Weekly Health Tech Reads | 4/19/20

News:

• UHG posted their Q1 results and didn’t see much of a financial impact from COVID-19 yet. Most notably, they’re keeping earnings expectations the same for 2020 at the moment. It will be worth watching whether that changes moving forward, given you’d expect UHC to fare well from provider financial challenges, while Optum as the biggest provider in the country these days could face its own financial headwinds. Here are a few interesting comments / takeaways from the call below. I’ve linked to the earnings call transcript here in case you want to peruse. Link.

  • There was a good amount of discussion about how OptumHealth’s revenue mix (two thirds risk based; one third fee for service) is helping Optum to navigate the financial challenges facing many care delivery organizations. Wichmann also made some interesting comments about UHG expecting a long term impact of COVID-19 to be that more providers will be interested in aligning with Optum given the organization’s financial stability.

  • Guess who’s back… in the exchanges?! UHC shared briefly that they’re evaluating / planning on getting back in the individual exchanges in 2021. It was a pretty cryptic mention in response to an analyst question, but they did share that they’ll have a better view of their participation by the Q2 earnings call. It will be quite interesting to watch their approach here, as well as what other insurers do in response. The timing of this is of course fascinating given the uncertainty in the market and the challenges they had pricing their product in the last go around.

• Johnson & Johnson posted Q1 earnings as well, which featured an interesting mix of COVID-19 impacts given their international presence, direct to consumer business, and medical device business. Their direct to consumer products did well in Q1 - it seems at least partly due to hoarding associated with COVID-19. Slide 36 in the attached document was the most interesting part of the earnings presentation for me, providing a perspective on the timeline to rebound from COVID-19. JNJ thinks that in the US deferrable procedures (which they estimate at two thirds of all procedures) will drop by 65% - 85% in Q2; improving slightly in Q3 but still a drop of 20% - 65%, with a rebound coming in Q4 of up to 15%. It’s shaping up to be a long summer / fall for health systems. Link.

• Teladoc came out this week and revised their Q1 financial targets upwards as they’re now seeing upwards of 20,000 visits per day. Seems like they’re going to have a very good year financially - although I am curious if all this attention on the space is a net positive for them in the long run (because of growing demand) or not (because of increased competition). Link.

  • For a little reminder how much the world has changed in the last month, check out Teladoc’s slide from their investor analyst day on March 5th. Feels like a lifetime ago at this point. It’s a worthwhile deck to check out in any event, interesting to see no mention of the coming pandemic just a month and a half ago. Link.

• Altais, a company recently formed by Blue Shield California to help providers with capital and back office infrastructure to help them operate independently, acquired a medical group in San Francisco with 2,700 providers serving 350,000 patients. It sure seems like we’re going to see a lot more activity like this coming out of COVID-19, as providers facing financial challenges seek shelter from the storm. Will be super interesting to watch how the provider community views the attractiveness of their various options - do you get acquired by an insurer (Wichmann’s comments in the earnings call sure seem to hint that UHG will be active in this space), a private equity group, or a health system? All seem to have their own various pros and cons. Link.

• Indie.vc, a venture fund with a twist on the mechanism by which they finance companies, announced its latest round of investments and featured a handful of healthcare investments. I’m particularly intrigued by Saavy Cooperative, which is building a co-op that enables patients to collectively share and monetize their knowledge / experiences by providing insights to industry. I love the idea of allowing patients to directly monetize their experience. The first-hand knowledge that patients have gained regarding their specific healthcare journey strikes me as the most underutilized resource in healthcare today. Indie.vc also scored major brownie points with me (which I’m sure was their intent) by investing in Billiyo, a Minneapolis(!!!) startup building a home health EHR. Link.

Opinions:

• As many folks on here know, Cityblock is right at the top of the list of my favorite healthcare startups out there, and this article from Toyin Ayaji and Iyah Romm is a great example of why. They detailed what their experience has been like over the last month providing healthcare services to marginalized communities in New York City - talking about how concepts like social distancing are simply not feasible for so many people. Keep it up y’all. Link.

• Here’s a quick read from Bob Kocher on how COVID-19 has brought telehealth mainstream, focusing on what the long term benefits of increased telehealth might be. Provides a decent overview of whats going on in the space currently. Link.

• Nikhil Krishnan penned a good blog post questioning whether health systems are really deserving of their not-for-profit status. It makes the case well as to why health system activities don’t quite seem aligned with the intent of not-for-profit status. Link.

• Picking up on the theme of structural issues in health care delivery, this is a good article from Zeke Emanuel and Amol Navathe looking at some potential policy changes that could be made during this time of crisis to fix healthcare. Link.

• This week felt like a consensus has finally emerged on how we work our way out of this crisis from a public health perspective - test, contact trace, isolate. Even our perpetually befuddled federal government managed to put together a coherent set of steps to opening the country again, centered around testing and contract tracing. The question of who is best suited to lead this charge in terms of reopening the country provided for some interesting reads this week:

  • Here’s a good piece arguing that employers may be the fastest way to establish widespread COVID-19 testing in this country. I question whether over the long term we want to cede public health efforts to employers in this country, but it’s hard to argue with the premise, particularly given federal leadership vacuum to date. Link.

  • This article poses a number of very good questions of the efforts by Google, Apple, and Facebook in the contract tracing arena. It asks a bunch of important questions, i.e. how do we balance privacy and public health in times like these? Link.

  • Trevor Bedford posted a solid tweetstorm on why the general approach is so important, and why he thinks empowering local and state public health officials to do contact tracing is the best route.

Data:

• A survey came out this week finding that 56% of ACOs are planning on leaving their risk-based model to avoid financial losses. It’ll be really interesting to watch what happens to risk-based agreements - I am worried that the uncertainty COVID-19 presents is going to cause every provider and insurer that has one foot into risk-based arrangements and one foot still in FFS is going to get cold feet and go straight back to FFS. How do payors and providers agree on the basic tenets of any value based agreement in these times? Link.

• Here’s more data looking at the price of healthcare - finding that private insurers pay almost 200% Medicare rates for all hospital services. Link.

• Kevin Wang shared some interesting data over on the slack channel from Peterson-KFF on the potential costs of COVID-19. Some really wide ranges of what might happen. The uncertainty here seems like it will be a huge challenge for payors - how much does COVID-19 treatment cost? What’s the benefit for deferred elective procedures? When does the rebound come and how much higher are costs then? Link.