Taking stock in heart docs

The ideas and innovators shaping health care

May 25, 2023 View in browser   By Erin Schumaker and Ben Leonard FOLLOW THE MONEY If you can read an EKG machine, private equity may be interested in you. | Getty Images Private equity investors are bullish on cardiology, a new report from PitchBook, the Seattle firm that tracks market data, says. That’s a change. While private equity firms have long invested in health care, with 1 in 10 investment dollars flowing into the sector, cardiology hasn’t been a big recipient. Why now? Technological advancement has allowed surgeons to perform more cardiovascular procedures in outpatient settings instead of in hospitals. In 2020, the Centers for Medicare and Medicaid Services added percutaneous coronary interventions — a nonsurgical procedure used to treat blocked arteries, or coronary artery blockages — to a list of covered procedures at ambulatory surgery centers. The change enabled centers to perform enough procedures to cover overhead costs, which piqued investor interest. By the numbers: Compared with other specialties like dermatology or dentistry, cardiology has relatively few independent practitioner groups. That might seem like a downside for investors. But Rebecca Springer, the report’s author and PitchBook senior health care analyst, told Erin that scarcity can fuel investor interest. “There aren’t that many assets out there, so if you want to make a cardiology play, you have to move now and pay up in order to do so,” she said. Why it matters: Heart problems are prevalent. Twenty million adults in the U.S. ages 20 and older have coronary artery disease, and at least 660,000 people die of heart disease each year, according to the Centers for Disease Control and Prevention. Heart disease costs the country about $219 billion, the CDC says, and those costs are likely to rise as the population ages. If you can’t beat ’em: Health systems, under financial strain from rising costs and the pandemic, worry about losing revenue, Springer said. One potential model for health systems: A joint venture with an investor and a doctors’ group. “There’s a lot of discussion in that space around how to get out ahead of this,” she said.   DON’T MISS POLITICO’S HEALTH CARE SUMMIT: The Covid-19 pandemic helped spur innovation in health care, from the wide adoption of telemedicine, health apps and online pharmacies to mRNA vaccines. But what will the next health care innovations look like? Join POLITICO on Wednesday June 7 for our Health Care Summit to explore how tech and innovation are transforming care and the challenges ahead for access and delivery in the United States. REGISTER NOW.     WELCOME TO FUTURE PULSE Schwartz Peony Garden, Md. | Shawn Zeller This is where we explore the ideas and innovators shaping health care. A gene mutation causes one woman to feel essentially no pain, anxiety or fear, researchers at the University College London uncovered. Can we have that, too? Share any thoughts, news, tips and feedback with Ben Leonard at bleonard@politico.com, Ruth Reader at rreader@politico.com, Carmen Paun at cpaun@politico.com or Erin Schumaker at eschumaker@politico.com. Send tips securely through SecureDrop, Signal, Telegram or WhatsApp. Today on our Pulse Check podcast, host Katherine Ellen Foley talks with Alice Miranda Ollstein about CDC data that shows a significant drop in new HIV infections across the U.S. But racial gaps remain in testing and treatment. Listen to today’s Pulse Check podcast TECH MAZE After heating up during the pandemic, funding for digital health firms focused on services like telemedicine and remote monitoring has plummeted. And it hasn’t hit bottom yet. A new report from market research firm CB Insights found that U.S. digital health funding dropped to its lowest level since the third quarter of 2019 at $2.3 billion in the first quarter of 2023. After peaking at $9.3 billion in the final quarter of 2021, funding has taken a nosedive, declining every quarter. And the trend in the U.S. tracks the direction of global investment. The 198 U.S. deals reached in the first quarter were also the fewest in the past four-plus years, as were the three deals of $100 million or more reached between Jan. 1 and March 31 globally. For context, 42 such deals were made in the second quarter of 2021. What’s happening? Venture capitalists are pulling back because of recession fears and rising interest rates. The fallout: Layoffs have plagued the sector, and startups are struggling to stay in business. For the public, it could mean fewer innovative products and services coming to market. Quick fix? There is none and there’s little Washington can do about it. Congress’ extension of eased Medicare telehealth rules through 2024 has helped a bit, but the Covid public health emergency’s end this month has also brought regulations curtailing growth in remote patient monitoring. The Federal Reserve has continued to raise interest rates to drive down inflation, meaning the hard times will likely continue.   GET READY FOR GLOBAL TECH DAY: Join POLITICO Live as we launch our first Global Tech Day alongside London Tech Week on Thursday, June 15. Register now for continuing updates and to be a part of this momentous and program-packed day! From the blockchain, to AI, and autonomous vehicles, technology is changing how power is exercised around the world, so who will write the rules? REGISTER HERE.     WASHINGTON WATCH The magnitude of the fentanyl problem is forging unlikely alliances on Capitol Hill. | Spencer Platt/Getty Images Before the House voted Thursday on legislation to boost mandatory minimum sentences for distributors of street versions of fentanyl, Energy and Commerce ranking member Frank Pallone (D-N.J.) condemned the measure. Pallone called it a “partisan distraction” from the hard work needed to combat opioid addiction, and said its increased mandatory penalties for fentanyl distributors would “disproportionately impact communities of color.” But when the roll was called, 74 Democrats, including progressives and Hispanic and Black representatives joined Republicans in passing it. Why it matters: The vote’s an indication of how the seriousness of the fentanyl problem – the Centers for Disease Control and Prevention says it was responsible for the majority of more-than-100,000 fatal drug overdoses in the U.S. last year – has made it difficult for members to vote against measures aimed at curtailing it. Among the Democrats in favor were Rosa DeLauro of Connecticut, the ranking member of the House Appropriations Committee, Sanford Bishop and David Scott of Georgia, Steven Horsford of Nevada and Ruben Gallego of Arizona. President Joe Biden cleared the way for them when he all but endorsed the legislation in a statement Monday. What’s in the bill? In addition to increasing penalties for distributors, the HALT Fentanyl Act would make permanent the temporary scheduling of street versions of fentanyl under Schedule 1, which covers substances with no currently accepted medical use and high potential for abuse. It would also bolster research into the drug. What’s next? A Senate version of the bill sponsored by HELP Committee ranking member Bill Cassidy (R-La.) is unlikely to pass the Democratic-controlled chamber since most Democrats oppose it.   Follow us on Twitter Ben Leonard @_BenLeonard_ Ruth Reader @RuthReader Carmen Paun @carmenpaun Erin Schumaker @erinlschumaker   Follow us

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