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Weekly Health Tech Reads | 9/8/24

Weekly Health Tech Reads | 9/8/24

Humana expects to lose 230k MA lives, Clover's new software partnership, the quality of ACA plans, and more!

Kevin O'Leary
September 08, 2024

Updates coming out of the Wells Fargo and Morgan Stanley investor conferences this week

Per usual, the public company presentations at these conferences included some interesting insights. Here were a few of the more interesting tidbits that stood out to me:

Humana expects to lose ~230,000 MA members in 2025 due to plan exits
Humana shared a bit more detail on its expectations for 2025 on the MA front. The headline was that 560,000 members, or roughly 10% of Humana’s book, will be impacted by a plan exit. But the actual impact here is much smaller as Humana is only fully exiting thirteen counties, meaning Humana’s footprint will be virtually the same in 2025 as it was in 2024.

Humana assumes it will retain roughly 50% of those 560,000 members by enrolling them in other Humana plans that will remain in those markets. Aside from the markets with plan exits, Humana expects to remain flat overall. In total, that means Humana expects to lose around 230,000 members overall in 2025.

Humana also noted it is prepping for open enrollment by staffing for higher levels of activity at its call centers given the frustration it expects for brokers and members over the level of the change in the industry. Another reminder that this is going to be a tumultuous open enrollment period in Medicare Advantage.

Clover signs its first software deal with The Iowa Clinic
Clover announced this week that The Iowa Clinic signed an agreement to use Clover’s Counterpart software as an “anchor customer”. The Iowa Clinic is a multispecialty group based in Iowa with ~250 clinicians. Clover shared a bit about the contract during its presentation at Wells Fargo — the partnership is for “multiple years, but not a decade” and includes two components: a PMPM and a shared risk piece. On the shared risk piece, it sounds like the first portion of any shared savings goes to the third party, in this case, The Iowa Clinic. Then Clover will share in the upside after achieving that initial savings mark. It sounds like an attractive financial deal for The Iowa Clinic, and a bet on Clover’s part that it can drive the 10% cost savings it claims via Counterpart. Regardless, it’s a nice data point for Clover on the software business as the Medicare Advantage business performs well.

HCA’s CEO threw some cold water on the impact of healthcare delivery innovation
HCA and Tenet both still appear to be in really strong strategic positions at the moment — that doesn’t seem all that new. What I found interesting in the HCA commentary was a Q&A about how HCA is responding to changes in the industry in terms of meeting the needs of patients. While the question implied the industry has changed a lot, the answer was essentially the opposite — nothing has meaningfully changed in two decades. Some services have shifted from inpatient to outpatient, but that’s about it.

The answer, pasted below, is a good reminder of the progress that has, or hasn’t, been made in care delivery innovation:

I think it's, in many ways, changing less than people perceive. And that's simply because if you're in a car accident, you go to the emergency room. 20 years ago, if you were in a car accident, you went to the emergency room. So I think on the fringes, there are changes. And that's where telemedicine, that's where different kind of primary care models may have some implication, but largely at the core, there's not a lot of change. You still depend on your payer for which networks you can go to. You still depend on the doctor to give you some sense of where he or she is comfortable in doing a surgery or cardiac cath procedure, or whatever the case may be. And then you depend on your emergency rooms that are in your community when you need an emergency. So the patterns of purchasing health care are less changed than people believe. Having said that, we recognize that we have to be responsive to these large growing communities and some modestly changing patterns of how people purchase. So we're investing heavily in our outpatient network first. And with our outpatient network, our approach is to take as many outpatient facilities as we possibly can and make it closer to the patient.

Samuel Hazen, HCA CEO at Morgan Stanley Healthcare Conference

ACA

Is the ACA in a “race to the bottom?"

The Paragon Institute released another report critiquing the ACA (following a report earlier this year arguing people were fraudulently misrepresenting their income for subsidies). This report focused on how the quality of ACA plans is dropping over time compared to employer-sponsored insurance. It finds that enrollees are increasingly in more Medicaid-like narrow network plans.

Of note for the innovation community, the report recommends that one of the “fixes” for the ACA is to expand access to ICHRA for small employers. It’s another bullish data point on the future of ICHRA.

The chart below from the report highlights the changing network dynamics in the ACA. In 2014, 50% of enrollees were in PPO plans, while in 2023 that number declined to only 17%.

Read the Paragon report.

