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Who Is Really At-Risk Here?

An item from yesterday's Wall Street Journal caught my wandering eye. Though the economy's sad state continues to depress healthcare utilization, the effect is markedly different depending on your place in the food chain.

UnitedHealthcare's earnings are up as declining utilization has not (yet) resulted in declining premiums (though come to think of it, when has it ever?)  It's no surprise that payers benefit when utilization drops.  The difference here is that the economy's doing their dirty work for them.

On the other hand, Johnson & Johnson's earnings are down as consumers decide they can live without Band-Aids and Tylenol, and cash-strapped hospitals clamp down on expensive artificial joints.  Getting paid "per-click" is great when volume heats up, not so much fun when the movie runs backwards.

And, no, this is not what providers mean when they mention "downside risk."  That's an entirely DIFFERENT way to lose a ton of money betting on utilization trends...

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