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The Healthcare Investor

Insights on Issues & Trends that Impact Investments in Healthcare & Life Science Businesses

Healthcare & Life Sciences Private Equity Deal Tracker: Tendyne Secures $25 Million in Financing

Posted in Healthcare Services Investing

Tendyne has announced (pdf) it has secured $25 million in series C financing.

Tendyne Holdings, headquartered in Roseville, Minn., is a clinical stage medical device company focused on the development of minimally invasive therapies for the treatment of mitral regurgitation.

The series C financing was led by VC firm Apple Tree Partners.

Tendyne indicated that the proceeds from the financing will be used for validation of the company’s Transcatheter Mitral Valve Implant to treat mitral regurgitation, including forthcoming clinical trials.

Healthcare & Life Sciences Private Equity Deal Tracker: Adaptive Biotechnologies Secures $105 Million in Financing

Posted in Life Sciences Investing

Adaptive Biotechnologies has announced it has completed a series C financing round and completed a newly created series D round of financing with a $105 million investment from Viking Global Investors.

Adaptive Biotechnologies, based in Seattle, Wash., is an immunosequencing diagnostics company with a focus in oncology.

Viking Global Investors, based in Greenwich, Conn., is a global investment firm managing more than $20 billion in capital across long-short equity and long-only strategies.

The new funding for Adaptive Biotechnologies will be initially allocated to the expansion of the company’s immunoSEQ research platform through the launch of a research use only kit in the third quarter of 2014.

ICD-10 Deadline Delayed Until Oct. 1, 2015

Posted in Healthcare Services Investing

The following alert was authored by our McGuireWoods colleagues Kimberly J. Kannensohn and John C. Saran.

On April 1, 2014, President Obama signed the Protecting Access to Medicare Act of 2014 (the Act) into law, thereby delaying until at least Oct. 1, 2015, the mandate of the Centers for Medicare and Medicaid Services (CMS) for healthcare providers to implement the ICD-10 coding system. The Act expressly prohibits CMS from enforcing its previous Oct. 1, 2014 deadline and delays reductions in Medicare reimbursement rates for physician services. Large healthcare providers and payors have already spent hundreds of millions of dollars preparing for this deadline. Conversely, smaller providers, who were unprepared for the implementation of ICD-10, are welcoming this one-year delay. However, the ICD-11 system will be released by the World Health Organization in 2017, which might cause CMS to further delay its mandate.

The ICD-10 coding system is a set of more than 68,000 codes that classify medical diagnoses and procedures for payment. The American Medical Association indicated that the move to ICD-10 would not be easy, but that the new system affords the benefits of greater detail and expanded concepts for injury. The ICD-10 system also accounts for recent advances in medical technology. While the United States is the only industrialized nation not to use the ICD-10 system, the high implementation and training costs facing providers put pressure on Congress to ultimately delay the ICD-10 deadline.

Hospitals As Employers: 10 Things Investors Must Know

Posted in Healthcare Services Investing

Below is a link to view the latest entry from the monthly Law360 that we publish relating to healthcare private equity investments.

In light of the constant attention we’re seeing in the physician practice management (PPM) space  — including most recently at our 11th Annual Healthcare Private Equity & Lending Conference last month — we decided to describe what we see as key differences between physician employment opportunities with hospitals compared with PPM models.

View the column “Hospitals As Employers: 10 Things Investors Must Know” (pdf).

Healthcare & Life Sciences Private Equity Deal Tracker: J&J Accepts Carlyle Group’s $4 Billion Offer for Ortho Clinical Diagnostics

Posted in Healthcare Services Investing

Johnson & Johnson has announced it has accepted a $4 billion binding offer from PE firm Carlyle Group for Johnson & Johnson’s Ortho Clinical Diagnostics business.

Ortho Clinical Diagnostics, headquartered in Raritan, N.J., operates in 130 countries. It provides solutions for early screening, diagnosing, monitoring and confirming diseases, focused on supporting hospitals, laboratories and blood centers worldwide.

