Re:If you imagine a business making surgical facemasks is wo...
by boulos on Monday April 06, 2020 @01:37AM
(#22791145)
The Economist had an article about this last year [1, but paywalled, obviously]. A helpful quote though:
> As the drug industry has come back down to earth, the returns of the 46 middlemen on the list have soared. Fifteen years ago they accounted for a fifth of industry profits; now their share is 41%.
An example of a middleman firm is Express Scripts (a prescription management / negotiation firm) which had an operating income of $5B in 2017 on revenues of $100B. The parent company Cigna (NYSE:CI) handles a broader array of insurance things and had an operating income of almost $10B in the last twelve months but on revenue of $160B.
Medical billing in this country is insane and full of inefficiency. A little bit of each part gets collected along the way, and it adds up. I don’t even think ExpressScripts would have been counted in the methodology that The Economist was using (excess profits are considered a >10% return on capital) as part of Cigna.
> As the drug industry has come back down to earth, the returns of the 46 middlemen on the list have soared. Fifteen years ago they accounted for a fifth of industry profits; now their share is 41%.
An example of a middleman firm is Express Scripts (a prescription management / negotiation firm) which had an operating income of $5B in 2017 on revenues of $100B. The parent company Cigna (NYSE:CI) handles a broader array of insurance things and had an operating income of almost $10B in the last twelve months but on revenue of $160B.
Medical billing in this country is insane and full of inefficiency. A little bit of each part gets collected along the way, and it adds up. I don’t even think ExpressScripts would have been counted in the methodology that The Economist was using (excess profits are considered a >10% return on capital) as part of Cigna.
[1] https://www.google.com/amp/s/amp.economist.com/business/2018...