(01:23) Overview of healthcare sectors Brian covers, including hospitals, pharmacies, and value-based care  

(04:26) The Medicare Advantage cutbacks and how they affect supplemental benefits  

(08:12) Stability of commercial insurance and the focus on Medicare Advantage  

(10:00) Discussion on the Jeffries Bus Tour and healthcare’s importance in Nashville  

(12:40) Labor cost inflation in healthcare and signs of stabilization  

(13:48) Medicaid reimbursement rates increasing and the impact on hospitals  

(19:28) Hospital investment challenges: labor vs. technology during post-COVID recovery  

(20:00) AI in healthcare: payers’ advanced tools and hospitals’ need to catch up  

(21:18) Revenue cycle management moving to the forefront of hospital CFOs’ strategies  

(24:54) Decline of telehealth post-COVID and the importance of patient-clinician relationships  

(26:30) How pharmacies, like CVS, are shifting to a cost-plus model and emphasizing pharmacist-patient relationships  

(30:15) Behavioral health demand is high, but clinician shortages are a challenge  

(31:12) Why direct-to-consumer behavioral health models are fading while insurance-based models thrive  

(35:15) How upcoming elections may affect healthcare policies  

(36:18) Brian’s go-to healthcare news sources: Beckers, Modern Healthcare, Politico, and CQ HealthBeat  

(37:29) Future trends and key takeaways for healthcare marketers

[00:00:04.260] – Kriste Goad

Hey, welcome to How It’s Done, a podcast for Curious Marketers. I’m Kriste Goad. I’ll be your host, and I’m really glad you’re here. Hello, Curious Marketers. Now that we’re staring down the barrel of the fourth quarter, I thought this would be an ideal time to invite a guest with a finger on the pulse of what’s hot and what’s not in healthcare. Having recently been invited to a happy hour with the Jeffries Bus Tour here in Nashville, I, of course, thought of the one and only Brian Tanquilut, a senior equity analyst at Jeffries, covering the healthcare services sector. Brian’s areas of focus include, hang with me, this is a long list, hospitals, drug distributors, and retail pharmacies, value-based care, post-acute care, including home health and inpatient rehab, behavioral health, healthcare staffing, consumer health, including physical therapy, optometry and dental clinics, diagnostic laboratories and imaging, outpatient surgery centers, durable medical equipment and distribution, and specialty pharmacy infusion. Brian, that’s a lot. I don’t know how you do it. Brian has been with Jeffries for more than 20 years, and he’s been named a ranked analyst for his coverage of the healthcare services space by Institutional Investor magazine and the Wall Street Journal.

[00:01:23.690] – Kriste Goad

Welcome, Brian.

[00:01:25.220] – Brian Tanquilut

Kriste, thank you so much for having me. Really appreciate you doing this, and I’m excited to chat healthcare today.

[00:01:31.000] – Kriste Goad

Well, I’m honored because you’re everywhere. You cover a lot, as I’ve just mentioned this full list. I don’t know how you do it. We do have a lot I want to cover off on, so let’s just dive in.

[00:01:41.480] – Brian Tanquilut

Let’s do it!

[00:01:42.090] – Kriste Goad

All right.

[00:01:43.250] – Kriste Goad

Well, Brian, you and I go way back. We’ve known each other quite a few years here in this very close healthcare community. But I was at a Swaay Health Marketing Conference back in May, and the Swaay Health folks presented some interesting facts and figures. One of them I posted about because I thought it was super interesting. It was by the numbers, like topics no one is covering in healthcare media. On the list were probably some things that weren’t too surprising but maybe things that were a little bit surprising to some people, those things that were not being covered at the time were COVID-19, thank goodness, home care, SDOH, population health, IT infrastructure, and telehealth. You had made a comment about some of the factors driving why those just weren’t a hot topic anymore. I thought maybe we could just kick off by sharing with our podcast audience why some of those things are on that list. Obviously, it’s a follow the money thing, and you follow the money. I’m just curious if maybe you can talk about that. Then I want us to dive into healthcare headlines and trends.

[00:03:01.340] – Kriste Goad

What’s going on? What’s coming up? What should we, marketers and beyond, really be thinking about?