NEWS

A BI report calls Commure the “weirdest startup in healthcare”

Of all the startups that I’ve come across in the seven years I’ve been writing this newsletter, Commure is the one that seems to attract the most questions of “what does that company actually do?”

Business Insider’s Rebecca Torrence did a nice job diving into that topic in this report. With General Catalyst’s backing, Commure has a $6 billion valuation despite having gone through multiple pivots, CEO changes, and failed acquisitions since it launched only four years ago. It seems like a challenging environment, to say the least.

If I squint, I think can make out the bull case for Commure through the article — it is finding meaningful traction as a AI-based revenue cycle management platform via its most recent acquisition, Athelas, and a budding partnership with HCA. Between this and GC’s hospital partner ecosystem, this gives Commure an opportunity to become the “AI-based operating system for hospitals”. The article notes that Summa Health will likely be a guinea pig for Commure, and that Commure has a blank check from General Catalyst. Those are some massive built-in advantages for a company building a platform like this. And if a company succeeds in becoming that operating system for hospitals, it’s likely a large public company that will generate nice returns for an early investor like General Catalyst. Seems like a logical play to run, particularly if you’re an investor trying to put a lot of capital to work in healthcare.

At the same time, given the track record over the last several years, I’m not sure I understand why systems like Summa Health would sign up to be the guinea pigs here.

Read the Business Insider report

Other Top Headlines

In news from the week prior Labor Day, Evolent Health stock jumped as Reuters reported that the company is running a sale process. Elevance reportedly was one of the bidders that submitted an offer, but it has dropped out of the process. Other bidders include private equity firms CD&R, KKR, and TPG. TPG invested in Evolent’s Series B back in 2013. Will be interesting to watch if a deal gets announced here in the coming weeks.
Also in rumored sale news from before Labor Day, Surgery Partners is potentially for sale. Bloomberg reports that UHG as well as PE firms including TPG have been interested in acquiring the ASC operator.
OneOncology has acquired Navigating Cancer, a patient portal and care management platform for oncology. Navigating Cancer will remain a standalone business and be sold to all oncology practices, regardless of if they work with OneOncology’s MSO.
A New York Times article reports that Acadia Healthcare has a history of keeping patients in psychiatric hospitals longer than medically necessary to capture additional revenue from stays. Acadia operates 50+ psychiatric hospitals across 17 states, and the article dives into how Acadia aggressively markets to attract new patients.
New Mountain Capital created a new payment integrity company by merging three businesses: Rawlings, Apixio’s payment integrity business, and VARIS. The combined company, which doesn’t have a name yet, is reportedly valued at $3 billion. The press release notes that Apixio’s Connected Care platform and VBC offerings are being sold to Datavant as part of the merger.
New Mountain Capital also announced the launch of Swoop, an AI-based marketing platform for pharma. Swoop is being spun out of another New Mountain Capital investment, Real Chemistry, which provides analytics to the life sciences industry.

Funding Announcements

Vesta Healthcare, a virtual home health provider, raised $65 million. Vesta has an interesting model that integrates caregivers in the home into the care model.
Doccla, a European-based hospital-at-home startup, raised £35 million ($46 million).
Thatch, an ICHRA platform for insurers, raised $38 million.
SegMed, a real-world imaging data provider, raised $10.4 million.
Circadian Health, a virtual cardiometabolic provider, raised $7.5 million.
MyndYou, an AI-enabled virtual care assistant, raised a strategic investment from WindRose Health Partners. It sounds like WindRose will use this as a platform to build capabilities on top of.

Reads from the Community

How states are shaping Medicaid managed care and marketplace participation by Health Management Associates
This is a quick post highlighting the efforts of some states to encourage Medicaid MCOs to offer ACA plans in the state as well. Read more.

Patients Suffer When Indian Health Service Doesn’t Pay for Outside Care by Arielle Zionts and Katheryn Houghton
This KFF article does a nice job discussing the Indian Health Service and how the underfunded and understaffed program leads to gaps in care for Native Americans. Read more.

The Evolving Primary Care Workforce by Paulius Mui
A helpful perspective on how the primary care workforce is changing, and in particular how different startup models are approaching staffing care teams. Read more.

Featured Jobs

Strategy & Operations at Tandem, an AI platform for accelerating access to medicine. Learn more.
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Innovation Vice President at Morgan Health, JPMorgan’s business unit focused on improving employer-sponsored healthcare. Learn more.
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Director, Clinical Operations at Aledade, a VBC enablement platform for independent primary care providers. Learn more.
Remote

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