HTN: Weekly Health Tech Reads 10/3

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**Paging Don Berwick and Rick Gilfillan**

Your Health Affairs article on the Medicare Advantage "Money Machine" (see below) caused quite a kerfuffle in the community this week - with strong opinions on both sides of your piece.

If anyone here knows Berwick or Gilfillan, please pass along that we'd like to invite them to join us in a virtual conversation with the community on the articles. Don / Rick - if you see this, shoot us a note: hello@healthtechnerds.com

Oh and for anyone who wants to join events / discussions like this, you should join the community here.

News:

Revenue cycle management vendor Ensemble filed its S-1 to go public. Emsemble got its start inside Bon Secours, which is by far the most significant customer still - Bon Secours was 61% of revenue in 2020 (pg 114), which means it accounted for roughly $370 million of Ensemble's $600 million in overall 2020 revenue. A helpful reminder of the scale of these departments inside of individual health systems - and that you can build a public company in the space working with 18 health system customers, as Ensemble is for its end-to-end rev cycle platform. For everyone looking for successful examples of health system innovation, this seems like an example of how to do it really well. Bon Secours originally acquired Ensemble in 2016 before selling a majority stake to a PE firm back in 2019. Ensemble currently has 18 health system customers of its end-to-end revenue cycle management offering. Link.
Amazon rolled out a new $19.99/mo subscription model for Alexa Together, building on the Care Hub offering it released for free last year. I would love to know how many people are actually using Care Hub and what drove this flip. You can certainly see the appeal of it - leverage a device already in so many homes to start delivering healthcare via it. No brainer, if you can get people to sign up (and pay for) the service. I'm a bit surprised to see them do away with the free Care Hub altogether, though. I'd think that if Amazon were working on a holistic healthcare strategy across all their products, you'd want to get Care Hub in everyone's home for free and use it to start offering other products (hint hint, Amazon Care). Link.
Behind the Business Insider paywall is an interesting read about how Walmart is struggling mightily with administrative challenges in its in-store clinic model. Perhaps not surprising for folks who have dealt with the healthcare billing space before, but apparently the simple cash pay model Walmart thought it was bringing to market has been fraught with challenges dealing with insurance. Link (behind paywall).
Meanwhile, Walmart announced this week it will be rolling out Epic at its in store clinics as well as its virtual care platform. I do suppose that partnering with Epic has the benefit of being one way to solve the administrative challenges you've been facing in your clinics. Link.
Walgreens is rumored to be considering buying Evolent Health, a partner for health systems / payors trying to succeed in taking risk. This one doesn't make sense to me strategically for Walgreens. I get everyone wants to get more into healthcare, but it seems like there would be a number of more straightforward ways of going about this that are a bit more complementary to your core competencies if you're Walgreens. Link.
Oscar announced network partnerships in Chicago and Miami with health systems. A good reminder that open enrollment season is almost upon us and this fall's individual exchange enrollment numbers are going to be fascinating to watch. Link (Chicago). Link (Miami).

Funding:

Clinical trials startup TrialSpark raised $156 million and announced it is going to get directly into the drug development game, using the financing to acquire clinical stage drugs. Link.
AlleyCorp announced it has launched a $100 million fund for its venture studio model. AlleyCorp joins Redesign as venture studios that have raised massive rounds focusing on building new healthcare startups. Seems like we'll see more venture investors heading this direction over the coming years given the dynamics in the space at the moment. Link.
AxialHealthcare raised $75 million and announced it is changing its name to WaySpring as it seeks to build a risk-bearing medical home for substance use disorder. WaySpring / Axial appears to have been on a rather interesting journey indicative of the broader health tech space over the last few years as it's moved from being a software platform for providers to being a risk-bearing clinic itself. Lots of money in taking and managing risk successfully. Link.
Truveta, the data platform created by health systems to monetize their clinical data, raised an undisclosed amount of funding from Microsoft. Truveta will also be using Microsoft Cloud as part of the deal. Link.
Stellar Health, a value-based care analytics platform for independent primary care groups, raised $60 million. Link.
Activ Surgical, a robotic surgery startup, raised $45 million. Link.
Weight management startup Found raised $32 million. Link.
Grow Therapy raised $15 million to help therapists build practices that accept insurance. Link.
Vital, patient engagement software for emergency departments, raised $15 million. Link.
Alkeme raised $4.6 million to be the "Peloton for black mental health" with self-guided courses and on demand content for $14/mo. Link.

