COVID-19 Recovery End Prematurely?

      Finally, a light at the end of the tunnel, but will it remain lit?
      Michael Barbella, Managing Editor 10.01.20


    • Surgical
      Hype or Hope? The Future of Surgical Robotics

      Hype or Hope? The Future of Surgical Robotics

      Recent publications suggest the U.S. performs more robotic surgery than every other country in the world.
      Maria Shepherd, President and Founder, Medi-Vantage 10.01.20

    • COVID Community: How the Pandemic Is Bringing Out the Best in Us

      COVID Community: How the Pandemic Is Bringing Out the Best in Us

      Given the brain power and generosity of our industry, I knew I could follow the wisdom of Fred Rogers’ mother and “look for the helpers.”
      Dawn A. Lissy, Founder & President, Empirical 10.01.20

    • Electronics
      Why Applying Cleanliness Standards to Outsourced Medical Electronics Is Important

      Why Applying Cleanliness Standards to Outsourced Medical Electronics Is Important

      When looking to outsource the manufacture of electronic medical devices, cleanliness standards and processes should be a top consideration.
      Jay Tourigny, Senior Vice President, MicroCare Medical 10.01.20


    Trending
    • Philips Buys Capsule Technologies In $635M Deal
    • Cytotron Gains Breakthrough Status To Treat Breast, Liver, And Pancreatic Cancers
    • Top 10 Trends In The Medical Device And Equipment Industry
    • 5 Ways Plastics Revolutionized The Healthcare Industry
    • Telemedicine, Regulatory Changes To Characterize Medtech Industry In 2021
    Breaking News
    • CHF Solutions Appoints CEO
    • Freehand Partners with Imperial Medial Solutions
    • Intersect ENT Announces CMS Approval of Coding Application for Sinus Implant
    • Hillrom to Buy Bardy Diagnostics for $375M
    • Global Tissue and Organ Transplantation Market to Surpass $25.6 Billion by 2027
    View Breaking News >
    CURRENT ISSUE

    November/December 2020

    • Pharmaceutical Focus: A Look at Combination Products
    • The Printed World: Additive Manufacturing in Medtech
    • The Lost Year: 2020 Year in Review
    • View More >

    Cookies help us to provide you with an excellent service. By using our website, you declare yourself in agreement with our use of cookies.
    You can obtain detailed information about the use of cookies on our website by clicking on "More information”.

    • About Us
    • Privacy Policy
    • Terms And Conditions
    • Contact Us

    follow us

    Subscribe
    Nutraceuticals World

    Latest Breaking News From Nutraceuticals World

    BGG Obtains U.S. Patent on AstaZine Natural Astaxanthin for Heart Function During Exercise
    Qualitas Health/iwi Raises $10 Million in Investment Round
    Aker BioMarine Expands Krill Portfolio with Novel Protein Hydrolysate
    Coatings World

    Latest Breaking News From Coatings World

    IGL Coatings Launches Graphene Reinforced Dual System Ceramic Coating
    Miller Paint Declares Simple Serenity its 2021 Color of the Year
    TAUBMANS Paint by PPG Releases ‘Chromatic Joy’ Palettes
    Medical Product Outsourcing

    Latest Breaking News From Medical Product Outsourcing

    CHF Solutions Appoints CEO
    Freehand Partners with Imperial Medial Solutions
    Intersect ENT Announces CMS Approval of Coding Application for Sinus Implant
    Contract Pharma

    Latest Breaking News From Contract Pharma

    Bone Therapeutics, Rigenerand Ink Cell Therapy Deal
    NovaQuest Private Equity Acquires CoreRx
    JS Bio and Etta Biotech Advancing Partnership
    Beauty Packaging

    Latest Breaking News From Beauty Packaging

    Marino Belotti Presents New Website
    Essence Cosmetics Expands in the U.S.
    Sigma Beauty Launches 'Brush Care' Sets at Sephora
    Happi

    Latest Breaking News From Happi

    Putting a Number on the Clean Beauty Market
    No7 Adds At-Home Resurfacing Peel
    Alastin Named a Fast-Growing Brand
    Ink World

    Latest Breaking News From Ink World

    Cowan Graphics Adds Fujifilm Inca OnsetX3 HS
    Packaging Printing Market Worth $433.4 Billion by 2025: MarketsandMarkets
    O-I Foundation Gifts $50k to Facilitate COVID-19 Vaccine Access
    Label & Narrow Web

    Latest Breaking News From Label & Narrow Web

    Domino grows installation and service teams
    ABG keeps pace with demand with recruitment drive
    Acucote expands FSC-certified portfolio
    Nonwovens Industry

    Latest Breaking News From Nonwovens Industry

    Honeywell Delivered 225 Million Masks in December
    Techtextil, Texprocess Postponed to 2022
    Super Strong Inks Survive Tough Environments
    Orthopedic Design & Technology

    Latest Breaking News From Orthopedic Design & Technology

    FDA Breakthrough Device Designation Granted to Spiderwort's Spinal Cord Technology
    Bioventus Appoints SVP of Operations
    DePuy Synthes Receives 510(k) FDA Clearance for VELYS Robotic-Assisted Solution
    Printed Electronics Now

    Latest Breaking News From Printed Electronics Now

    UDC Subsidiary Adesis' Website Wins 2020 MarCom Platinum Award
    Roadsimple Modernizes Warehouse Ops with Zebra Technologies
    Graphene Flagship Launches Redesigned Website

    Copyright © 2021 Rodman Media. All rights reserved. Use of this constitutes acceptance of our privacy policy The material on this site may not be reproduced, distributed, transmitted, or otherwise used, except with the prior written permission of Rodman Media.

    AD BLOCKER DETECTED

    Our website is made possible by displaying online advertisements to our visitors.
    Please consider supporting us by disabling your ad blocker.


    FREE SUBSCRIPTION Already a subscriber? Login