Weekly Health Tech Reads | 6/11/23

CMMI announces the MCP Model, Optum bids on Amedisys, & more

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This week’s newsletter sponsor: Elion

Elion released a new vendor comparison marketplace product this week, enabling operators at digital health providers to efficiently discover, evaluate, and select healthcare technology vendors. The first deep dive category in the marketplace, of many to come, evaluates EHR vendors across over 200+ EHR features and 10,000 data points on key EHR vendors. You should check it out if you’re a digital health provider in the market for an EHR platform, or just interested in learning more about the landscape.

NEWS OF THE WEEK

Sharing our perspective on the news, opinions, and data that made us think the most this week

News

Summary: Optum made an unsolicited all-cash bid for Amedisys this week. Amedisys had previously announced last month that would merge with Option Care in a $3.6 billion all-stock deal, an announcement that was greeted with serious skepticism from investors. Option Care’s stock fell over 15% after the initial deal with Amedisys was announced, and the investor call discussing the deal included questions from analysts who seemed baffled by the strategy of the move. Amedisys is the second largest home health provider in the country with 522 care centers across 37 states. If Optum is successful in this bid, between LHC and Amedisys it will own ~10% of the home health market in the US, the largest player in a very fragmented market.

Our Reaction:

  • Lots of coverage of this deal this week and the implications it has in the home health market. As noted in the HTN Slack convo, the strategy here seems pretty straightforward for UHG as it continues to build out its presence in the home health market. Amedisys seems like a natural addition for Optum on top of LHC, and gives Optum a capability in the hospital-at-home market. UHG just continues to eat the healthcare world right? It seems almost inevitable that Optum will win this bid.

  • As a brief aside, if you’re early in your career and looking to learn about business opportunities in healthcare, its hard to imagine anything would beat Optum’s Corp Dev team the past several years. At least from the outside it feels like they are digging into virtually every asset in the landscape and deciding which entities make the most sense to bring in next. Irrespective of whether you think it’s a good thing that a single entity is able to buy up so much of the healthcare landscape, it’d be a pretty wild way to learn about how money flows in healthcare.

Other Relevant Reads:

  • We find ourselves going back to this NEJM Catalyst article from Optum execs about the future of home and community care from last year. It’s a good rundown of the strategy Optum appears to be deploying here.

News

Summary: This is a new voluntary model that will be tested in eight states, including the best state in the Union. CMS released a blog post this week articulating the strategy behind MCP, which notes that less than 50% of primary care practices participate in CMS’s ACO models, including Shared Savings Program and ACO REACH. The MCP Model has three stated goals, which include 1. Ensuring patients get integrated primary care, 2. Supporting independent, rural, and safety net PCPs in taking risk, and 3. Improving outcomes while reducing costs. The MCP model will launch on July 1, 2024 and run for 10.5 years.

Our Reaction:

  • This seems like a big move from CMMI attempting to reach more primary care providers with VBC contract.There was a comment in the HTN Slack about how this feels like the type of big initiative you'd hope to see from CMMI. We agree with that. There’s been a lot of discussion about the need for more mandatory programs coming out from CMS in order to actually drive sustained adoption (and success) of VBC initiatives, so it will be interesting to see how this program does in achieving its goal of engaging more primary care practices in VBC.

  • CMMI has been under increased political pressure recently given the issues it has had demonstrating cost savings from models. It’s not good when you have House Republicans arguing that CMMI slows innovation and doesn’t drive cost savings. Hopefully initiatives like this help garner continued support for the program.

Other Relevant Reads:

  • The American Academy of Family Physicians shared a statement with the Senate Committee on Finance this week discussing the impact of consolidation on primary care and suggesting changes to bolster independent practice. One set of recommendations was to allow CMMI more flexibility, and in particular have the ability to implement programs that don’t need to generate cost savings. It’s fascinating to see that recommendation in the broader context of the conversation around whether VBC actually reduces costs. When you read between the lines of a recommendation such as that, it seems like a pretty clear indication the answer is “no”, right?

  • Yuvo Health’s $20.2 million Series A announcement this week to support FQHCs in taking VBC contracts underscores the early yet growing momentum we’re seeing in the Medicaid market. This news seems to highlight there’s reason to be optimistic about more innovation in the Medicaid market, and we’d imagine this CMMI announcement will drive more dollars into the space.

Join the HTN Slack Convo (h/t Anthony Frizzle)

News

Summary: Last week the NY Times released a report on Allina’s policy of denying care to patients over $4,500 in debt. This week, Allina decided to pause the policy. The NYTimes investigation caught the attention of the Minnesota Attorney General’s office, who expressed concern over the number of patients who reached out to the AG in the last week sharing their experiences of being denied care by Allina. Allina originally responded pushing back against the NYTimes investigation, noting that the policy in question impacted only 0.1% of patients and care was only cut off after Allina attempts to reach out to patients over 20 times. Allina stopped short of actually sharing how many patients were impacted by this policy.

