Weekly Health Tech Reads | 12/5/21

UHG's Investor Day Highlights:

• Witty made some really bold comments about how, moving forward, UHG expects to shift from UHC as the consumer entry point toward Optum. UHG's historical approach has always been getting people in UHC insurance plans first and then selling through Optum products. In the future, Witty sees consumers meeting UHG via the Optum brand, whether thats through clinics, pharmacy assets, or the Optum Store. Once Optum builds relationships with those consumers, then they'll look to sell UHC plans. It makes sense that UHG wants to head this way, as it views the Optum target market as a way to get the organization in front of all 330 million people in the US, whereas UHC serves 45 million people today. CVS / Aetna actually seem a bit further ahead on this strategy, as it can use its retail presence to build those consumer relationships and subsequently introduce the insurance relationship. You have to wonder if UHG will go down a similar path in building out a retail presence as it pursues this strategy.

• As is the norm these days, analysts certainly seemed excited about OptumCare's growth story as it continues to shift from fee-for-service to value-based contracts across its 60,000 providers (half of whom are PCPs and half specialists) and 20,000 APNs. A lot of the analyst Q&A was around exactly how this transition is happening, with specific questions about the playbook and financial impact of how OptumCare is transitioning providers to value-based care. The responses to the analyst questions were disappointingly vague, even for basic questions like understanding OptumCare's MLR. OptumCare has a number of, albeit smaller, public competitors who are reporting these sorts of numbers so given how central this is to the growth story moving forward, you'd hope to see some additional data here in the future. 

• Optum Virtual is highlighted a number of times throughout the session, as Optum's new virtual care product has gone from having 0 lives at the beginning of 2021 to 14 million in the network next year. UHG uses it as an example of how quickly they can scale innovation when the time is right, and its a pretty compelling point. It's worth pondering if you're a virtual care provider - if UHG can just build and scale this asset on its own overnight - what asset are you really building here? My hunch is the asset lies in building out a quality provider network and set of services more so than the tech.

• At minute 18 of the video, Witty talks about needing the organization's tech platform to step up and provide a best-in-class consumer platform, acknowledging that the organization is not there today and that it needs to be. This lens potentially provides some helpful context for decisions like why Optum Store leveraged TruePill to power its backend infrastructure over Optum's variety of internal digital assets. It also seems like it provides a good lens for where we could see UHG pursuing acquisitions moving forward - targeting best-in-class technologies to develop consumer competencies. 

• At minute 51, there's a member story discussing UHG's Comprehensive Medication Management Program, one of their many offerings for high risk members. What caught my attention about this video, though, is that the intervention basically has nothing at all to do with medications at all really, but rather UHG providing a support resource, identifying that the member needed stable housing, and connecting him with a local group, the Ozanam Inn, to provide him with that housing. That opens the opportunity for them to ship him medications to his apartment, help him stay on those medications, and out of the hospital. It's a good example to think through what healthcare activities should happen at a national level versus at a local level, and what interventions are really driving cost savings. 

News:

• Best Buy hosted its quarterly earnings call. The earnings call highlights the sometimes awkward fit for new healthcare entities, as BBY's CEO goes from one paragraph talking about the acquisition of a patio furniture manufacturer to describing its overall health strategy in the next. And then after a few paragraphs on health, it's back to innovation in electronic sign labels. Squeezing healthcare industry disruption between patio furniture and sign labels raises some questions about focus. Nonetheless, the section on healthcare strategy provides some helpful color, articulating three separate focus areas for BBY: 1. consumer health, 2. active aging, and 3. virtual care. Of course, there certainly appears to be a lot of overlap across those three areas, so it will be interesting to see how distinct they keep the approaches moving forward. They also disclosed the purchase price of Current Health at $400 million, which is forming a key component of their virtual care strategy. Link.

• Minneapolis-based health system Allina Health & Humana signed a value based care deal in the Medicare Advantage space. The deal represents an interesting strategic shift for a health system like Allina that has spent the past few years in building up a JV with Aetna in the Medicare Advantage market. Rather than doubling down on moving patients to the JV, you're taking more of a payor agnostic approach. Link.

• A group of North Carolina anesthesiologists is claiming that BCBS NC is strong arming them into accepting lower rates and "abusing" the surprise billing ban. Provides for an interesting example of the political back and forth we're going to be hearing a lot more about as the No Surprises Act goes into affect. Link

• Meanwhile over in Nevada, a jury ruled in favor of emergency department staffing firm, TeamHealth, over UHG. The TeamHealth press release announcing the ruling provides a glimpse into how these two organizations feel about each other: "Nevada Jury Finds UnitedHealthcare and Affiliates Guilty of Oppression, Fraud and Malice in its Conduct against Frontline Healthcare Heroes". It's a pretty bold theory TeamHealth pushed in court, claiming in part that UHG used its claims data to persuade Yale researchers to publish research on how TeamHealth was surprise billing, and then UHG used that research to convince Congress to pass the No Surprises Act. I mean, I know UHG has a lot of market power, but sheesh. Link

• A new company called Fabric Health has launched in Philadelphia and it definitely wins the award for favorite  new company of the week. Fabric is apparently showing up at five local laundromats in Philly and supporting local families with a variety of community care needs, from helping people enroll in insurance, navigate applications for SNAP and TANF benefits, it has an on-site literacy corner for kids, and more. Everyone should be going and supporting more ideas like this please. Link.