Opinions:

Former CMS Administrator Don Berwick and Trinity Health CEO Rick Gilfillan penned two articles in Health Affairs on what they refer to as the "Money Machine" that is Medicare Advantage. Both the tone and the public nature of this rebuke seem noteworthy here, particularly given the stature of the authors. The issues pointed out shouldn't come as a surprise to folks following the space - calling out MA overpayments, the dynamics of risk adjustment, and how owning providers leads to even higher payments via the "Money Machine". The article also calls out the Direct Contracting model as needing to be redesigned, or entirely replaced by a new MSSP program. The article seems design to elicit strong responses on both sides of the equation, and judging by the response in the Slack community it has done so. Either way, it feels like we're at the beginnings of a very large argument between the venture-backed / for profit community and incumbent provider community over what the right path is for CMS to move down toward more value-based care. Too much money is at stake for this not to turn into a massive political argument. Between this article and the statements from the CMS COO below, it sure seems like the provider community is winning this round. I expect we'll see the venture-backed / for-profit community swing back hard. Link (part 1). Link (part 2).
On a related note, CMS's COO Jon Blum was quoted suggesting that we're not going to see more full-risk models for the sake of going at-risk. Among other things, Blum suggests the agency has lost the overall vision for value based care, and we need to focus more on health equity moving forward. It's worth noting that Blum was speaking at a National Association of ACOs (NAACOS) conference. If you'll recall, NAACOS penned a letter to CMS contesting the Direct Contracting program back in December 2020. It would certainly appear the lobbying efforts are working as intended. Link.
The Rock Health team published a report on the women's health market, and as one would expect from Rock it features a good market map of startup activity, broken down into eight sectors where they're seeing the most activity. Link.
Interesting paper from Manatt on how employers can look at using episode-based payments to manage costs. Note that the paper was supported by Signify Health, which by coincidence can support managing episode-based payments. The paper does a nice job explaining the concept. If I'm an employer, particularly one without my own medical team, it seems like a daunting task to navigate implementing this - picking specific episodes, contracting with providers, explaining the benefit to employees, etc. So I'm turning to my benefits consultant to run the analysis for me on whether this makes sense to implement. Link.
The American Dental Association recently came out against adding dental benefits across Medicare, arguing it is wasteful by not focusing federal dollars on low-income seniors. Of course this position is against AARP and the National Dental Association - a group of primarily black dentists - who support expansion of Medicare coverage. I'm sure the ADA's position doesn't have anything to do with the heavy private equity influence in the Medicare space and the potential for declining reimbursement with more Medicare coverage. Link.
Here's a good read on the virtual MSK market and where it's headed from Benjamin Schwartz. The perspective on integrating a local, high quality network of MSK providers into a virtual solution is quite interesting. Link.
This NPR article looks at the shortage of home health aides and some of the challenges facing the labor market. The Mercer report below picks up on this topic as well, one we're going to be hearing a lot more about moving forward if the trends hold. Link.

Data:

The AMA released a report finding that the majority of commercial insurance markets in the U.S. are highly concentrated, suggesting that federal and state antitrust authorities should be scrutinizing insurance M&A more closely. Link.
Mercer released a report looking at healthcare staffing trends, and not surprisingly the outlook is bleak. Primary care physicians are increasingly moving to retirement age - while 12% of PCPs are retirement age today, that will grow to 21% over the next five years. Twenty-nine states will not be able to meet demand for registered nurses, and twenty-seven states will not be able to meet demand for mental health workers. Link.
The AHA highlighted a interesting report this week looking at what would drive consumers to other providers, finding its more trust and respect. But what I find bizarre is that the article starts with this sentence: "Two things — and price and convenience aren’t among them — can cause even satisfied patients to switch providers." Such an odd statement to lead off with, particularly when paired with the following chart in the article. I mean... does that chart not say that 46% of people would try a new provider for lower prices? Link.

Featured Jobs:

Best Buy Health, the healthcare division of the large retailer, is hiring a Sr. Manager of Healthcare Consumer Strategy. Link.
Current Health, the remote patient monitoring and at-home health platform startup, is hiring a Sr. Product Manager. Link.
CVS Health and its Kidney Care team is hiring a Sr. Manager of Strategic Partnerships. Link.
DotCom Therapy, a virtual therapy startup focused on speech, occupational and mental health, is hiring a Head of Health System Sales. Link.

Access the HTN Jobs Board for the full list of job postings.

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