Our Reaction:

  • Paul Keckley per usual had an excellent post this week on the headwinds facing not for profits, which included this quote: “The headwinds facing large not-for-profit hospitals systems are strong. They cannot be countered by contrarian messaging alone.” It seems like Allina learned that lesson in real time this week, as Allina originally pushed back on the report before ultimately pausing the policy. When you have the state AG expressing his concern at the policy, it’s no surprise that it gets paused. But it’s a bit disappointing to see the sequence of events play out as such - it comes across like the Attorney General has to step in to keep the health system in line, which you’d hope wouldn’t need to happen.

  • It reminds me that healthcare institutions of all types - health systems, independent providers, payors, VBC startups, pharma companies, etc - are tapping into profit pools and are reliant on those profit pools increasing in size. Yet at the same time, I’m fairly certain that all of those institutions will tell you they exist to do right by patients. And, I’m equally certain that every institution is open to critique that it isn’t meeting this ideal. The mantra “no margin, no mission” is evidence of the inevitability of this all and the trade offs that need to be made. At some point, maintaining and growing a profit pool will be in direct conflict with doing the right thing by a patient. Supporters of those organizations will point to the overall good the organizations are doing. Critics will point to the failures. Allina is just the latest example of that.

  • Keckley’s blog post concludes with an interesting suggestion that health system leadership should proactively lead a conversation attempting to reset the entire US health system, while putting everything on the table, including not-for-profit status. I’d love to see that sort of proactive leadership from health systems, Allina included. Perhaps having state Attorney Generals push this convo forward is what will need to happen to make that occur.

CHART(S) OF THE WEEK

Sharing a visual or two that made us think this week

KFF published an awesome interactive data visualization on Medicare spending projections, highlighting really well how the population is expected to shift over the decades and how that will cause Medicare spending to increase from $744 billion in 2022 to a projected $1.7 trillion in 2033. It highlights the magnitude of the challenge in front of us when you think about the demographic changes through 2060 with that expenditure increase.

Halle Tecco’s third installment of her excellent series reflecting on angel investing included this chart showing valuation gains for her investments in seven “unicorns”. It highlights how her gains as an angel investor essentially stop after the Series B valuation, even though the company valuation grows substantially.

OTHER NEWS

A round-up of other newsworthy items we noticed during the week

WebMD will acquire Limeade, an employee engagement platform, for $75 million.

Link / Slack (h/t Jarrad Hicks)

Carbon Health released an AI-enabled charting tool for clinicians in its EHR platform. It feels like it is only a matter of time before we see Carbon get back to its roots and attempt to license its technology again.

GenesisCare, an Australian cancer treatment company, filed for Chapter 11 bankruptcy. KKR owns 30% of GenesisCare, which entered the US market after it acquired 21st Century Oncology in 2020. 21st Century Oncology itself went through bankruptcy back in 2018.

A New JAMA study estimated that Johns Hopkins spent over 100,000 person hours, $5 million on personnel costs, and $600k on vendor fees in order to prepare and report data on quality metrics in 2018.

Link / Slack (h/t Rik Renard)

Upperline Health, a specialty care model for ACO REACH, raised $58 million. Upperline serving 350,000 patients annually and targeting the highest-risk patients, whose spend is 3-5x times an average patient. The model wraps a care team around specialty care providers, with 122 clinics across seven states.

Chrissy Farr and Leslie Schrock do a nice deep dive into the fertility market, including highlighting the insane story that someone robbed twelve banks to pay for their IVF treatment (seriously). The article includes a good market map of startups in the space.

One Medical opened two clinics in Hartford, CT this week in partnership with Hartford HealthCare. This news comes more than a year after the two parties first announced their partnership.

Morgan Health steps into the policy ring, suggesting changes needed for the employer market to move to value. The suggested changes are focused on data quality and funding primary care.

Cityblock cut 12% of staff, focuses on profitable growth moving forward.

Link / Slack (h/t Erica Webb)

If you’re a HTNer looking to hire Cityblock CHWs / behavioral health workers who were laid off, check out Uppie’s post in #talentforhire

Pomelo Care, a virtual practice for maternity and newborn care, raised $33 million. They’re working with a number of employers and Medicaid plans, serving patients in 44 states currently.

Link / Slack (h/t Duncan Reece)

RxLightning raised $17.5 million for a specialty medication platform.

Laudio raised $13 million for VBC contract enablement.

Link / Slack (h/t Kevin Wang)

ParetoHealth received an investment from PE shop Warburg Pincus, which will be equal to the stake of Great Hill Parnters.

Karoo, a new VBC platform for cardiology, raised $3 million.

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