Cigna to Acquire Express Scripts and NYU to offer tuition-free med school for all students – September 2018 Healthcare Hot Takes

September 2018 Healthcare Hot Takes

Healthcare Hot Takes is Luma Health’s monthly rundown of healthcare innovations happening right now. Check out what the industry is thinking, reading, doing. This month’s main topics are NYU offering free tuition and Cigna acquiring Express Scripts.

Story #1: NYU School of Medicine Is Offering Free Tuition to All It’s Students

Last month, New York University School of Medicine made the bold announcement that it would cover tuition costs for all of its students. The university is hoping to alleviate a longstanding problem for medical school graduates — “overwhelming financial debt.” For example, 62% of the NYU graduating class has some form of debt, with the average debt for the class of 2017 being $184,000 (the median debt for all graduating medical students in 2017 was $192,000).

This excessive debt has led many medical students to pursue high paying specialties instead of fields in which more practitioners are needed, such as primary care, pediatrics, and research. According to the American Academy of Family Physicians, 52,000 more primary care physicians will be needed by 2025.

This initiative will cover all current and future students (93 first years and 350 others). With an annual tuition of $55,000 per student, NYU expects the cost of this plan to exceed $600 million. To date, the university has already raised $450 million.

Luma’s Hot Take: Many people in this country are medically underserved and could be benefited by more primary care being available to them. NYU is trying to solve this problem in a very unique and ambitious way. We’re excited to see what comes of this initiative and whether it is actually able to divert medical school graduates into more needed fields.

If you’re looking to improve your telehealth offering, this on-demand webinar shares some best practices.

Story #2: Shareholders Have Approved Cigna’s $54B Acquisition of Express Scripts

Cigna, the third largest health insurer in the country, announced in March that it would be acquiring the nation’s largest pharmacy benefit manager (PBM), Express Scripts, for a cool $54 billion. Only last week, however, did shareholders actually approve of the merger (despite pushback from activist investor Carl Icahn). This comes on the heels of shareholders approving CVS Health’s acquisition of Aetna, a deal worth a whopping $69 billion.

This goes back to the larger trend in healthcare of consolidation and these mega mergers between insurers and PBMs are no exception. Cigna plans to integrate its services with that of Express Scripts to provide “immediate and long-term value” for its constituents. According to the company, they hope to “broaden(s) capabilities and distribution for more than 100 million combined customers and deepen(s) data and insights to improve predictability and deliver better health outcomes.”

Both deals still need to be approved by antitrust regulators. According to the Wall Street Journal, that could be done in the next few weeks.

Luma’s Hot Take: This is yet another example of consolidation in healthcare. With mounting pressure from Amazon and others, more and more health organizations are making the move to acquire businesses that will help them extend their reach and provide more value to their customers. The way patients will get care is changing and we at Luma are pumped to be a part of that transformation!

Story #3: Private Investors are Pouring Money Into Workplace Primary Care Clinics

More and more employers are looking for ways to offer health care solutions to their workers in ways that won’t cause high deductible health plans.

A group, led by venture capital firm New Enterprise Associates (NEA), is investing $165 million in expanding Paladina Health, a provider of medical clinics for employers. NEA actually acquired Paladina earlier this year from DaVita Inc. for a reported $100 million.

Organizations like Paladina help companies control health insurance costs, as well as provide better and more timely care for their employees. More and more employers are looking at ways to offer health care solutions to their workers so as to cut costs and slow expenditures related to high deductible health plans. The focus has been on primary care providers as they are the cheapest to employ and the most helpful to patients navigating the healthcare system.

The plan for Paladina is to use this investment to build and acquire more clinics. As the U.S. government is increasingly incentivizing care providers to lower costs and keep those savings, companies like Paladina will continue to flourish.

Luma’s Hot Take: More and more companies are taking their employees’ health care into their own hands, which means a push for value-based care and a boost to health care access — both things we absolutely love!

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