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Weekly Health Tech Reads
UHC & BCBS NC contest an RFP, McKinsey profit pools, Aledade becomes a PBC, & more
Amanda DiTrolio & Kevin O'Leary
January 22, 2023
This newsletter is sponsored by Nabla
Nabla supplies digital clinics with an “AI assistant” for their healthcare professionals - so they can spend more time serving patients and less time doing admin. Nabla does this by building messaging and video consultation modules augmented with AI capabilities that automate tasks like consultation notes taking, patient record updates and asynchronous follow-up. It’s used by clinics all over the world and, on average, cuts the time spent by physicians on clinical documentation by 50%.
News:
The North Carolina State Employee Health Plan RFP result is being contested by BCBS NC and UHC
BCBS NC and UHC both disagree with the RFP process and result, arguing that Aetna should not have won the bid. It’s worth checking out each protest letter if you’re looking to learn about the mechanics of a big RFP like this. It’s indicative of the morass we’re all collectively in together, as you have large organizations arguing over whether or not yes / no questions should be allowed on an RFP because they don’t allow for enough context in the answer (yes, that is one of BCBS NC’s main complaints here). UHC’s letter shares a ton of detail on network pricing in its protest letter, which prompted some really interesting Slack commentary about how much UHC (and presumably other insurers) already know about each others rates and presumably use in network contract negotiations with health systems.
Aledade is shifting legal structure to a Public Benefit Corp
Aledade shared this week that the company moved to a PBC legal structure in order to ensure that its Board will be required to consider what’s best for Aledade’s public benefit purpose as it makes key business decisions. Theoretically, this opens the door for the Board to make a decision that isn’t aligned to shareholder financial interests. Kudos to them for having this conversation and attempting to tangibly demonstrate their commitment to doing societal good. We’d imagine that we’ll see more health tech companies will make this move as a way to signal to the market that they take patient interests seriously. It seems like one of the few tangible actions an organization can actually take as more questions inevitably get asked about whether for-profit investment in healthcare is a good thing.
Of course, the rubber will really meet the road for Boards when shareholder interests are in conflict with the public benefit purpose. We’re skeptical PBCs will actually result in consistently different Board decisions in those scenarios as a general trend - it seems like the decision will still come down to the individual leaders involved and how they consider the tradeoff between financial returns and public benefit.
Intermountain and Story Health partner to deliver care for heart failure patients
Continuing the theme from last week, we see another announcement combining virtual and in-person care capabilities. Interesting to compare this to the Omada partnership - in that deal, Intermountain was integrating Omada with Castell, its VBC entity. This deal appears to be directly with Intermountain’s cardiovascular group, which presumably means this partnership is more based in FFS versus VBC. Assuming Intermountain continues with these sorts of partnerships, it’ll be interesting to see if an overarching strategy emerges for the organization or if we continue to see various departments form one-off partnerships with digital health vendors.
Dollar General experimenting with mobile clinics in store parking lots
Three Dollar General locations in Tennessee will have access to primary care and urgent care services via a partnership with DocGo On-Demand. The clinic will operate under Dollar General’s brand DG Wellbeing, and it appears from the hours of operation on the site that it’s really just one van driving around to three locations a couple days a week each. I suppose this represents a toe in the water for Dollar General, but I’m not particularly optimistic for its long term entry into healthcare if its testing a single mobile clinic.
Transcarent partners with Cleveland Clinic for second opinion services
Seems like a smart move on Transcarent’s part as it adds a solid brand name to its offering to pitch to employers. For Cleveland Clinic, it seems like a no brainer to continue signing up deals like this as it looks to drive volume to its telehealth business, The Clinic (which is a JV between the Cleveland Clinic and Amwell).
Posterity Health, a “center of excellence” for male fertility, raised $7.5 million
knownwell, a primary care clinic focused on obesity treatment, raised $4.5 million
Opinions
Hospital OB units are getting cut as financial pressures mount
The article does a nice job highlighting the harsh reality that hospital administrators are closing obstetrics units, particularly in rural areas. It shouldn’t come as a surprise that this has a negative impact on health outcomes and increases disparities in care.
A nice rundown of key regulatory changes in 2023
Marissa Moore and Brendan Keeler did a deep dive on a number of key regulatory topics for 2023 - price transparency, interoperability, privacy, PHE impacts, and more.
Why employer healthcare costs keep rising
Jan-Felix Schneider published the third part of his series on employer health costs, diving into all the complexities of why employer health costs keep rising.
Data
McKinsey looks at profit pools in healthcare in 2023
McKinsey’s latest report on how profit pools in healthcare are changing is worth checking out, even though it takes me as much time figuring out how to interpret these dang charts as it does to read the article. McKinsey sees payor profit pools increasing across the board (see chart below), with high growth rates in commercial, individual, and Medicare markets. The provider profit pool will be growing much more slowly - although it still suggests most provider profit pools will be growing, including hospitals. Virtual healthcare remains a tiny sliver of this chart, although at $4 billion of EBITDA in 2026 is still a sizable market. It’s also worth noting McKinsey’s analysis of how providers will recover EBITDA margin in the face of cost inflation - in part they will optimize costs, but in any scenario rate increases are the biggest levers to recover EBITDA margin. Another sign that upcoming payor / provider rate negotiations are going to be tense.
Clarify Health data suggests if you’re in need of a hip or knee replacement, go to a surgeon who does a lot of those procedures
Makes intuitive sense, right? But interesting nonetheless to see the data show that providers who do more of these procedures generally both have better outcomes and cost less.
KFF data suggests telehealth use isn’t impacting employer costs
Using HCCI data, KFF shows that telehealth visits cost just as much as in-person visits among privately insured individuals in 2020, and that only 6% of employers who offer telehealth are seeing their healthcare costs decrease as a result. That doesn’t mean it’s a bad thing, of course, as telehealth has other benefits like expanded access. But it does seem like an issue for organizations that were sold on the potential cost savings associated with virtual care.
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