HTN Weekly Health Tech Reads 12/12

CVS & Bright Health's investor days, City of Hope acquired CTCA, and more!

Wheel, a company that pairs virtual care technology with a clinical workforce, published a good blog post explaining the impact of demand fluctuation for virtual care services. It highlights the benefits of outsourcing clinician staffing to help deal with peaks and valleys in patient demand, particularly given the complexity of state-by-state licensing requirements. Of course, there are tradeoffs to evaluate when thinking about a fixed versus variable staffing model (e.g. branding, continuity of care, etc). But when your provider staffing needs mirror the chart below, the need for a partner who can scale scale appropriately and meet demand seems pretty clear.  
Check out the blog post here.

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CVS & Bright Health Investor Days:

CVS hosted its investor day, and the slide materials included cover a lot of ground. As reported in a number of places, CVS made clear it is jumping both feet into the care delivery + health insurance business. It continues to feel like a really impressive transformation for the organization - for the past two years UHG has seemed peerless in its breadth of healthcare offerings, and all of a sudden CVS has joined the conversation in a meaningful way. Below are a few other reactions from the Investor Day. Link (press release) Link (materials site).

  • The press release highlights the rapid shift in the business, as CVS outlines six key strategic pillars - one of which is related to the foundational business. Two are related to health care delivery (advance primary care capabilities, optimize retail portfolio for community health centers) and two are health services (all payer products and omni-channel health services) in addition to a digital-first, consumer centric approach.
  • This slide below in the Health Services presentation articulates how CVS intends to build its health solutions business and is worth pausing on.

  • It's notable how each of these five pillars are focused on primary care. Contrast this with UHG's presentation last week where they repeatedly hit on the point that they're not just primary care. You have to wonder if that's an inevitable evolution of CVS's strategy as they make progress in the space and seek to manage medical spend. It's also worth watching what CVS does in the MSO / primary care clinic acquisition arena. It seems that one of their biggest challenges with this strategy is how quickly they can grow their base of employed primary care providers, and the MSO / acquisition strategy certainly is a way to grow your PCPs staffing clinics faster. CVS mentions in the slides that they're going to report on metrics around provider NPS and physician retention rates, which will be fascinating to watch over time - I'd be curious to know the perceptions of independent docs of working for CVS. I'd imagine we'll see CVS make a splash with a care delivery acquisition at some point here - you can imagine any number of the big primary care startups making a lot of sense in this portfolio.
  • CVS cites in a number of places that when a member has both CVS medical and pharmacy insurance, that member costs 3% - 6% less, based on data in Aetna's self-funded commercial business. Seems like a much more realistic cost savings number than the 20%+ numbers you see companies talking about regularly. CVS also cites the engagement benefits of pharmacy - with the average patient interacting with pharmacy 3x per month. That level of engagement creates a huge opportunity in managing medical spend, but also a huge shift from the transactional nature of the pharmacy desk today on both expectations of Rx purchasers and hiring and operational practices of the pharmacists. It'll be interesting to see how CVS introduces the PCP into those relationships over time.

Bright Health also hosted its Investor Day this week, with the big news of the day being that Bright is receiving a $750 million capital infusion, $550 million from Cigna's Evernorth division and $200 million from NEA. This gives Bright more cash on hand heading into 2022, as it expects to lose another $400 million to $500 million in Adj. EBITDA in 2022. Bright expects to go from that loss to Adj. EBITDA breakeven in 2024. It's going to be an eventful couple  of years for Bright as they try to get to breakeven while balancing  that with the need for growth to support the platform. Some other thoughts on the investor day below. Link (slides).

