Weekly Health Tech Reads

Walgreens earnings, BCBS NC loses a client, JPM startup presenters, and Aledade wipes out medical debt 

This newsletter is sponsored by Capable Health

Capable Health, a patient engagement platform for digital health providers, shared a helpful list of 2023 predictions for the virtual care delivery space. Chief among them is that successful virtual practices will need to move beyond cash billing and encounter-based care models to improve patient outcomes and deliver value. Capable Health's extensible patient engagement stack for longitudinal care delivery empowers providers to do just this.

News of the Week:

  • Walgreens posted Q1 2023 earnings and increased sales guidance for FY 2023 by $3 - $3.5 billion driven in part by the Summit Health acquisition. The earnings call featured a fascinating strategy conversation about where VillageMD/Summit is headed, with VillageMD apparently choosing to focus on going deeper in fewer geographies moving forward. The integration of VillageMD and Summit will feature two key levers: first, VillageMD's VBC capabilities will help move Summit to more VBC contracts this year. Second, over the next five years, VillageMD will look to integrate more of Summit's multi-specialty approach as it seeks to better manage risk. This will be a big strategic shift for VillageMD in moving beyond primary care, one that will be really interesting to keep an eye on. It also seems like it indicates where we could see Walgreens making more acquisitions moving forward - i.e. leading multi-specialty practices in priority geographies. Walgreens' CFO also noted on the call they're not likely to be a player in big health tech acquisitions moving forward - focusing on capability adds for "hundreds of millions" not billions. It wouldn't be entirely surprising to see other primary care orgs seeking to take risk following similar strategic paths moving forward, expanding beyond primary care in order to better manage the entire patient journey in an effort to control the experience and cost.  Link (Earnings Transcript)

  • BCBS NC lost a major customer this week as the North Carolina state health plan announced it is moving from BCBS to Aetna after over 40 years of working with BCBS NC. This will move North Carolina's 740,000 plan members to CVS / Aetna (which beat out BCBS and UHC for the business), with the move apparently offering up to $140 million of savings opportunities. This seems like a massive shift in North Carolina, where the local Blues plan had for years been the dominant payor and was attempting to use that market share to drive the state to more value-based relationships. When you combine this with all the news about NC State Treasurer Fowell's willingness to go toe-to-toe with hospitals who were driving up costs for the NC (i.e. see this), it's not hard to imagine that the NC state health plan was disappointed with BCBS NC's efforts to drive savings for the health plan. The fact that they're saying Aetna will drive $140 million of savings over the next few years drives that home, and also makes you wonder what Aetna committed to in order to drive that $140 million of savings. Another reminder of how hard it is to drive meaningful change in healthcare markets. Link / Slack (h/t Chase Jones)

News:

  • Carbon Health pulled back from a number of its more ambitious initiatives in order to focus on its core business of urgent care and primary care. Alongside this decision, it cut ~200 staff working in the areas cut, which include public health, RPM, hardware, and chronic care. As highlighted in Slack, those areas appear to be where Carbon has made a number of acquisitions over time, and where Carbon was attempting to build a differentiated model versus more traditional urgent care and primary care models. It's an unfortunate reminder of the financial realities of building in the healthcare space in this environment. It'll be interesting to watch what happens with the primary care business here, as while Carbon refers to that as its core business here, the core business really seems like urgent care. A primary care offering seems necessary in order for Carbon to take on VBC contracts, which is presumably why they're calling it core here, but it seems like there remains a lot of risk there. LinkSlack (h/t Manas Kaushik)

  • Aledade made a very cool move by wiping out $86 million of medical debt for 85,000 patients in Mississippi and Louisiana in partnership with RIP Medical Debt. It includes the story of a patient who might not go to their PCP because of the shame of an $84 debt, and instead end up in the ER at some point later, which helps drive home the impact of medical debt. Kudos to Aledade for doing this - hopefully more health tech startups follow Aledade's lead here. I'm not sure there's an org out there doing more meaningful work for patients at the moment than RIP Medical Debt. Link / Slack (h/t Ben Hughes) 

  • The list of companies presenting at JPM is out, and as always it is worth perusing the private companies for a sense of who is considering going public coming up. Some notable names: Aetion, Aledade, Carbon Health, Cedar Gate, Cityblock, ConcertAI, Equality Health, Headspace, Hinge, Honor, Included Health, GoHealth Urgent Care, JenCare, Omada, Quantum Health, Somatus, Spring Health, UniteUs, Waystar. Hopefully the public markets open up this year - there'd be some fun S-1s in there! Link / Slack (h/t Duncan Reece)

