Weekly Health Tech Reads | 12/15/24

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HEALTH INSURANCE

The Tradeoffs podcast discusses the role of health insurance in the broader healthcare ecosystem

This Tradeoffs podcast episode featuring a discussion between Dan Gorenstein and Aaron Carroll was by far the most insightful thing I saw this week on the topic of health insurance. I’d encourage everyone here to spend time either listening to / reading it and contemplating the conversation.

From my perspective, the podcast did a great job of wading into the nuance of the conversation about health insurers that is so often missing in today's public dialogue. While it seems easy to point the finger at for-profit health insurance as the bad actor in the system, the reality of the situation is not so black-and-white. It’s a much more complicated discussion, full of grey spaces that it seems most people want to overlook in the public sphere today.

Take, for instance, the public discussion of the Anthem Blue Cross Blue Shield anesthesia policy decision last week, which the podcast covered well. I’m sure you’ve already seen that Anthem was ridiculed for the move across the internet, held up as an example of the worst type of greedy health insurance maneuvers in the public conversation.

But as I dug into the topic, I learned that Anthem was attempting to implement the same policy that Medicare already has in place to pay for anesthesia. So all of the consternation over this decision and its impact on patient safety is weird to me — it is the same policy that Medicare already has in place! Why are congresspeople jumping on the bandwagon with ill-informed sound bites that seem designed to incite people? What good does that do us collectively? I suppose its just the nature of social media today. And on top of that, if someone is both worried about patient safety in a case like this and simultaneously suggesting that we move toward a single-payer system, do they recognize that is a contradiction in terms? Again, Medicare already pays for anesthesia in this manner! All the responses cheering Anthem’s reversal of the decision in the name of protecting patients seem to misunderstand or gloss over the basic facts of the situation to make it conveniently fit into a narrative blaming the failures of the system on for-profit insurers. There is so much more grey to the conversation about the role of various actors in the anesthesiology market and the challenges it faces.

We have a massive challenge that lies in front of us in healthcare, which I’d frame in an overly simplistic way as this: collectively, we all want to put $1 into a pot for healthcare, and then somehow expect that pot of money to be able to pay out $2. That is obviously not possible, and payers have had the task of being the “bad guy” who denies care to keep costs in check. Granted, payors clearly have room for improvement in terms of how they operate and the administrative burden they impose while being the bad guy. But the issue is so much broader than that — we are going to need to have some hard conversations about the real tradeoffs needed to make the equation sustainable.

I’m not sure how we move this conversation about fixing the broken healthcare system forward in a productive manner given the current state of public discourse. I received an email reply last week from a reader who works in this industry telling me that denying care is tantamount to murder. This is a sentiment that seems to be shared by many people in the public. I’m really at a loss as to how to even start a productive conversation when that is the opening salvo. How is it that we can hardly even discuss basic facts about topics like prior authorizations and the role of a health insurance company without people becoming so enraged that there is no opportunity for conversation?

For example, a report from ValuePenguin has circled the internet like wildfire, suggesting that UHC denies 32% of all claims. You’ve probably seen the chart — it has been a key talking point against UHC. Meanwhile, UHC issued a press release on Friday stating that it approves 90% of claims when it receives them and that only 0.5% of claims that are delayed (not even denied) are related to medical issues. Those are pretty different framings. This seems like a matter of fact that we should be able to get to the bottom of, right? Even if the answer is grey and uncomfortable. And yet, it doesn’t seem like anyone cares to understand what is actually happening — a 32% denial rate is a convenient stat to use if you’re making a case against UHC.

I’m not sure where we collectively go from here. I find myself questioning so many things about our current environment and whether we can actually have a real public conversation about these hard topics over the internet or if these conversations need to happen offline in trusted environments. We seem to be losing our collective ability to understand what is actually real in the online world. It is being replaced by algorithms that feed us opinions disguised as facts that become the basis for a reality that we choose to construct for ourselves.