  • This slide below highlights the benefits Bright sees in being both health insurer and care delivery provider. It's helpful in showing the flows between the businesses. The insurer, while it captures the premium dollar, has a capped profit margin and lower long term EBITDA margin target. The care delivery side of the business captures the medical expense on the insurance side as revenue, and doesn't have the same cap on profit margin, leading to a higher long term EBITDA margin. It's a smart business play, assuming you can execute well on all of it.
  • Bright sees significant growth coming from the Neue business, as demonstrated by the chart below. Next year it expects to do $2 billion of revenue (before intracompany eliminations), up from $475 million this year, per the chart below. If I'm doing the math right on this chart, it looks like Neue's revenue per Bright HealthCare member is expected to increase from $2,692 per member in 2021 ($350m / 130k) to $4,552 per member in 2022 ($1.3b / 290k). Meanwhile it's expecting external payers to increase from $3,125 to $6,000 over the same period. Would be curious to know what is driving that close to doubling of revenue per member.
  • Bright repeatedly cites a 22% reduction in relative Medical Cost Ratio for its fully attributed Bright HealthCare members in Florida versus other members in Florida. Of course, showing this number on a relative basis invites the question of what the numerators and denominators are on those comparisons, and how much of that reduction in MCR is due to increased premiums (via risk adjustment) versus decreased spending (via medical management).
  • The narrative arc related to Bright's tech platform is a bit all over the place in the slide deck. DocSquad is discussed the most in the slides, but they talk about BiOS and Panorama as well, and seemingly refer to DocSquad and BiOS interchangeably at times. The discussion of the tech platform in the Bright HealthCare and Neue Health sections seem both inconsistent and forced when it does appear, and doesn't give confidence that it is one of Bright's core competencies. Slide 42 highlights what seems to be the strategy of DocSquad - get members to sign up for a digital rewards program (31% of IFP members are in the program), and use that to attribute members to PCPs / encourage them to submit an HRA (97% of members who are in the rewards program do that). Use that HRA to identify high risk members (they identified 15,000). It seems telling that those are the first three metrics cited for DocSquad - with the fourth being an NPS-esqe (oddly its not NPS) metric that 95% of surveyed customers find the Member Hub easy to use
  • Bright's path to Adj. EBITDA breakeven in 2024 relies on both growth and cost management. Bright is going to focus on scaling membership in existing states and gaining more contribution from Neue. Bright also expects its operating cost ratio to decline - moving from 34% in 2020 to ~15% by 2024. This will be driven by moving to one operating platform and insourcing certain items. Will be interesting to watch how they balance continued investments in product with that cost reduction target.
  • On the Cigna front, Bright says a few times that they see strategic opportunities with Cigna's Evernorth division and NeueHealth clinical assets beyond just the capital investment. An analyst asked a question about the relationship in the Q&A and the strategic side of the relationship didn't sound all that far along yet. Beyond the pharmacy benefits around Evernorth, you would think Cigna sees an opportunity to increase its MA and individual presence at a relatively cheap price given Bright’s post-IPO performance, while Bright potentially gains access to data, network relationships, and potential growth in the employer market.


  • City of Hope is purchasing Cancer Treatment Centers of America for $390 million to create a inpatient and outpatient oncology network that treats 115,000 patients a year. City of Hope will turn CTCA into a not-for-profit after the merger. Interesting to see the context here that CTCA has been entertaining a private equity buyout, but ultimately chose to go with City of Hope and flip into a not-for-profit model. Sure, City of Hope is more strategically aligned, but you'd think CTCA would only do that deal if the City of Hope purchase price is close to the private equity buyout. Link.
  • The American Medical Association and American Hospital Association are suing HHS over its implementation of the surprise billing ban. The motion itself is an interesting read - as it centers around using a Qualifying Payment Amount (QPA) as the appropriate payment rate for arbiters to base decisions on. The lobbies suggest doing so will cause irreparable harm to on out-of-network docs in particular, highlighting a quote from HHS Secretary Becerra about providers needing to tighten their belts as proof that providers will be underpaid by payors. And of course the provider lobbies play the ultimate trump card of patient harm because they'll have to shut down facilities. Despite my general skepticism about the rates providers are charging, it seems like the hospital lobbies have a good argument around the use of the QPA factor based on the motion. What a mess we've all made for ourselves. Link.
  • In the mental health space, Quartet acquired InnovaTel, a tele-psychiatry provider targeting serious mental illness. InnovaTel has 130 clinicians on staff and help Quartet expand to 30 states. Link.
  • Grail and Alignment Health plan partner to offer Grail's cancer blood test to Alignment members as a complement to cancer screenings. This is a cool example of the additional benefits members can see within Medicare Advantage plans. Link.
  • Included Health (formerly Grand Rounds + Dr on Demand) is rumored to be gearing up for an early 2022 IPO. Link
  • Virtue, a new seed fund in the digital health space, closed its initial $31 million fund this week. Link.