[00:03:07.540] – Brian Tanquilut

I’ll start with the first part of your question. What we’re seeing right now is, if you look back five, six years ago, even before COVID, there was a lot of focus on social determinants of health. Home health was a key focus area for a lot of folks. And a lot of these buzzwords. You go to an AHIP conference and everyone’s talking about supplemental benefits. And telehealth was big, obviously, post-COVID. And what we’re seeing right now is that a lot of these things are being, I don’t want to say they’re sunsetting, but they’re being fated by the payers. So what’s happening is, post-COVID, obviously, there was a little bit of pent-up demand that was in the market. And so we saw a little bit of a pickup in utilization, calling in 2022, 2023. But now that we’re past the whole COVID normalization trend in healthcare, what we’re seeing is that a lot of these insurance companies are struggling with high medical loss ratios, much higher than they had expected, specifically in the Medicare Advantage world. So what’s interesting to me is, as these companies, the United and Elevances and the Blues plans of the world, as they’re trying to figure out, “how do we manage our margin,” right?

[00:04:26.630] – Brian Tanquilut

When more people are going to hospitals, clinics, and all these things, What do we do? And what I’m hearing, at least from where I sit, is that top of mind is we got to pull back on some of these benefits that were viewed as ancillary, maybe not completely necessary, but good to have with the idea, like social determinants of health would be one where if we feed our populations better food, give them access to transport, overall health and well-being would improve over time. I mean, you were involved with disease management back in the day, right? That’s the whole idea is that it’s an investment in the person’s health. But as the dollars, as you said, you follow the money, follow the dollars. As the dollars are getting squeezed, they’re saying, okay, I need to manage near-term earnings, near-term margins, and they’re just looking at the easiest levers to pull. And so what we’re hearing is that a lot of these health plans are saying, okay, we don’t need to pay for transport anymore. We don’t need to give cash cards to these Medicare Advantage populations that we have. Food programs are being pulled back and even home health because Medicare Advantage plans started sending home health to patients’ homes in order to help them improve their daily living.

[00:05:45.130] – Brian Tanquilut

That’s what it is. As we think about 2025, you’re going to see a dramatic decline in what we call supplemental benefits. All these programs, I know there’s a lot of marketing that has happened in social determinants of health because obviously there’s been-

[00:05:57.540] – Kriste Goad

No kidding. A lot of dollars have been in those areas.

[00:06:00.580] – Brian Tanquilut

Yeah, there’s a lot of consumerism that you havet to factor into those programs and make them effective. They’re getting pared down. Transport is number one that we’re hearing about. If you remember, Healthways, where you used to work, had the program Silver Sneakers. And that’s another program that we’re hearing is going to get pulled back quite a bit next year because it’s like gym memberships are not top of mind right now. And that’s not where the plans want to spend their dollars. And the cash cards. I mean, that was a big thing, especially in some markets like South Florida, where they were essentially giving grocery gift cards to members of the health plans. So that’s an easy lever to pull. And so that’s what we’re seeing right now. I mean, it’s a struggle for the insurance companies translating into reduced benefits for Medicare Advantage lives next year. So the follow-up question then is, what happens to Medicare Advantage? And I think what you’re going to see is that while we’ve seen spike in enrollment in Medicare Advantage over the last few years where the bounds has shifted from traditional Medicare enrollment to more people enrolling in Medicare Advantage plans, I think that shift slows down a little bit when the benefits are not as rich in the Medicare Advantage side of the equation.

[00:07:18.520] – Kriste Goad

So does that have a trickle-down effect into commercial?

[00:07:21.990] – Brian Tanquilut

Commercial is interesting. We haven’t really seen MLRs or medical loss ratio spike as much, or they’re not as drastic in terms of how they’ve gone up post-COVID. So to me, what it also shows you is that the MLR or the rights and utilization that we’re seeing is primarily in the senior population. So I think there’s a big demographic component here, which, again, for marketers, I think that matters. It’s tailoring your marketing strategies to a senior population versus a commercial population. I think commercial is okay. Commercial is stable. Now, some of that, obviously, employment is one thing that we’re watching because a lot of commercial insurance is employer-based. But for the most part, for the health plans, the moneymaker really is in Medicare Advantage right now. So that’s why this is a big deal for the insurance companies that are in the market.

