Weekly Health Tech Reads | 12/3/23

Cigna / Humana merger talks, UGH Investor Day, primary training programs, and more!


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


On the heels of news that Cigna is selling its Medicare Advantage business (link), the WSJ is reporting that Cigna and Humana are in talks to merge. The merger could be finalized before the end of the year, creating a new ~$140 billion insurance company (Cigna's market cap is ~$80 billion and Humana's is $60 billion). This isn't the first time these organizations have been involved in similar merger conversations - back in 2017 Humana attempted to merge with Aetna and Cigna attempted to merge with Elevance (then Anthem). Both of these deals were thwarted by anti-trust concerns.

The logic of this deal seems straightforward enough - scale is the name of the game in healthcare, and by combining Humana's Medicare Advantage lives with Cigna's lives in the commercial market, you have more of just that. The sale of Cigna's MA business makes sense in hindsight as a way to pre-empt any sort of FTC issues with the acquisition, which has obviously been an impediment to these deals in the past. I'm more curious to see the reverberations this deal may cause in the space, both within these organizations and more broadly. With Humana, you had a business that was seemingly executing quite well on a strategy to get back to the basics in MA over the last several years, and now potentially you're putting that organization in the spin cycle by merging it with Cigna. Presumably the insurance arms would be able to operate independently, but it will be interesting to see how the services assets would be integrated and cross-sold across various lines of business.

HTN Slack Convo (h/t Matt Poindexter)


As always, it is worth paying attention to events like this as they provide a really good lens into key themes across the healthcare landscape today - from Medicare Advantage benefits to physician enablement to home health to AI to the growth in commercial insurance and Surest's plan design. It is worth noting that Andrew Witty's opening remarks focused heavily on how the Medicare Advantage rate notice changes were an "adverse event" for UHG, but he flipped it as a positive for the organization, suggesting that UHG's capabilities have allowed it to respond to that headwind in a way that strengthens its offering. Witty also focused investor attention on two key themes across the business, one being value-based care, and the other being an empowered US healthcare consumer.

One thing that is particularly notable is how Optum continues to experience incredible growth both in terms of affiliated physicians and VBC lives under management. Amar Desai, the CEO of Optum Health, shared during the session that "Optum helps nearly 90,000 physicians and 40,000 advanced practice clinicians." This is up from 70,000 physicians that were employed by or affiliated with Optum at the end of 2022. And on the patient side, Optum cited that it has 4 million patients in fully accountable (i.e. capitated) relationships, a number it has more than doubled since 2021. It expects to be at 5 million patients by next year. For perspective, that means UHG will have 1.5% of the US population in fully accountable VBC contracts in the next year, and it employs / is affiliated with 8% of the providers in the US.


Sharing a visual or two from the week that made us think

A recent publication in the Journal of General Internal Medicine discusses primary care physician training program in for-profit VBC clinics. In particular, digging into the recent evolution of for-profit organizations - such as Oak Street, Aledade, and ChenMed - partnering with academic institutions to stand up independent PCP training programs.

Ali Khan's Reaction:

Ali Khan, MD, MPP is the Chief Medical Officer of Oak Street Health and co-author of the publication. He works at the intersection of medicine, entrepreneurship, translational health policy, population health and public service to help transform American health care delivery. Prior to Oak Street, he served in several senior executive roles across organizations such as CareMore Health, Iora Health, and more. He shares his reactions to the report’s findings:

Amid the many national conversations about the state of the current - and future - primary care workforce, a key variable remains lurking in the shadows. We focus on primary care reimbursement and payment models - but how often do we consider the sociocultural incentives that drive people away from primary care? Said differently - how often are we exposing the nation’s future doctors, nurse practitioners and PAs to primary care that doesn’t suck?

In the value-based care sector, many of us - whether at Oak Street, Iora, ChenMed or others - have come to the same conclusion: if we don’t show trainees primary care practice environments that are well-supported, sustainable, better compensated and - when we do it right - joyful, we’ll never succeed in shifting trends in primary care workforce supply. This article in the Journal of General Internal Medicine examines that body of work nationally - as it asks important questions about how to ensure that true education remains at the center of those efforts.