• Athenahealth looks to be set for its second private equity sale in the last three years. Lots of discussion in the community on this one with Elliott Management selling it for $17B to Hellman Friedman and Bain Capital after it took the company private back in 2019 for $5.7B. Link.

• CVS and Microsoft announced a strategic alliance to work together on buzzword-y things. Link.

• Hims & Hers is partnering with Uber Eats to deliver goods to home. Link.

Funding:

• Sword Health, a virtual clinic in the MSK space, raised $189 million at a $2 billion valuation after seeing 12x client growth over the last year. I'm guessing Sword (and every other digital health startup raising at significant valuations) is projecting some significant revenue growth over the next 12-24 months in order to justify the valuation here - will be fun to watch how the MSK space evolves. Link.

• Patient engagement startup Luma Health raised $130 million. Luma appears unique versus some of the other patient engagement solutions on the market in its focus on selling to Federally Qualified Health Centers (FQHCs) (it also sells to hospitals, etc). It appears they've seen good uptake related to roll-outs of vaccine programs. Link.

• Iodine Software, maker of clinical documentation software received private equity investment valuing it at $1+ billion. Link.

• SafelyYou raised $30 million to put cameras in rooms at senior living facilities that record patients falls and help staff prevent fall-related ER trips with an "AI platform". The case study that SafelyYou published on how it has reduced ER visits from falls for a senior living community is worthwhile to check out if you're interested in this stuff - good outcomes that sound a lot like process improvement. I'm not sure where the AI platform comes into play though. Either way, fewer ER trips from falls is a good outcome for patients, albeit along with a side of some Orwellian privacy concerns. Link.

• Greater Good Health launched a new network of Nurse Practitioners this week, and it appears to have undisclosed funding from Optum Ventures. Link.

• Vinehealth, a London-based startup supporting cancer patients / collecting patient reported outcomes, raised $5.5 million in Seed funding. Link.

Opinions:

• We're officially into December which can only mean one thing - 2022 prediction season! Sachin Jain gets us started with a solid list of predictions that cover a wide range of trends in the space. Come for the list of buzzy healthcare topics - MA, Medicaid innovation, primary care, health equity and more - and stay for the well placed pop culture references - Ted Lasso and Squid Games. It is particularly interesting to see the point about digital health unicorns looking like tired horses - it seems as though the public markets beating that digital health companies have taken over the last few months is now seeping into the private markets. A Squid Games for digital health doesn't sound like very much fun. Link

• The Andreessen crew shared a piece on the B2C2B go-to-market strategy and scored major brownie points with me for putting a written transcript of their video in the article. The comments from Maven's CEO, Kate Ryder, are particularly helpful on the "how" of the B2C2B approach, from her comments on give-away marketing to consumer confusion around why their insurance wasn't paying for it (even if it was cheaper than a co-pay). It seems like there's a lot for us all to unpack in how the flip from B2C back to 2B happens over time successfully for companies, particularly as this strategy gains steam. Link.

• Culturally competent care feels like a phrase we're all going to be hearing significantly more of over the next few years, and this article highlights how Black entrepreneurs are launching companies aiming to address cultural gaps in care delivery. It highlights the work of a number of different startups including Clinify Health, Health in Her Hue, Hurdle, and MedHaul. Link.

• Christina Farr penned an overview of why digital health startups are all becoming virtual clinics, providing a helpful thought starter on a number of fronts. Link.

• This is a good look at opportunities within fertility landscape by Alyssa Jaffee of 7wire. It is great to see growing awareness and conversation around the the challenges of the fertility, as well as solutions that are being built supporting women through their fertility journeys. Link.

• An article in JAMA attempts to provide an overview of the virtual first primary care market, and in doing so I think actually highlights how little information is out there publicly about the virtual first primary care market. The article basically suggests virtual care models either supplement or replace PCPs, and highlights some of the potential concerns / risks in doing so. It feels like there's a lot more to unpack on this topic. Link.

Data:

• Humana released an updated report on its progress toward value-based care contracts in primary care. The chart below shows the current state of Humana's VBC contracts, with 20% of Humana members in global cap arrangements. This chart actually looks very similar to the numbers Humana shared in 2020 (check out the chart in this post), so it doesn't appear there has been much of a shift over the last two years. Link.

• The Institute for Medicaid Innovation released a survey of Medicaid health plans, providing data across a wide range of subjects - care coordination, SDoH, value-based care, etc. Link.

• This is an interesting study in JAMA looking at clinical outcomes in pregnancies around the age of 35. Turns out, if you're having a baby around 35, mortality rates are slightly better after turning 35. Link.

• The Rand Corporation surveyed 2,000 people, finding that most people want access to virtual care moving forward, but that slightly over half of patients (53%) prefer an in-person visit. Link.