[00:08:20.210] – Kriste Goad

Yeah, it’s interesting. It’s just a reflection of what’s going on in larger society, right? The cost of everything is going up. We hear a lot of conversation out there about the cost of bacon and just people in general, consumers cutting back. It sounds completely analogous. Like, Hey, okay, those were nice to have when things were rocking and rolling, but we got to tighten our belts a little bit. This is where we have to cut. Is that also a reflection of government payment rates in Medicare or not so much?

[00:08:55.420] – Brian Tanquilut

One of the things, it’s probably more political than not, where the Biden administration has been tighter on the Medicare Advantage plans. I think, generally speaking, the Republicans are very pro Medicare Advantage, and they want to promote growth in Medicare Advantage. The Biden administration has been more stringent, and they’ve changed the rules that are impacting how much money the Medicare Advantage plans are making. So that’s the issue there is that we’ve seen a little bit of compression in premium dollars that are being paid to these Medicare Advantage plans. That’s definitely factoring it as well.

[00:09:33.040] – Kriste Goad

I got you. Tell me a little bit more about this Jeffries Bus Tour. Thank you for the invitation to the happy hour when you guys were doing that here in Nashville. I met some really interesting folks in the finance space who were here for that. It sounded like a great event. I know that you guys are just ginning that back up after COVID years. Tell us a little bit more, what is the Jeffries Bus Tour? How does it work? What were some of the key takeaways from that?

[00:10:00.080] – Brian Tanquilut

So first, Nashville, obviously, it’s always been a healthcare town, but I think it’s becoming an even bigger healthcare town where it’s not just hospitals that are based here. So I think within the investment community, there’s a greater appreciation for what Nashville has become in the healthcare world. And so I’m based here in Nashville, have been here for more than 20 years, and taking advantage of the networks that we’ve built around here, we do an annual bus tour. So this was our 12th annual bus tour here in Nashville. 

[00:10:28.860] – Kriste Goad

Oh wow, that’s awesome. 

[00:10:29.880] – Brian Tanquilut

Yeah. So the event has grown. When we first started this, literally one of us would be driving the van, driving around the city to bring investors from all over the world to the headquarters of healthcare companies. But where we are today, we had a big group. We had the biggest bus that you can hire in Nashville. But also we had events that we built around it. We were inviting both local healthcare executives and investors and putting them together in a room just to network. But more than that, I think the key is that we had a good number of healthcare companies and their C-suites presenting basically open Q&A to give the latest and greatest views on what’s happening in the healthcare world. We had the likes of HCA, Community Health, Acadia Healthcare, Surgery Partners, some of these big name Nashville companies. And then because of the… I mean, you rattled off the names or the sectors that we cover within healthcare and the size of our bus tour, we’ve had companies from out of town also say, Hey, we want to be part of this. So we had a bunch of company management teams come to Nashville just for this event.

[00:11:38.560] – Brian Tanquilut

You know what’s interesting? I think that over the last two years, the top discussion points within the healthcare space are number one, utilization. We just talked about how MLRs and utilization have been really strong or high, and then how that’s the impact on the insurance companies. Well, the flip side of that is, healthcare providers have seen very good years. The hospitals are thriving, or at least the publicly traded ones have done pretty well. I think that outpatient surgery centers have done well. So across, I mean, labs, go up and down the list. We’ve seen that level of utilization translate into good earnings results, good stock performance. And so the question for a lot of investors is, how sustainable is this? I mean, is this something that still has the demand from COVID or carry-over demand, or is this more of a trend that will continue? So a lot of the companies, a lot of the management teams were pushed and questioned on that. The second thing is labor. I mean, one of the things that we saw across the economy was labor got tight. And then obviously with the Fed raising rates, there was this push to slow down inflation.

[00:12:49.320] – Brian Tanquilut

And what we’re hearing now from a lot of the healthcare companies is that labor is starting to stabilize. Like the inflation on wages for healthcare labor is probably trending more in the low single digit range today versus something as high as 10% two years ago. So that’s obviously a good thing because as Kriste, the healthcare space is very labor-intensive, whether you’re a hospital or even a retail clinic or whatever that may be. So it’s nice to see that the number one cost factor that goes into operating a healthcare company, which is labor, is flattening out. And then the last thing we’re seeing, which is another key discussion point, is Medicaid. Medicaid used to be a bad word in terms of reimbursement. As a healthcare provider, you want as little Medicaid as possible because they don’t pay enough. What we’re seeing today is that a lot of the states are realizing that, number one, it’s hard for Medicaid members to access healthcare because the providers don’t want their patients. And then the other side of it is, as we’re seeing struggles within the healthcare industry, whether that’s hospitals and rural markets shutting down or just different clinic groups going bankrupt.

