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Everything to know about healthcare’s first futures trading exchange

by John R. Fischer, Senior Reporter | February 06, 2024
Business Affairs
Intelligent Medicine Exchange (IMX) has been designated as the first futures contract exchange for the healthcare industry.
For the first time, healthcare providers, payers, and manufacturers have a futures exchange that will provide greater transparency into the value of bonds, shares, and commodities on the market, allowing them to manage financial risks and, in turn, stabilize pricing and revenue for medical services.

The Commodity Futures Trading Commission, an independent U.S. government agency, has designated Intelligent Medicine Exchange (IMX) as a contract futures market, a platform where investors agree to buy or sell contracts for specific quantities of an asset at a predetermined price that they will pay at a future date.

IMX, also known as IMX Health, is a subsidiary of IMX, LLC, and a two-sided marketplace that provides derivatives such as contracts to market participants. Future contracts lock in prices for products, protecting investors from potential losses resulting from rises or drops in product value. The exchange will also facilitate trading for options, where participants can choose whether or not to execute a futures contract previously agreed upon.

“Healthcare is 20% of our economy ($4.3 trillion per year) but there is currently no way to hedge financial risk in healthcare with futures or derivatives. We believe creating a robust futures market is required to save the healthcare system. Healthcare is still considered a cost but should be an asset. Futures turn unstable costs into stable assets,” IMX CEO Jim Plante told HCB News.

According to Plante, futures have stabilized pricing for airlines, oil companies, wheat farmers, and food manufacturers by establishing transparency and new investing opportunities. IMX, he says, will allow hospitals and pharma companies to hedge risks to revenue, and payers and large employers to their costs, reducing financial uncertainties that lead to overcharging.

The company has developed proprietary healthcare indexes and futures contracts based on trends such as the cost of treating certain diseases like diabetes or kidney disease, common medical procedures, the ability to invest in certain drugs, and more, creating opportunities to invest in multiple components of the healthcare ecosystem.

These indexes are and will be formed by the company’s AI model, IMX GPT, from de-identified EHR data and more than 100,000 provider billing codes. Plante says using these indexes will create more equal levels for supply and demand and expects IMX to someday have hundreds of indexes.

“Supply can see future demand and the price the demand is willing to pay. IMX could potentially lead to stable and lower prices for consumers and more predictability for drug companies, hospitals, providers, and payers as they learn to do what farmers have done for decades — hedge the future.”

Futures exchanges typically have a clearinghouse that acts as an intermediary between the buyer and seller to ensure the trading process is fair and to guarantee the performance of the futures contracts. IMX has partnered with Minneapolis Grain Exchange for clearing services.

The exchange is expected to commence operations in the first half of 2024.

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