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Weekly Health Tech Reads | 8/18/24

Weekly Health Tech Reads | 8/18/24

Kaiser selects Abridge for AI scribes, McKinsey on Star ratings, Elevance's new primary care brand, and more

Kevin O'Leary
August 18, 2024

Kaiser switches AI Scribe vendors, moves to Abridge

Kaiser and Abridge announced a partnership to deploy Abridge’s AI scribe to the entire Kaiser system — 24,000 providers across 40 hospitals and 600 medical offices. This partnership is notable partly because Kaiser and Nabla announced a similar partnership less than a year ago to deploy its AI scribe at 10,000 providers in The Permanente Medical Group (TPMG). Kaiser, an investor in Abridge, will use Abridge as the AI scribe for the entire system. Nabla’s CEO posted on LinkedIn about the decision, suggesting its deployment at Kaiser had gone quite well.

Earlier this year, a TPMG research team detailed the rollout of Nabla’s solution in NEJM Catalyst. It shared that ~1,000 of the 10,000 providers at TPMG used the scribe in over 100 patient encounters.

The ability to switch vendors like this seems like a concern for the durability of the AI scribe market opportunity. Here you have TPMG, which has just invested meaningful time and energy into deploying Nabla. The change management involved in getting 1,000 providers to use a new tool consistently seems significant. Yet only six months later, Kaiser decides to switch to a systemwide implementation of Abridge. That feels like a lot of wasted energy in the system.

The move reminds me of this STAT article a few weeks ago describing the AI scribe space as facing the “Pepsi challenge.” It described clinician feedback on some AI scribes, Nuance and Abridge specifically, as “almost indistinguishable.”

I suppose in an environment like that, if you’re a leading brand name system like Kaiser, it makes sense that you might see an opportunity to use your brand to help pick a “winner” in the market. It seems like that is what’s happening here.

Read the Fierce Healthcare coverage.

MEDICARE ADVANTAGE

Mckinsey’s perspective on how MA insurers can succeed by focusing on Star ratings

This McKinsey post does a nice job articulating the focus on Stars Ratings in Medicare Advantage, and how payors need to hit 4+ stars if they expect to have a margin-positive business in this environment. It notes that clinical activities will replace member experience as the key focus for plans attempting to hit 4+ stars.

The chart below does a nice job of highlighting the financial headwinds in MA for 2025 — between the CMS rates and utilization challenges, McKinsey expects a headwind to payors of $80 per member per month, which would move a payor from its expected 3% margin to a ~4% margin.

Read the McKinsey article.

Other Top Headlines

HHS shared the results of the first ten prescription drug price negotiations as part of the Inflation Reduction Act (IRA). The press release indicated that CMS would have saved $6 billion in 2023 had these negotiated prices been in effect, generating 22% savings on those ten drugs. The new prices for these drugs will go into effect on Jan 1, 2026.
- PhRMA issued a statement about the news, criticizing the IRA for increasing costs to consumers while making it less likely companies will invest in future development of drugs.
Elevance and private equity firm Clayton, Dubilier & Rice announced the brand name — Mosaic — for the primary care partnership originally announced earlier this year. Mosaic will serve one million members across nineteen states. When the deal was announced, the intent was to combine the primary care assets of apree health (which itself the result of a merger between Vera Whole Health and Castlight), Carelon, and Millennium Physician Group. The Carelon advanced primary care assets that will be moved to Mosaic are still awaiting regulatory approval before being formally added to the platform.
Medical device and equipment manufacturer Stryker acquired Care.ai, a virtual care operating system for healthcare facilities. Care.ai will be integrated into Vocera, which Stryker acquired for ~$3 billion in early 2022.
Steward Health has sold Stewardship Health for $245 million to Rural Health Group, a PE-backed rollup of rural healthcare providers. The court filing provides some interesting details on the sale process — Leerink, the investment bank managing the process, contacted 57 parties about potentially purchasing Stewardship. After United walked away from the transaction, Leerink secured two bids. Rural Health Group initially bid $175 - $215 million, and Stewardships’s FILO Lenders made a credit bid of $225 million. Rural Health Group came up to $245 million and won the bid.
- In separate Steward news this week, six Steward hospitals in Massachusetts will be taken over by Lifespan, Boston Medical Center and Lawrence General Hospital.
Blackstone acquired a majority stake in the healthcare consulting firm Chartis. Chartis was previously owned by another PE firm, Audax, which acquired Chartis back in 2019. Chartis acquired seven businesses in the period Audax owned it. Under new ownership, Chartis will invest in growth in the payor market via one of those acquisitions, HealthScape Advisors.
Astrana Health has partnered with Awell to roll out Awell’s CareOps platform to Astrana providers.

Funding Announcements

CareSyntax, a surgical workflow optimization platform, raised $80 million in equity and $100 million in debt financing.
Payzen, a revenue cycle management provider for health systems, raised $32 million in equity and $200 million in debt financing.
MD Ally, a platform that helps divert non-emergency 911 calls, raised $14 million.
Photon Health, a prescription management platform, raised $9 million.

Reads from the Community

Changes in Patient Care Following HCA’s Purchase of Mission Hospital by Mark Hall
This paper, highlighted in Healthcare Dive, presents a critical view of the impact of HCA acquiring Mission Health in Asheville. It focuses on how providers have been leaving MIssion since the acquisition due to concerns about quality of care. Read more.

Highly Stable Beneficiary Attribution in Medicare’s Comprehensive Primary Care Plus Model by multiple authors
This study explores the churn of attributed patients in the Comprehensive Primary Care Plus (CPC+) Model, finding that for every 100 beneficiaries, 88 remained attributed to a practice after one year, and 70 remained after four years. Read more.

Healing a Dark Past: The Long Road to Reopening Hospitals in the Rural South by Aallyah Wright
This is a really good read about the challenges facing rural hospitals in the south and the distrust that many people have with the system, and how some local communities are finding ways to reopen them. Read more.

Featured Jobs

Responsible for hiring? We’re exploring hosting a virtual career fair. We’d appreciate your input on a brief survey to help gauge interest. Feel free to share with others as well (clients, portcos, etc.). Thanks!

Sr. Manager, Product Strategy at Blue Shield of CA, a California-based managed care company. Learn more.
$145,970.00 — $218,900 | Hybrid (CA)

VP of Payor Sales at MD Ally, a platform that helps divert non-emergency 911 calls. Learn more.
Remote

Director, Healthcare Operations (Implementations Support) at Interwell Health, a kidney care management company. Learn more.
Remote

Medicare Strategy Lead at Humana, a Medicare Advantage insurer. Learn more.
$112,400 – $154,900 | Remote

Head of Operations at Greenbrook Medical, a senior-focused primary care company. Learn more.
Hybrid (NYC)

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