[00:13:59.400] – Brian Tanquilut

The Medicaid plans are also realizing that, you know what? In order to maintain access within healthcare in our states, we need to raise reimbursements. So what we’re seeing is that there are lots of states that are approving what we call supplemental payments. And these are hundreds of millions of dollars that are being paid primarily to hospitals to raise their Medicaid reimbursement rates. And so it’s become a windfall for a lot of hospitals across the country.

[00:14:26.520] – Kriste Goad

That’s really interesting.

[00:14:29.310] – Brian Tanquilut

Yeah. For us here in Tennessee, the State Legislature passed a big increase. The governor signed it and they submitted it to the federal government to CMS about three months ago. And so we’re waiting to hear back from CMS. Should be in the next 30 to 60 days on what’s going to happen there. And if it happens, if CMS approves it, like I said, it’s hundreds of millions of dollars of incremental payments to hospitals here in the State of Tennessee. We’re seeing that in other markets like New Mexico, we’re hearing Alabama, Indiana, and a few places are considering doing similar programs to shore up Medicaid reimbursement and help the hospital industry in those markets.

[00:15:09.210] – Kriste Goad

Does that mean we should then have fewer headlines about the closing of rural hospitals out there in America.

[00:15:20.660] – Brian Tanquilut

That’s the hope.

[00:15:20.690] – Kriste Goad

Yeah. I mean, it’s interesting. I was just on vacation out West in Oregon and Northern California. It’s just a bunch of really small communities. I think I saw maybe one hospital sign, and it really made me think, and I think they were opening a new one, but it just really brought it home. When you travel into these communities where they’re really far away from a larger city with access to that care. It brings it home just how important those facilities are. That’s really interesting to hear that.

[00:15:58.530] – Brian Tanquilut

I think it’s that. It’s that realization from state legislatures and their governors that, hey, you know what? A lot of communities, especially as you get out of the big cities, don’t have access to healthcare. And if you think about rural communities, the hospital is the center of care. The doctors are part of the hospital. Everything is done through a community hospital. So, yeah, I think it’s nice to see it. The Biden administration has been very supportive of these efforts, and so they’ve been approving a lot of these state programs, and there are more states that are trying to pursue these supplemental payments.

[00:16:33.140] – Kriste Goad

I got you. Well, it is interesting because the first part of our conversation was really heavily focused on the payers and what they’re doing for their medical loss ratio. Then seeing what’s the flip side impact on providers. We have clients in the revenue cycle management space, and one is coming out with a state of claims report, and it’s a survey that they did two years ago. Then this newest survey, it’s got some interesting findings. The most interesting, I think, is the increase in claim denials and more worry on the part of providers about not feeling technologically ready. I think on the flip side, I saw a story in Modern Healthcare just this morning about Aetna rolling out some AI automation around utilization management and prior approval and all those things. What I’m seeing out there is like, okay, you can just see the battle play out. It’s like payers are really investing in technology to be able to be better at managing their margins and making sure that they’re doing what they can on the claims and payment front. Whereas providers have had this windfall, as you mentioned, but they really, post-COVID, they really stepped back a lot on technology investment.

[00:18:07.940] – Kriste Goad

The whole telehealth investment, it’s been interesting to watch that trajectory of telehealth. It’s like, Oh, it finally took off and everyone loved it and people still like it, I think. But post-COVID, you see a lot of folks backing away from it.

