Investment gains masking health system operating margin difficulties 

The combination of the Omicron surge, lackluster volume recovery, and rising expenses have contributed to a poor financial start of the year for most health systems. The graphic above shows that, after a healthier-than-expected 2021, the average hospital’s operating margin fell back into the red in early 2022, clocking in more than four percent lower than pre-pandemic levels. 

Despite operational challenges, however, many of the largest health systems continue to garner headlines for their sizable profits, thanks to significant returns on their investment portfolios in 2021.

While CommonSpirit and Providence each posted negative operating margins for the second half of 2021, and Ascension managed a small operating profit, all three were able to use investment income to cushion their performance.

A growing number of health systems are doubling down on investment strategies in an effort to diversify revenue streams, and capture the kind of returns from investments generated by venture capital firms. However, it is unlikely that revenue diversification will be a sustainable long-term strategy.

To succeed, health systems must look to reconfigure elements of the legacy business model that are proving financially unsustainable amid rising expenses, shifts of care to lower-cost settings, and an evolving, consumer-centric landscape.    

Thoughts of the Day: Charlie Munger

https://www.marketwatch.com/story/charlie-munger-warren-buffetts-right-hand-man-just-turned-98-and-has-some-choice-words-about-inflation-ebitda-and-marriage-11641319939?siteid=yhoof2

Many Americans, even those who don’t pay much attention to investing and the markets, know the name Warren Buffett.

Buffett, of course, is the billionaire philanthropist who created one of the greatest investment fortunes in history. Far fewer, however, know the name of his longtime business partner Charlie Munger.

And that’s a shame, because Munger is at least half the brains behind Berkshire Hathaway BRK.A BRK.B, the holding company he runs with Buffett and which manages billions and billions of investor dollars.

Notably, despite his deal-making prowess, Buffett is a big fan and longtime proponent of low-cost personal investing.

Munger turned 98 on Jan. 1. To celebrate his wit and market wisdom, here is a collection of quips from various interviews and question-and-answer sessions over the years.

On business education

Those of you who are about to enter business school, or who are there, I recommend you learn to do it our way. But at least until you’re out of school you have to pretend to do it their way.

On common sense

If people weren’t so often wrong, we wouldn’t be so rich.

On company earnings

Yeah, I think you would understand any presentation using the word EBITDA, if every time you saw that word you just substituted the phrase “bullsh** earnings.”

On a changing economy

So no, I’m optimistic about life. If I can be optimistic when I’m nearly dead, surely the rest of you can handle a little inflation.

On public spending

Everybody wants fiscal virtue but not quite yet. They’re like that guy who felt that way about sex. He was willing to give it up but not quite yet.

On legacy

Well, you don’t want to be like the motion picture executive in California. They said the funeral was so large because everybody wanted to make sure he was dead.

On stock buybacks

I think some people just buy it to keep the stock up. And that, of course, is insane. And immoral. But apart from that, it’s fine.

On marriage

Warren: Charlie is big on lowering expectations.

Munger: Absolutely. That’s the way I got married. My wife lowered her expectations.

On the purpose of money

Sure, there are a lot of things in life way more important than wealth. All that said…some people do get confused. I play golf with a man. He says: “What good is health? You can’t buy money with it.”

On money managers

The general system for money management requires people to pretend that they can do something that they can’t do, and to pretend to like it when they really don’t. I think that’s a terrible way to spend your life, but it’s very well paid.

On systematic investing

Well, I can’t give you a formulaic approach, because I don’t use one. If you want a formula you should go back to graduate school. They’ll give you lots of formulas that won’t work.

On human nature

As Samuel Johnson said, famously: “I can give you an argument, but I can’t give you an understanding.”

On financial innovation

It’s perfectly obvious, at least to me, that to say that derivative accounting in America is a sewer. is an insult to sewage.

On business competition

Competency is a relative concept. And what a lot of us needed to get ahead was to compete against idiots. And luckily there’s a large supply.

On cryptocurrency

I think the people who are professional traders that go into trading cryptocurrencies, it’s just disgusting. It’s like somebody else is trading turds and you decide, “I can’t be left out.”

On investment bankers

Once I asked a man who just left a large investment bank, and I said, “How does your firm make its money?” He said, “Off the top, off the bottom, off both sides, and in the middle.”

And finally, a parting shot

Munger: I think I’ve offended enough people.

Buffett: There’s two or three in the balcony!

Humana quietly funded 40 Iora primary care clinics

New doctor's office for people on Medicare opens in Lawrenceville | News |  gwinnettdailypost.com

Health insurer Humana quietly funded 40 of Iora Health’s 47 primary care clinics, according to a Securities and Exchange Commission registration statement obtained by Business Insider.

The filing also showed the Humana-funded clinics exclusively served Humana members until July 2020.

Humana CEO Bruce Broussard told Business Insider earlier this year that the company had begun investing in other startup healthcare companies to see which would succeed. He also said the payer sees better outcomes and lower costs among members who go to clinics focused on providing care to older populations.

Iora Health serves 38,000 patients in eight states, according to the article.