Welcome to this week’s free weekly newsletter, where we share our perspectives on some of the key healthcare related news of the week.

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NEWS OF THE WEEK

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

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News
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​The Biden Administration proposes a new rule in mental healthcare​

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Summary: The Biden Administration announced a new proposed rule to help improve access to mental healthcare for 150 million Americans on private insurance, building on the Mental Health Parity and Addiction Equity Act from 2008.

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Our Reaction:

• This seems like a major effort in terms of addressing some the many challenges facing the mental health market. There was some really insightful back and forth in the HTN Slack conversation about the potential impact of this ruling as it goes through the public comment period. Lisa Bari per usual shared some helpful details on the regulatory process, noting the magnitude of the effort here given there are multiple rules being proposed across different agencies - i.e. across employers, Medicare, and Medicaid. There are many issues to pull apart here, including the thorny problem of commercial payors underpaying therapists. We imagine that this will be a heavily discussed topic over the coming months.

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Other Reads:

• For a good example of some of the issues that mental health providers have with insurers, check out this article highlighting how Empire Blue Cross is blocking providers from leaving its network. It provides for a good practical example of some of the issues at hand here. Link​

​HTN Slack Convo (h/t Owen Muir)
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News
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‍Teladoc's Q2 beats Wall Street expectations​

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Summary: Teladoc posted a solid quarter, upping revenue guidance for the year. Its stock was up ~27% on Wednesday on the news. The analyst Q&A included some interesting nuggets, in particular about GLP-1s. They also shared general sentiments from employers - 3 out of 4 expect to increase virtual care spending in the next three years, 50%+ are taking a "whole person" approach and integrating point solutions, and 50% are interested in health plans that leverage virtual care. 80% think that virtual care will help employers manage access to high cost medications, including GLP-1s. Teladoc noted that one 5,000 life employer client saw a $100,000 increase in GLP-1 costs in a single month, while numerous other employers are seeing a 4x annual increase in cost.

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Our Reaction:

• Teladoc's commentary around GLP-1s highlights how top of mind this is for employers at the moment. A 5,000 employer seeing a $100,000 increase in costs associated with GLP-1s in a month seems massive. Perhaps it's not surprising then that the tone of Teladoc's pitch here is that its weight loss offering is actually about reducing use of GLP-1s to save the employer money. For as much as we all critique payors about their use of prior auths to deny care for patients (Cigna has been front and center again here this week), is this really any different?

• It was interesting to see the analyst back and forth about the positive trend of increasing BetterHelp's gross margin - which Teladoc attributed to "a number of initiatives to improve therapist productivity, ranging from group sessions, group therapy sessions, to more digital interactions. And all of that is resulting certainly in the trends that we are seeing in our gross margin improvement for BetterHelp. I would say that's really the key driver of the gross margin expansion that we are seeing overall therapist productivity improvements." All of that makes sense, it just seems like it begs the question about how BetterHelp therapists feel about these changes being foisted on the care model in the name of better gross margins.
• As per usual with these sorts of calls, it's as interesting to observe what wasn't discussed as it is to look at what was discussed. Specifically, Primary360 seems to have fallen to the background. Look back to Q1 earnings, when Primary 360 was mentioned in intro remarks as a key initiative for virtual care. This quarter it was hardly mentioned at all. If you're a virtual primary care startup selling to employers, this seems worrying - I'd be paying attention to this over the coming quarters to see if it's a sign the market is moving on from virtual primary care.
• It won't be surprising at all to see Teladoc execute on some tuck-in acquisitions over the coming months as they seek to expand clinical offerings to employers. Gorevic noted in the Q&A that valuations are starting to correct, and that seems like a sure sign we'll see them pull the trigger on integrating some virtual care point solutions.

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CHART(S) OF THE WEEK

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

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​Michael Greeley's blog post about digital health investing trends in Q3 featured this "hype cycle" chart from Gartner looking at where health insurance innovation is on the hype cycle this month. It's interesting to see the common theme among categories at the "peak inflated expectations" - basically all of them are about using AI / automation to make back office processes more efficient.

​Join the Slack Convo​

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This map from a recent publication in the Journal of Internet Medical Research provides a nice overview of the many factors affecting the adoption of digital therapeutics. Looking across this map, it's clear there is no shortage of barriers to uptake in the DTx market. As discussed in Slack, one of the bigger ones that has always stuck out to us is the lack of payor reimbursement to help drive adoption. While we have seen the combination of these barriers put even the leading pioneers of the tech (Pear Therapeutics' recent bankruptcy) to the test, we are hopeful of folks working to bring down these barriers (e.g. Digital Therapeutics Alliance) and operators building solutions across the market.

​Join the Slack Convo (h/t Ryan Stellar)

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Nabla published an overview of the AI scribe landscape, comparing itself to its closest competitors. Not surprisingly, Nabla comes out looking good. Nonetheless, the report does a nice job articulating various considerations and provides insight into each model. The pricing grid is particularly interesting - when you have some companies charging 10x what others are for a seemingly similar service, it seems like a sure sign of a very nascent market.

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OTHER NEWS

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

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Amazon stepped into the generative AI healthcare ring, announcing a suite of AI services for clinicians including business analytics and chatbot assistants.
​Link / Slack (h/t Mike Wadhera)

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Milliman shared a perspective on the impacts of the 2024 Medicare Physician Fee Schedule. It's a very nerdy (aka helpful) take on changes to risk scores, financial benchmarks, and the assignment methodology.
​Link / Slack (h/t Deana Bell)

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Paul Keckley released a new report looking at the four issues that will impact healthcare services and providers the most over the next 12 months. Top items include 1) private equity maturity wall 2) DOJ and FTC push on consolidation 3) defamatory attack on nonprofit health systems 4) 2024 campaign healthcare agendas.
​Link / Slack​

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A group of PCPs in New Mexico have banded together to form a FQHC Look-Alike clinic after the rural hospital they worked at closed. A cool example of meaningful "innovation" in healthcare delivery even if it's not getting VC funding anytime soon.
​Link / Slack​

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Digital mental health company, Headspace, raised $105 million in debt financing to expand its mental health offering and target potential M&A deals.
​Link / Slack

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AI-based diagnostics platform, RapidAI, secured $75 million in Series C funding.
​Link

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Rwanda-based Women's health startup Kasha raised $21 million to build out its last-mile pharmaceutical and consumer health distribution platform in East Africa.
​Link / Slack

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Cancer monitoring platform, Entia, raised a $20 million Series A round.
​Link

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Hippocratic AI, a generative AI startup, raised an additional $15 million and announces a handful of partners, including Cincinnati Children's Hospital, Universal Health Services, HonorHealth, Vital Software, ELNA, Sondermind and Capsule. This comes on the heels of its $50 million seed round announced less than two months ago.
​Link / Slack

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BrainTale raised $4.9 million to advance its digital biomarker platform focused on neurodegenerative diseases, such as Alzheimer's, Parkinson's, and more.
​Link / Slack

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Home-based testing platform, Sanguina, raised $2.8 million in Series A financing.
​Link