[00:18:23.250] – Brian Tanquilut

There are two things there. Let’s split up telehealth and then the revenue cycle side. So a revenue cycle, I’ll start with the idea that the payers, obviously, they’re big companies with a lot of scale and a lot of money to invest, have actually invested in AI tools that, like you said, as an example today where they can use AI to run prior authorizations. They’re using AI to scrub bills. And part of the payer move, it’s part of their strategy is to delay payments as much as possible. You’re trying to screen out whatever where you can avoid paying, where if it’s inappropriate or it’s just not properly documented. Running technology through that process allows them to automate it and obviously operate at a lower cost, but also it makes it more accurate and more precise. Now, the flip side of that is your point, too, right? I think that during COVID and since the post-COVID world, when we were seeing really high inflation rates, a lot of these hospital systems were forced to balance or make the decision, where do we spend our money? Do we spend it on nurses and capacity because demand is picking up, or do we spend it on CapEx, whether that’s IT or physical hospital beds?

[00:19:40.800] – Brian Tanquilut

And as you can imagine, a lot of those dollars were spent on temporary nursing, contract labor, to drive up capacity and make sure that hospitals are able to provide care. I think fast forward to today, the hospitals are realizing that they need to, and not just hospitals, but a lot of provider groups, that they invest in technology, whether that’s AI-driven or whatever that may be in revenue cycle, because it feels one-sided, where the payers are running at an advantage because they’ve got AI tools that are helping them deny claims. On the other side, you have to play catch up. I think you’re going to see some investment on the rev cycle side or just AI capabilities to drive efficiencies in back office. We’re hearing a lot of that.

[00:20:28.790] – Kriste Goad

Can I ask you a question about that because I’ve been having some conversations lately and there’s a theory, and maybe it’s not just theory, maybe it’s reality. But the revenue cycle, that function within hospitals has always historically been like, Okay, yeah, that’s revenue cycle. They’re over there in a closet somewhere. Not necessarily seen as hugely strategic, I guess. But I’m hearing conversation that maybe that’s shifting, that maybe it’s becoming a lot more on the radar of CFOs.

[00:21:09.320] – Brian Tanquilut

I think it is.

[00:21:10.070] – Kriste Goad

Hospitals and health systems. Why do you think that? What are you hearing?

[00:21:13.760] – Brian Tanquilut

It’s because I think the level of denials has gone up. We’re hearing that, especially from hospitals. There’s this dynamic called the two-midnight rule. There was a rule change that happened late last year that basically you cannot keep a patient for more than two midnights in an ER. The ones there with you for two midnights, you got to push them into an inpatient admission, which obviously is more expensive. As a result of that, the payers have become more stringent in paying the bills. They’re screening these bills out and filtering, and they’re denying a lot of bills because you need to show medical justification to keep that patient for more than two midnights. So that’s the two-midnight rule. And that, I think, has been the key driver of… I mean, granted, the manager companies are always looking for ways to delay and deny claims. But this was a real inflection point for them where they’re like, we need to figure out if we’re going to pay more just because of a new rule, we need to figure out what’s appropriate and what’s not. So for the provider, they’ve seen a spike in denials. And as a result, if you’re a CFO of a hospital and you’re not getting paid for a certain patient, it becomes a big red flag.

[00:22:28.330] – Brian Tanquilut

And it has impacted cash flows for some hospitals. That’s what’s forcing the hospitals to reconsider, whether it’s investments or outsourcing of revenue cycle. If the payers are going to do something, we need to buy it back.

[00:22:43.480] – Kriste Goad

Yeah. The Change Healthcare data breach, which brought everything to a screeching halt, I would imagine, really elevated that conversation as well in the C-suite.

[00:22:55.590] – Brian Tanquilut

It did. Part of it is that some hospitals got squeezed really hard because they were not getting paid for weeks. They have to tap bank facilities or whatever cash sources that they had just to keep the lights on. I think we’re just now starting to get that resolution really showing up in P&Ls and cash flow statements for a lot of these providers.

[00:23:18.870] – Kriste Goad

Yeah, interesting. What should we be… What should us marketers and communicators in healthcare be? For us as an agency, see we start looking at, Okay, what are some of the year-end and then 2025 trend stories that are going to start coming out and where we can plug in our folks as thought leaders? I’m curious what you see on the horizon where you think those trends and headlines are going to be focused.

[00:23:47.650] – Brian Tanquilut

Maybe before I touched on that, I forgot to answer your question about telehealth.

[00:23:51.250] – Kriste Goad

Telehealth. Sorry about that.