Carlyle Group, headquartered in Washington, D.C., is a global asset management firm specializing in PE. It has more than $185 billion in assets under management across 122 funds and 81 fund of funds vehicles. Since Carlyle’s inception, it has invested $6.3 billion of equity in healthcare transactions.

Insight from MedPAC for Private Equity Investors

Posted in Healthcare Services Investing

McGuireWoods has a sister consulting group based in D.C. and several critical state capitals who are knowledgeable about the political climate and impending changes for our healthcare clients.

Stephanie Kennan, Senior Vice President, and Brian Looser, Assistant Vice President, recently published a summary of the MedPAC March 2014 meeting, which addressed the following:

  • Site-neutral Payments for Select Conditions Treated in Inpatient Rehabilitation Facilities and Skilled Nursing Facilities
  • Next Steps in Measuring Quality across Medicare’s Delivery Systems
  • Developing Payment Policy to Promote Use of Services Based on Clinical Evidence
    Per-beneficiary Payment for Primary Care
  • Synchronizing Medicare Benchmarks Across Payment Models
  • Improving Risk Adjustment in the Medicare Program

To access the summary, click here (pdf).

Analysis of Healthcare Spending Over Past Several Decades Reveals Noteworthy Trends

Posted in Healthcare Services Investing

An analysis by the Wall Street Journal of healthcare spend over the past several decades reveals the price of healthcare continues to increase faster than the consumer price index, with health spending primarily driven by hospital and physician services.

In 2012, spending on hospital care accounted for a little more than 30% of U.S. health spending. While hospital care makes up the highest percentage of health spending, it has declined from a high of about 40% in 1980.

Physician services accounted for about 23% of spending in 2012. It is down from a high of close to 25% in 1990.

Nursing care spend has been on the rise these past several decades. It accounted for just 5% of U.S. health spending in 1960. In 2012, it’s around 13%.

Dental services have been steadily slipping, down from more than 7% in 1960 to about 4% in 2012.

Medical equipment, both durable and nondurable, has seen a sharp decline. In 1960, it accounted for roughly 8.5% of U.S. health spending. In 2012, that figure is closer to 3.5%.

Another interesting statistic to note in WSJ’s analysis is the change in emergency-department spending per visit. In 2010, the average spend per visit for all patients was $969. This is a significant increase from 2000, which had an average per visit spend of $546 (in 2010 dollars).


Healthcare & Life Sciences Private Equity Deal Tracker: Unilife Secures $60 Million in Financing

Posted in Healthcare Services Investing

Unilife Corp. has announced it has secured $60 million in debt financing.

Unilife, headquartered in York, Pa., is a developer and supplier of injectable drug delivery systems.

The financing will come from an affiliate of OrbiMed, a New York City-based healthcare investment firm with approximately $10 billion in assets under management.

Unilife received $40 million of the financing at the closing of the deal, with two additional tranches of $10 million to be provided to Unilife in December 2014 and June 2015 as long as Unilife remains in compliance with the terms of the agreement with OrbiMed.


House Republications Expected to Propose SGR Repeal Funded by Delaying Individual Mandate

Posted in Healthcare Services Investing

Republicans in the House are expected to vote this week on legislation that would permanently repeal the sustainable growth rate (SGR) Medicare physician payment formula.

To pay for the SGR fix, the legislation is expected to propose a delay or repeal of the Affordable Care Act’s individual mandate, according to multiple news reports including a Modern Healthcare report.

If the SGR fix legislation is bundled with a bill that would call for the delay or repeal of the individual mandate, the Senate is not expected to approve the merged legislation.

The deadline for the next doc fix is March 31. If a temporary or permanent fix is not in place by then, Medicare physician payments under the SGR will be cut by about 24%.


Private Equity Investors Should Be Aware of Government Healthcare Fraud Enforcement Activity

Posted in Healthcare Services Investing

We have previously discussed on this blog the ever-increasing federal and state focus on healthcare fraud prevention and enforcement activities.

As investors consider opportunities, especially those in more highlighted areas of sensitivity, they should be aware of the government’s focus on this area of fiscal management so that the risks can be properly weighed.

A recent article by our partner Scott Becker in Becker’s Hospital Review describes some key statistics.