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Research: ACOs now serving up to 17% of Americans

BY Antoinette Alexander

NEW YORK — More than two-thirds of the U.S. population now live in localities served by accountable care organizations and more than 40% live in areas served by two or more. That’s according to new analysis by consulting firm Oliver Wyman, based on the Department of Health and Human Services’ announcement of the latest class of ACOs approved to participate in Medicare’s ACO programs.

The latest round of approvals in January brings the total of Medicare ACOs to 368, up from 259 a year ago, and the total number of ACOs to 522, up from 320.

  • According to the Centers for Medicare and Medicaid Services, about 5.3 million Medicare beneficiaries, or about 10% of all Medicare beneficiaries, will now receive their healthcare from ACOs.
  • Most of these Medicare ACOs also serve non-Medicare patients and are moving toward serving all their patients under ACO arrangements. Medicare ACOs currently serve 33 million non-Medicare patients, up from 25 million in July 2013.
  • There are currently more than 150 non-Medicare ACOs, compared with approximately 130 in July 2013. The total number of patients in organizations with ACO arrangements with at least one payer — both Medicare and non-Medicare — is now between 46 million and 52 million or roughly 15% to 18% of the population. The corresponding figures in July 2013 were 37 million to 43 million and 12% to 14% of the population.

“The rapid growth of ACOs is very encouraging,” said Niyum Gandhi, a partner in Oliver Wyman’s Health & Life Sciences practice and one of the firm’s experts on ACOs. “But no one should be deceived: The process of shifting American healthcare to a new, sustainable model is nowhere near the finish line. On the other hand, these numbers mean we have a critical mass lined up at the starting gate.”

Gandhi pointed out that ACOs were designed to create a new kind of competition in health care, with providers taking responsibility for the patient’s total health and competing on the basis of cost and quality. The idea: competition will drive them to adopt more effective, cost-efficient ways to deliver health care.

“But when will we see the kind of competition that leads to real change? That’s the real question,” Gandhi said. “But now that two-thirds of Americans have access to an ACO and almost half have access to two or more. Here’s a prediction: Once the fire is lit, it’s going to spread quickly.”

 

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AmerisourceBergen posts Q2 results, has ‘good momentum’ heading into second half of FY

BY Antoinette Alexander

VALLEY FORGE, Pa. — AmerisourceBergen posted double-digit gains in second quarter revenue, reflecting a gain in both the AmerisourceBergen Drug Corp. and the AmerisourceBergen Specialty Group.

Revenue for the second quarter ended March 31 totaled $28.5 billion, up 38.6% compared with the year-ago period.

Operating income for the quarter was $416.6 million, up 17% compared with the prior year, as the percentage increase in gross profit was slightly higher than the percentage increase in operating expenses. Operating income as a percentage of revenue decreased 27 basis points to 1.46%.

Diluted earnings per share from continuing operations were up 19.1% to $1.06 in the quarter, compared with 89 cents per share in the year-ago period, driven primarily by the increase in operating income, the company stated.

“We delivered strong performance in our March quarter, as we continued to onboard substantial new business, and made significant progress against our strategic objectives,” said Steven Collis, AmerisourceBergen president and CEO. “With excellent operational performance and improving working capital trends that helped generate tremendous free cash flow in the quarter, we have good momentum heading into the second half of our fiscal year. In addition, we continued to make important investments in our business for the long-term, including signing a definitive agreement to acquire a minority stake in Profarma Distribuidora de Produtos Farmacêuticos S.A. of Brazil, and returned funds to shareholders through repurchasing more than $250 million of our common stock.”

The Pharmaceutical Distribution segment, which includes both AmerisourceBergen Drug Corp. and AmerisourceBergen Specialty Group, posted revenues of $27.9 billion, an increase of 39% compared with the same quarter in the prior year.

ABDC revenues increased 46%, due primarily to the onboarding of all of the new Walgreens branded pharmaceuticals business and a portion of their generic pharmaceuticals business, and increased branded pharmaceutical sales to its other large customers.

ABSG revenues increased 10%, which was driven by strong performance in our blood products, vaccine and physician office distribution businesses. Intrasegment revenues between ABDC and ABSG have been eliminated in the presentation of total Pharmaceutical Distribution revenue. Total intrasegment revenues were $976.3 million and $760.9 million in the quarters ended March 31, 2014 and 2013, respectively.

Operating income of $372.9 million in the March quarter of fiscal 2014 increased 16% compared with the same period in the previous year due to the new Walgreens branded and generic pharmaceuticals business in ABDC, strong contributions from generics overall and solid performance in ABSG, as a flat performance in its community oncology business was offset by strong performance in its blood products and vaccine distribution businesses, the company stated.

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Dollar General to sponsor Jacques Villeneuve in Indianapolis 500

BY Michael Johnsen

INDIANAPOLIS — Dollar General on Wednesday announced it will serve as primary sponsor for the Schmidt Peterson Motorsports entry driven by 1995 Indianapolis 500 winner Jacques Villeneuve in the 98th running of “The Greatest Spectacle in Racing” on Sunday, May 25.

This will mark Villeneuve’s third start in the prestigious race. He’s returning to the Indy 500 after a 19-year absence. His record at the event includes a second-place finish and Rookie of the Year honors in 1994 and victory in 1995 before moving to Formula One, where he won the 1997 World Championship.

“I have so many wonderful memories of racing at the Indianapolis Motor Speedway throughout my career, including my last appearance at the track in the Brickyard 400 when I also was sponsored by Dollar General,” Villeneuve said. “It’s been 19 years since I ran this race, but returning with a team like Schmidt Peterson Motorsports and a household-name sponsor like Dollar General is going to give me a fantastic opportunity to perform at a high level.”

“We are excited to have our Dollar General brand on a car in this year’s running of the Indianapolis 500, which is a great spectacle and one of the premiere events in all of sports,” said Rick Dreiling, Dollar General’s chairman and CEO. “This will give our brand tremendous exposure, especially if our car runs in the front of the pack and we like our chances, with a respected team like Schmidt Peterson Motorsports and Jacques Villeneuve, a proven winner, behind the wheel.”

 

 

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