The last ten days have been really scary to me in so many different ways as I’ve watched this misinformed, misdirected discourse unfold. The one thing that gives me some glimmer of optimism during these dark days actually comes from something Carroll said during the podcast:

I so deeply agree with that sentiment. We all work in this industry because we want to make it better. I believe this to be true whether you work for health systems, pharma, digital health startups, VC, PE, health insurance, or whatever. This is why the backlash against insurers, particularly from others who work in the healthcare industry, has been so hard to watch. It seems people forget that we’re all in this mess together. I hope we can figure out how to move out of this phase of pointing fingers and tearing each other down. We’ve got a lot of work to do together to figure out how to fix this broken system.

I’m so grateful to Dan Gorenstein and Aaron Carroll for their willingness to have this conversation publicly in these times. If you’re similarly a fan of folks wading into hard conversations like this, I’d encourage you to donate to Tradeoffs here.

Read / listen to the Tradeoffs podcast

HEALTH INSURANCE

Centene hosted its 2024 Investor Day virtually, is very bullish on the long-term ICHRA opportunity

I’m going to be honest — I had a really hard time listening to anything said in this investor day this week, not because of anything the Centene folks said or didn’t say, but rather because this was the first investor day following everything that happened last week. I have a hard time processing that. I hope I can get to a place in the coming weeks where I can listen to it more fully because I’m sure it’s full of great detail about the state of the business and how a team of good people are trying to drive a flawed insurance business to a better future state.

From what I can gather based on skimming the slides, Centene told a narrative centered around executing on its core business in the exchanges, Medicare, and Medicaid, with key growth opportunities in Duals and ICHRA. Centene’s CEO Sarah London described the ICHRA opportunity as “the health benefits version of moving from a pension to a 401(k)”. Centene indicated it has ~6,600 ICHRA members today, out of a market of 300,000 individuals today. It also sounds like Centene is not only seeing interest from small groups but large groups as well — Centene shared it has seen at least one Fortune 25 company interested in an ICHRA product. This is going to be a fascinating market to watch evolve.

It also appears that there was a lengthy discussion of anticipated policy changes under the new administration, including the impact of enhanced subsidies in the exchanges. Centene anticipates modifications to the subsidies, but also expects some version of the subsidies to remain.

View the Investor Presentation Slides
Watch the Investor Presentation Webcast

RETAIL

Walgreens mulls take-private offer from PE firm

The WSJ and others reported that PE firm Sycamore Partners is in discussions to acquire Walgreens. Walgreens’ market cap reached $100 million in 2015 and was around $7.5 billion earlier this week before the news. After news of the acquisition discussions, Walgreens stock jumped ~18% to $9 billion. Walgreens has also reached out to other parties about a potential acquisition but is now in exclusive talks with Sycamore. It sounds like a transaction is expected to be done early next year.

Walgreens previously attempted to go private back in 2019 at a $55 billion valuation. That deal didn’t materialize because of concerns over Walgreens’ business prospects and the ability to finance the deal.

It’s pretty remarkable to think that VillageMD purchased Summit Medical for $8.9 billion back in 2022, while Walgreens was only worth $7.5 billion earlier this week. Another reminder of just how much the world has changed in the last few years.

Read the WSJ report

PRIMARY CARE

Bain publishes an updated view of primary care in 2030

This report by folks at Bain suggests that 30% of primary care could be delivered via “non-traditional” providers by 2030, the majority of which would come from payors. I’d be curious to see how this report would now change, considering the public furor toward insurers over the last ten days.

Read the Bain Report

Director of Account Management at Third Way Health, an end-to-end front office platform for payers, providers, MSOs, and more. Learn more.
On-site (LA, Boston, or NYC)

Director, Complex Care Strategy Advancement at CenterWell Senior Primary Care, a primary care provider for Medicare patients. Learn more.
$136k — $187k | Remote

VP, Marketplace at Healthie, an API-first EHR, scheduling, and engagement platform for virtual-first care delivery orgs. Learn more.
$190k — $220k | On-site (NYC)

Managing Director, Value Based Care Operations at Evolent, a specialty care management solution for payers. Learn more.
Remote

Sr. Director, Community Health at Ascension, a national nonprofit health system. Learn more.
Remote

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