KFF released results of a survey of consumers' experience with insurance, focused on Medicaid. It's interesting to see that despite everything we've heard this year about the headaches associated with dis-enrollments, that ~82% of Medicaid enrollees rate their experience as "excellent" or "good" - above employer insurance and the exchanges. That said, the survey period closed on March 14th, so it'd be interesting to see if these results would look any different if done today as redeterminations have picked up.


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

Welsh Carson Anderson Stowe responded to FTC allegations that it has violated antitrust statutes via its investment in US Anesthesiology Partners. The tone of the response is pretty interesting to check out - it essentially argues that Welsh Carson is a "mere" investor that helped fund a local physician practice to grow their high quality care model, and the only constituent who has been potentially harmed is the big bad payor. It's worth reading through the response and the original case (link) together to see the different approaches each takes. The WCAS response seems well argued, but it doesn't really respond to the FTC arguments that the roll-up strategy employed by WCAS / USAP is costing Texans tens of millions of dollars a year.
Link / Slack

Clover announced it is exiting the ACO REACH program at the end of the 2023 performance year in order to accelerate its path to profitability. It's an understandable decision given Clover's extremely poor performance in the program. But at the same time, the ACO REACH program was essentially the entirety of Clover's non-MA business. That non-MA business has been Clover's core strategic focus as it has "pivoted" from an insurance company to a provider enablement platform. Given it has failed as an insurance company, and now seems to be failing as a provider enablement platform, what is next for this business? Go back to focusing on the MA book of business now that it is getting closer to profitability? So while the stock was up ~5% on the news, it's pretty hard for me to understand where Clover goes from here strategically.
Link / Slack (h/t Chase Jones)

Aledade and Anthem Blue Cross Blue Shield of Virginia announced an expanded partnership to serve Medicaid patients in Virginia.

Season Health, a food-as-medicine startup, has acquired strategic clinical assets from Wellory, a network of registered dieticians covering 25 specialties, in 15 languages, across all 50 states. In addition to expanding its clinical network, Season will also take on two national payor contracts with Aetna and Cigna.
Link / Slack (h/t Joe Sigrin)

Ayble Health, a digital GI platform, is partnering with Mayo Clinic to provide a hybrid care model for patients with gastrointestinal conditions.
Link / Slack (h/t Kate Wolin)

Vincere Health, a patient engagement platform, has been acquired by RVO Health, a joint venture between Optum and Red Ventures.
Link / Slack (h/t Brendan Keeler)

The Bob Woodruff Foundation announced $2.8 million in investments to 75 organizations that help veterans, service members, and their families live stable lives. The programs focus across a range of issues, including combating homelessness, promoting social connection, providing access to mental healthcare, and more.


A collection of notable startup financing rounds across the industry

PayGround, a healthcare payments platform, raised a $19.7 million oversubscribed Series A to accelerate expansion into hospitals and health systems and grow its senior leadership team.

Blisce, a tech-enabled infusion provider, secured $10 million Series A financing to expand its geographic footprint with 16 new centers across 4 new states. The startup will also leverage the fresh capital to expand its team and improve its referral platform.
Link / Slack (h/t Maria Thomas)

Salus, a Turkey-based mental health startup, raised $4.7 million in Seed funding to strengthen the company's clinical work, invest in technology, and scale B2B biz dev efforts.

Maia Oncology, a virtual oncology care coordination company, raised $4.25 million in Seed funding to advance its go-to-market strategy and accelerate hiring.
Link / Slack


A round-up of posts from the broader healthcare community this week that made us think

We're officially in predictions season - so get ready for a slue of write-ups opining on what's in store for 2024. This was a nice start, with ten predictions for the healthcare industry - from mega-mergers coming in trend again, to slower MA growth, to startups disappearing altogether. The note about mega mergers essentially predicting Cigna / Humana seems prescient.

The Clinical Innovation Mindset Stack by Paulius Mui, MD and Ben Dolson

As we quickly enter a seemingly new phase of health tech, one that requires us to take a step back, reset, and learn from mistakes of the past - this was an interesting framework presenting a reworking of the clinical innovation process.

The next stage of Star Ratings evolution: 2025 Proposed Rule and beyond by Hayley M. Rogers, Matthew Smith, and Mike Yurkovic

The Milliman crew is back with another solid white paper, this time digging into the evolution of Star Ratings with a look towards the future at the 2025 Proposed Rule and beyond.


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