[00:23:52.940] – Brian Tanquilut

Yeah. Telehealth is interesting because telehealth obviously picked up in terms of adoption rates during COVID. And there was a camp during that time that thought that this was the catalyst for us to shift the way we delivered care to more telehealth. It’s more efficient. I mean, a doctor can sit at an office or in their homes and deliver care. They can spotlight. And so you’re expanding capacity. What we’ve seen, though, is, and this is actually interesting, maybe it answers your marketing question as well, right? What we’ve seen is that the use of telehealth, whether that’s primary care, specialty, or even behavioral health has declined post-COVID. And what it shows you, at least from where we sit, is that patients still value the direct relationship with a physician. Because in most telehealth situations, you don’t know who you’re going to see. You’re clicking on something, you see a doctor. The next time you click, it will be a different doctor, most likely. But what it shows you is that there is loyalty, there is value in the direct patient relationship with a clinician, or at least US patients value that. Because in other parts of the world, we’ve actually seen telehealth utilization stay stable.

[00:25:13.010] – Brian Tanquilut

But in the US, it has declined quite a lot. So if you’re thinking about it from a marketer’s perspective, just consider that idea that patients are loyal and they appreciate the direct interaction with their clinicians. And now, if you’re a telehealth company, I think there’s a marketing aspect in there as well. I mean, it has become a truly direct-to-consumer type of business at this point, whether you look at behavioral or primary care. Now, specialty is a little different just because you’re getting referrals from primary care for the most part. I mean, for specialists. And then maybe the other side of this, maybe to answer your question, too, what are we looking at? Where are we seeing trends? One of the things that we’re watching really closely, for example, in the pharmacy space, CVS is shifting their revenue model in the pharmacy world to where they call it a cost-plus model, essentially, or a transparent model. And their view is that the clinician relationship with a patient, meaning with the pharmacist, patient relationship is important. We need to get paid for that clinician’s time. We’re going to split that away from what your payer insurance company pays for the drug.

[00:26:26.450] – Brian Tanquilut

I think that’s a really interesting topic because there is, at least from the pharmacy’s perspective, they’re saying that the pharmacist is actually more of a trusted clinician partner in healthcare for a patient than a primary care doctor, which is actually interesting, right? If you think about that. But if you think about it, whenever you get your drugs, you have an effective consultation with your pharmacist. They ask you, “Do you know how to use this? Do you know the side effects?” They walk you through your drugs. A lot of seniors, especially, love that interaction with a pharmacist, probably more so than the doctor, maybe because it’s easier to get a conversation with a pharmacist than getting to your doctor’s office, where they’re trying to shove you out every five minutes. But I think that’s one area that could be interesting, just strengthening that relationship and the value of the pharmacy going forward, especially as we’ve seen some of these pharmacies struggle, whether that’s Walgreens or RightAid. I think making that push to establish the pharmacist as a clinician and as a key healthcare relationship partner for a patient, I think there’s something there. Then there’s a lot of focus on price transparency, especially in drugs right now.

[00:27:40.700] – Brian Tanquilut

You have the Mark Cuban plus plus strategy. Obviously, CVS is rolling this out. I think trying to figure out, how does price transparency factor into patients or employers’ decisions to pick a specific pharmacy. Copays obviously matter. Value-based care is one that’s fading a little bit right now, especially in primary care. A lot of value-based companies are struggling. So again, that was one area where years ago, not that long ago, marketing was focused a lot on value-based care because you’re trying to bring patients into these value-based care practices, whether you’re VillageMD, OneMedical, Oak Street. I think that a lot of them are having a difficult time right now. They’ve burned through a lot of cash. I would say you’re probably going to see a little bit of a fading in terms of marketing dollars out of value-based care companies. Interesting. Value-based specialty is an emerging area where there’s probably some investment that’s happening.

[00:28:42.210] – Kriste Goad

I see a lot of activity in MSK in that space.

[00:28:45.210] – Brian Tanquilut

Yeah, MSK, cardio. And part of it is, back to your original point earlier, that you follow the money. And if you think about where a lot of dollars are being spent today, it’s joint replacements, cardio and behavioral health, and then dialysis, kidney care. So that’s where the money is flowing today. It’s not in value-based primary care. It’s more in these value-based specialty buckets that are considered high dollars.