  • Mental health startup Cerebral raised $300 million. It certainly seems like a sign of the times when a mental health startup has raised $400+ million within two years of launching. The Slack channel had lots of opinions on the Cerebral funding, highlighting the complexity of D2C virtual care models - is generally doing good by expanding access to care or doing harm by scaling too quickly? Regardless of where you net out in Cerebral in particular, this seems to be a conversation we're going to be having about many companies over the next few years. Link.
  • Nomi raised $110 million in Series A funding after launching its mobile care service in 2019. It appears Nomi has seen significant early traction in COVID testing, as Nomi is currently serving 30,000 people a day across ten states. Link.
  • ConnectRN, an interesting combo of a community of nurses seemingly leveraging staffing as its business model, raised $76 million. Link.
  • Reveleer, a data analytics platform that helps payers with risk adjustment and quality improvement, raised $65 million. Link.
  • Suki raised $55 million for its voice-enabled clinical assistant. They cite it as being used in dozens of specialties across 90 health systems and clinics nationwide. Would be interesting to hear how many physicians are using it across those 90 sites - hundreds? thousands? Link.
  • Robin, which supports clinical documentation via an Alexa-ish device, raised $50 million. Link.
  • Proov, an at-home fertility testing startup, raised $9.7 million. Link.
  • Pair Team, a tech platform for primary care practices focused on Medicaid populations, raised $7.3 million. Link.
  • Lyn Health, a new care delivery model for polychronic patients, launched with an undisclosed amount of funding. Link.


  • Forbes highlighted recent remarks by Roz Brewer, the CEO of Walgreens, regarding Walgreens health strategy. She made the comment that they anticipate 45% of their 9,000+ stores having primary care clinics, mentioning eight exam rooms and two physicians at each clinic. It's worth thinking about what the primary care landscape looks like if this future materializes for retailers - if Walgreens is employing 2 PCPs at 5,000 sites, that's roughly 5% of the PCP workforce in this country (at roughly 200k PCPs). We'd have a future where Walgreens, CVS, Optum, and others make up a pretty sizable chunk of primary care delivery in this country. Seems like a pretty dramatic sea change if that materializes. Link.
  • Interesting read from Crossover's CEO Scott Shreeve highlighting the plight of point solutions selling to employers these days. It's a quick, light read, and the chart below highlights the confusing array of different vendors all pitching employers at the moment. Link.
  • Here's an update on Hydrogen Health, the Anthem & Blackstone JV that's scaling K Health's AI chatbot and connecting members with virtual / in person care as needed. They're claiming 20% savings, which Anthem is testing on fully-insured populations to measure ROI. The article mentions that Anthem so far is seeing a reduction in urgent care + ED utilization and higher satisfaction than traditional plans, which is all well and good but stops short of that savings metric. Link
  • Another week in December means another prediction piece, this time from Bob Kocher and Bryan Roberts. A couple of their predictions are particularly interesting - the most interesting of which is the predicted changes to Medicare risk adjustment. The rumblings are loud there. Also worth noting they expect an even more active year of IPOs in 2022 and that they'll be better performing (not that that is necessarily a high bar for a number of 2021 IPOs). Link.
  • This is a good look at a rural Georgia town and the implications of a hospital closing. It shows you that the threats from the AHA and others about rural hospital closures are real, and they have profoundly negative consequences for patients in those communities. It's literally life or death for people in the communities, as the stories illustrate. Link.
  • A nurse shared data from a Scripps hospital operating room showing that Scripps' marks up costs for items by 575% to 675%. Reading this, combined with the rural hospital closure article and the AHA lawsuit above, makes my head spin. Link.


  • This JAMA paper looks at whether Medicare Advantage saves money, leveraging an Aetna data set to look at Aetna's commercial patients as they transition into MA versus traditional Medicare. It finds that in the first year after transition, MA patients are less expensive, primarily due to inpatient costs. The sizable increase in inpatient for the traditional Medicare population is curious. Link.
  • ASPE released data on Medicare fee-for-service telehealth visits in 2020, which by my math grew by roughly 6,000% over 2019 - increasing from 840,000 visits to nearly 52.7 million! There are some really good charts in here, including this one below - check out that rise in behavioral health  Link.
  • Wisconsin saw hospital lawsuits against patients rise by 37% between 2001 and 2018, particularly impacting Black and rural populations. Link.
  • Deloitte released a report summarizing health tech deal activity - as you'd expect, there's lots! Link.

Featured Jobs:

  • Anthem, the health insurance provider, is hiring a Provider Solutions Initiatives Director. Link.
  • Crossover Health, a hybrid virtual and in-person primary care model for employers, is hiring a Manager of Payer Strategy. Link.
  • Flume Health, a digital TPA for self-insured employers, is hiring a Senior Product Manager. Link.
  • Optum, the health care services arm of UHG, is hiring a Senior Product Manager for its direct to consumer platform, Optum Store. Link.

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