  • The FTC proposed a new regulation essentially banning non-competes in employment agreements. If this comes to fruition, obviously this would have major implications for healthcare where we have silly lawsuits like this (paywalled) between Wisconsin health systems over noncompetes. Of course, the Slack dialogue highlighted a lot of reasons why any changes here will be complex. Link / Slack (h/t Jake Kunkel)

  • KeyCare, a virtual care platform helping health systems expand virtual care access for their patients, raised another $27 million. From the press release, it sounds like they're going live with multiple health systems in Q1 and have a growing pipeline. Seems like momentum is building here and its not hard to envision why health systems might find KeyCare to be an appealing partner versus other telehealth vendors. Link

  • Herself Health raised $7 million to launch a new advanced primary care clinic for women aged 65+, and they're opening they're first clinic in... St. Paul!!!! Hooray for more primary care innovation coming to the Twin Cities!!  Link / Slack (h/t Deana Bell)

  • LunaJoy, a women's mental health startup, raised $2.4 million. Link / Slack (h/t Rik Renard)

Opinions:

  • The debate over hospital finances loomed large over the holidays as the WSJ featured two combatting pieces on the topic. The first highlighted how hospitals are spurning poorer areas for richer areas, which prompted a response from the American Hospital Association CEO that suggested that the WSJ article ignored how the government underpays hospitals, how hospitals deliver care without being paid, and that population trends are moving to more suburban areas. It's interesting to note the AHA argument isn't that the WSJ article was wrong, just that the WSJ ignores the financial realities of operating hospitals. What the AHA response does seem to get right is this sentiment: "The conversation on how to provide the best care to everyone, especially those most in need, is too important not to be done right." I doubt anyone would disagree with that. Yet it's hard to imagine how we do that in a meaningful way without moving past politically charged arguments designed to protect profit pools - i.e. whether hospitals make money on Medicare rates or not. Link (WSJ article) / Link (AHA response)

  • Speaking of hospital finances, the NYTimes shined a light on how hospitals roll out the red carpet for VIPs, highlighting "Room 20" at NYU Langone, which appears to be reserved for trustees, senators, and the like, although NYU denies that it has VIP patients. As discussed in Slack, while it's not surprising that hospitals like NYU Langone will deny this publicly, it seems like pretty common practice to provide white glove service to VIPs. Given the financial realities touched on above, as a hospital exec I'm not sure what you do here aside from hope that the NYTimes or Congress doesn't dig in here too hard. Having pissed off trustees sitting in your emergency department wondering why it takes hours for a routine test seems like a good way to lose your job really quickly. But good luck explaining that to your providers who want to deliver the same care to everyone.  Link (paywalled) / Slack (h/t Rik Renard)

  • This is an interesting perspective in The Atlantic on how the Roe v Wade decision is going to potentially create a surge of babies in areas of the country that are least equipped to support more births. Link / Slack (h/t Hamza Rehman)

  • This is a cool deep dive into Mercy Virtual's remote monitoring program and how it's leveraging Myia Health's platform to implement it. There's a lot of nuance to this article that is really interesting in terms of implementation learnings for startups looking to work with hospitals on programs like this. It's a really complex workflow that Mercy has implemented, and yet there are still less than 5,000 lives under management. And check out the operational metrics, where Mercy highlights that the operational cost to run this program is currently $3,600 per patient per year. The article talks about how the Mercy ACO and VBC contracts allow them to use this model, but it'd be really interested to see  the math behind how a remote monitoring model that costs over $3,600 per year per patient reduces costs at scale.  Link / Slack

  • This article looks at how providers who are building followings giving health advice on social media are losing their jobs over it. Personally, I think it'd be wise for healthcare institutions to figure out how they can harness and support this energy from their employees rather than firing these employees. Obviously, there will be some challenges on this journey with employees doing things that might jeopardize their employer's brand, and employers will naturally need to put some guardrails in place. Yet in a world where we talk about burnout constantly, it seems odd that employers are firing clinicians for something they enjoy doing while also earning some extra income from.  Link / Slack (h/t Betsy Yates)

  • Here's a helpful overview of the orthopedic market and how PE is getting more involved in buying up provider practices. It provides some good insight into what PE groups like Welsh Carson are doing here, and how models like HOPCo are attempting to move orthopedic practices to VBC contracts. Link

Data:

  • This study suggests that patients report receiving better care from specialists when those specialists trained with the referring PCP. Seems like there are lots of interesting potential implications from this if you're building a care delivery model.  Link / Slack

  • This study in JAMA Health Forum looks at the performance of physician group practices versus hospitals in the most common surgical and medical episodes under BPCI. It finds that physician groups had savings in surgical, not medical, episodes, while hospitals had savings in both. Link

  • A HHS study suggested that Black and Hispanic patients are less likely to use (and be offered to use) patient portals than white patients.  Link (Politico summary) / Slack (h/t Samuel Roods)

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