Liberation (from your wallet) day impact: will your healthcare dollars be impacted?
Good day Healthcare_anon members
As Liberation (from your wallet) day approaches, we are posting with increasing tempo on what we think are possible ramifications to the Healthcare sector. Suffice to say, we are pessimistic as shit when it comes to certain MCOs. In addition, it looks like another potential pandemic is brewing in Europe, specifically Russia (which I am waiting on pending confirmation once the spread occurs into the Eurozone. I would try to cite the CDC, but I am not sure if there is a possibility of compromise on this data. You can research this on your own, but once the Eurozone confirms this possibility, I will prepare another segment).
Let us proceed, but first our disclaimers:
*** Both RainyFriedTofu and Moocao123 has positions in Clover Health. The information provided is not meant as financial advice, please be advised of the potential bias and decide whether the information provided is within your risk consideration. **
\** This is not financial advice, nor is there any financial advice within. Shout-out to the AMC/GME apes for having me to write this **\**
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*** Chatgpt4 or any AI platform was not utilized to write the content of this post, and I am the sole author to this post. I personally do not think AI can write anything noteworthy of our subreddit caliber, and neither Rainy nor I have used chatgpt4 or any AI for our content ***
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Tariffs:
Trump tariff threat rattles hospitals and medical tech manufacturers
Virus:
Russia Denies Reports of Mystery Virus Causing Victims to Cough Up Blood - Newsweek
Discussion
I will ignore the virus part, pending Eurozone confirmation. Onto the Tariff risks:
1. How significantly will the tariffs increase the cost of medical equipment and pharmaceuticals?
164 of the 200 survey respondents predict that costs for hospitals and health systems will surge by at least 15% in the next six months due to increased import expenses.
69% estimate pharmaceutical costs will rise by at least 10% as a result of the China tariff on active pharmaceutical ingredients (APIs).
3. How will hospitals and physicians manage the higher costs?
90% of the twenty-one hospital finance executives surveyed report they will need to shift increased costs onto insurers and patients in the form of higher service charges.
94% of healthcare administrators anticipate reducing procurement volumes or delaying equipment upgrades to mitigate financial strain.
4. What effect will the tariffs have on payers and patient affordability?
84% of payers expect to see higher claims costs due to increased pricing on medical treatments and drugs.
48% of payer executives believe that insurance premiums will rise within the next 12 months as a direct consequence of increased supply chain expenses.
As you can see, the survey indicates broad-based pessimism on the industry from Hospitals to Managed Care organizations. Pharmaceutical companies and Medical device companies will be equally impacted. We expect some volatility of the impact of Tariffs on the Healthcare sector, which is both a defensive sector play BUT being actively impacted by the Tariffs. Population impact includes rising healthcare costs, in addition to increased healthcare premiums, as well as potentially lower quality of care. Coupled with Medicaid cuts and potential rolling patients onto Medicare Advantage, we will be witnessing mass misery. This impact is both inflationary on cost, and deflationary on quality, leading to a "stagflation" of healthcare. In this setting, I strongly recommend each reader to consider their personal financial situation and reassess their lifestyle choices immediately - this will lessen the overall cost to each individual, while allowing for healthcare delivery flexibility within this new stressed environment. The first signal of any impending issues within the MCO sector would be onboarding approximately late 25Q2 to 25Q3, and 25Q4 will potentially signal the full impact of tariffs.
Take this as you may, for I am sure those who disagree will continue to disagree. I speak only for those willing to listen.
Sincerely
Moocao