[00:29:15.630] – Kriste Goad

Well, I’m really curious about that. You mentioned telehealth, and we look at behavioral health. I mean, we are basically in a crisis right now in the country, maybe the world, from anxiety and mental health, and then access to those services is really difficult. There’s a lot of companies that have been born, and I imagine a lot more are going to start to be formed and founded in that space. I’m just curious, From a telehealth perspective, that does seem to be one of the sectors where if you need that help as a patient, as a consumer, you’ll take whatever you can get, whether it’s on the phone, whether it’s in person. You just need somebody to help you. Do you think that’s a true statement? What are you seeing in that space in terms of trends and where that’s going and how people differentiate themselves? I mean, there’s only so many therapists in the world.

[00:30:12.850] – Brian Tanquilut

I’ll start with, look, you’re definitely spot on when you say that there is a lot of demand and a lot of need for behavioral health services, whether that’s therapy, addiction treatment. I mean, we obviously have a big opioid crisis. Acute behavioral care is much needed right now. Suicide ideation rates are some of the highest levels we’ve seen ever. So it clearly shows that there is a lot of demand for this, but not enough supply of clinicians. I think the challenge that we’re seeing when you look at companies that are involved in telehealth, specifically for behavioral, you’ve seen volumes come down. And the problem in behavioral is payment. So most folks probably cannot afford to keep paying out of pocket for behavioral services. And that’s the biggest challenge. What we’re seeing is that companies that can provide behavioral services, whether it’s in person or through telehealth, that are able to charge insurance are the ones that are thriving and continuing to grow, while the direct-to-consumer model is starting to fade. I mean, it was easier to make that push during COVID. When people were at home, they were not spending a lot of money anyway. They had extra dollars to spend for teletherapy.

[00:31:34.660] – Brian Tanquilut

I think today, the patient out-of-pocket market has shrunk significantly. And part of it is broader inflation. We talked about that, right? People need to watch what they’re spending their money on. And it’s one of the things that people are pulling back on is therapy, especially if it’s not considered acute or if it’s not emergent. But we cover a company called Lifestance Health, and their model is their referral. They have very little money spent on Google searches and online advertising. A lot of their money is spent marketing to primary care physician groups and saying, Okay, your acute or semi-acute behavioral patients, refer them to us. We have a hybrid model where we can do teletherapy, or we can do it in-person, and we take insurance. Because if you’ve ever been in therapy, a lot of therapists actually do not want to take insurance because it’s such a pain to get reimbursed, and they don’t have any leverage with insurance companies, and they get paid bad rates compared to what they can charge as a direct consumer business. So I think that’s what’s happening in the behavioral world. Now, addiction is a different animal, different story altogether.

[00:32:47.740] – Brian Tanquilut

So many flavors to addiction, right? There’s the IOPs, and there’s some virtual models that have emerged here in Nashville. We’ve seen some of those. I think those are still thriving. Just because we have the big opioid crisis still ongoing. And there’s actually a lot of money that is allocated towards rehab, partly because the drug distributors and the retail pharmacies have signed very big multibillion dollar settlements with the government to spread dollars to help address the opioid crisis, whether it’s through education, law enforcement, and treatment. So for that reason, there’s a lot of money that’s going to anything addiction related.

[00:33:30.010] – Kriste Goad

Follow the money always.

[00:33:33.200] – Brian Tanquilut

That makes sense.

[00:33:34.570] – Kriste Goad

Well, Brian, we are running out of time here. I hope that you will come back. Maybe we could even make it a regular quarterly appearance since things change so often. I know you’re super busy, but I’m just going to throw that invitation on the table. You’re welcome to come back anytime if you’re willing.

[00:33:52.940] – Brian Tanquilut

Anytime, Kriste.

[00:33:53.960] – Kriste Goad

What have we not covered that we absolutely should not miss out in terms of looking at trends and headlines?

[00:34:00.520] – Brian Tanquilut

Elections.

[00:34:01.310] – Kriste Goad

The election.

[00:34:02.270] – Brian Tanquilut

I think it’s a tough one.

[00:34:04.370] – Kriste Goad

That’s taboo.

[00:34:05.590] – Kriste Goad

No, just kidding. Did you watch the debate?

