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MITD Well-Positioned to Continue Racking Up Profitable Quarters as Healthcare Industry Transitions from Inpatient to Outpatient Care
There has been a gradual but consistent shift in healthcare over the last decade or so from inpatient stays to ambulatory care (outpatient care) and the advent of the Patient Protection, as well as the Affordable Care Act (ACA), have accelerated this transition in the overall healthcare business model substantially. According to healthcare advisory firm Kaufman Hall, inpatient utilizations (per 1k) continually declined from 2000 to 2011 and 71% of the states in their study showed decreases of over 5%. A clear trend which is further evinced by Fitch Ratings’ report from August of 2014 showing a marked decline in inpatient activity and a corresponding rise in ambulatory care in their sweeping rated hospital and health system portfolio.
Some of the core reasons behind this transition are a growing focus on risk-sharing arrangements and coordinated or collaborative care, as well as the increasingly prominent financial benefits of value-based payment models, particularly under the ACA, which has optimized the playing field for low-cost, high-quality service in the most convenient settings for the patient. With Medicare providing coverage to some 54 million seniors last year, totaling $615.9 billion (including beneficiary premiums) and the number of those covered set to rise sharply within the next 15 years to around 81.4 million, as Baby Boomers continue to retire in droves, a perfect storm is brewing in the outpatient care services market. Total expenditures on healthcare in the U.S. for 2014 ran around $3.09 trillion, or 18% of GDP and these costs are projected to rise 15.5% by 2017 to over $3.57 trillion, making the future for service and product providers, particularly those who can master the rising trend towards ambulatory care, a very bright one indeed.
One of the larger hospital and home care agency focused providers in the U.S., Community Health Systems (NYSE:CYH), serves as an excellent benchmark for the ongoing transition to ambulatory care, with total associated revenues up around 1% year over year to 55.8% in 2014. Other large hospital operators, like HCA Holdings (NYSE:HCA) and Tenet Healthcare (NYSE:THC), also saw large chunks of their bottom line attributable to ambulatory care last year, at around 38.4% and 36.2% of revenues respectively. South Nassau Communities Hospital (Oceanside, NY) is another good benchmark here, with a 62% to 38% inpatient to outpatient mix only five years ago, having shifted to a 59% to 41% mix as of last year. COO and Executive VP of Administration for the hospital indicated that their experiences were consistent with the broader industry trend and that the drive to improve outcomes and service in a cost-effective manner was a major priority as South Nassau Communities Hospital as they transitioned more and more of their overall care footprint from the hospital to the community.
One of the exciting up and comers to provide an innovative approach amid this growing trend is MIT Holding (OTCQB:MITD), which has developed a portfolio of products and services ranging from custom compound pharmaceuticals and a wide variety of sold/rented home medical equipment, to IV infusions, ambulatory/in-home therapies, and medical management services. The company has emerged after a profile build up and reorganization to post back-to-back profitable quarters (as of Q2 2014) on the strength of several significant new revenue streams, including two key contracts with the first company to automate the patient transition process, Curaspan Health Group, whereby MITD can market their products and services directly to patients of Curaspan’s 5.4k plus medical facilities.
As of the start of last year, MITD revenues were on-track for a 32% net profit baseline and the company is pricing future business on that basis. One of the new revenue streams, a sub-investigator role (via the company’s facilitators) initiated back in November of 2014 for the main investigator in a Phase 3 study evaluating treatments for complicated bacterial and soft tissue infections, Melinta Therapeutics, not only validated the company’s approach to landing more business in this lucrative and highly specialized market, it opened the door for expansion of the contract on this 12-month study featuring two to four hour patient infusions and came with a 52% gross profit margin. Growth opportunities like the sub-investigator role in the Melinta study matches the company’s business model. MITD’s approval by over 130 insurance carriers goes a long ways towards helping to cement the company’s role as a chief sub-investigator. The Melinta study highlights a now established and growing presence in this highly profitable space for MITD.
Take a closer look at the company by visiting www.mitholdinginc.com