[00:34:07.750] – Brian Tanquilut

Watched the debate. But I think it’s more about what can actually be changed in healthcare. I think the reality of it is that while we’re all focused on what happens with the presidential elections. I think the key things to think about are for anything big to happen or change in healthcare, you need Congress. And so unless Congress is aligned with a White House, both in the House and Senate, you’re in gridlock, and there’s nothing significant that will happen. And I think any poll that you look at shows that we’ll probably have a split Congress. So I don’t think you’re going to see any changes to the Affordable Care Act or the IRA (Inflation Reduction Act) as a result. Now, obviously, the administration can put through administrative changes. We’ll see what happens. I’m not trying to be political, but it’s the… Look, it’s the reality of it, right? But I think if we’re worried, when you’re talking about the ACA going away, I don’t think there’s appetite for that in Congress, even from the Republican side. The IRA is going to be hard to eliminate or repeal. I’m not expecting much change in healthcare going forward.

[00:35:15.850] – Kriste Goad

Yeah, I agree. That was my takeaway from the debate last night. It didn’t sound like either candidate, whoever wins, is going to really be doing too much tinkering with the Affordable Care Act.

[00:35:26.820] – Brian Tanquilut

It feels like I think the focus areas for both presidential candidates are areas outside of healthcare. It feels like it’s immigration and economy, which probably is not a bad thing, at least from a healthcare perspective.

[00:35:40.870] – Kriste Goad

Right. They definitely impact what’s going on in healthcare, don’t they?

[00:35:45.940] – Brian Tanquilut

Yeah, exactly.

[00:35:47.350] – Kriste Goad

Well, I appreciate you bringing that up. How could we not talk about the election?

[00:35:52.100] – Brian Tanquilut

I think that’s a topic for another day.

[00:35:53.830] – Kriste Goad

Just a few more weeks left in that. I think that’ll be interesting to see what happens there. But well, thank you so much. I really appreciate you being on. We usually end with a burning question. So my burning question for you is, I’m just always curious what everybody’s reading, especially those of us who are really healthcare animals. What’s your go-to media sources?

[00:36:18.170] – Brian Tanquilut

Reading list. Yeah. Reading lists are Becker’s. I think I learn a lot from Becker’s, Modern Healthcare, Politico, and CQ HealthBeat.

[00:36:28.680] – Kriste Goad

CQ HealthBeat. I’m going to have to add to my list. I don’t take a look at that too often, but… Yeah. Awesome. Thank you, Brian. Well, as always, we will include links and background on you, Brian, and Jeffries, and anything that you would like our listeners to be sure to have access to. We’ll include that in our show notes. So, listeners, do be sure to check out those on our website, growwithfuoco.Com/howit’sdonepodcast, or wherever you get your podcast. And don’t forget to hit the subscribe button so you never miss an episode as we continue to cover all things healthcare, marketing, PR, and communications. Again, my guest today has been Brian Tenquilut, Senior Analyst with Jeffries. Thank you, Brian. I hope you have a great day, week, month, fourth quarter.

[00:37:22.100] – Brian Tanquilut

Thank you, Kriste. Always nice chatting with you, and I’m sure I’ll see you around.

[00:37:26.990] – Kriste Goad

Absolutely. You, too. Ciao for now.

[00:37:29.780] – Brian Tanquilut

Sounds good.

[00:37:31.570] – Kriste Goad

That’s it for now. Thanks so much for listening. We’re looking forward to keeping great conversations coming your way as we grow this podcast. There’s even more great content from our conversations on our blog. Be sure to check it out at growwithfuoco.com. That’s growwithfuoco.com. Stay tuned until next time, and no matter what, stay curious.

• Recommended Reading
  • Becker’s Hospital Review
  • Modern Healthcare
  • Politico
  • CQ Healthbeat
  • 11 Years of the Two-Midnight Rule: How a Controversial Policy is Shaping Medicare and Hospital Admissions in 2024
  • CMS Update to the Two-midnight Rule
  • For providers, application of the 2-midnight rule to Medicare Advantage appears to bring a revenue influx
  • The State of Claims: 2024

• Find Jefferies on:
  • Jefferies.com
  • LinkedIn

• Find Brian Tanquilut on:
  • LinkedIn

• Find Kriste on:
  • LinkedIn
  • Twitter
• Email Kriste: kg@growwithfuoco.com