Summus Global is company with a very interesting model that gives a glimpse about the future of virtual care. It delivers online specialty care and much more to employers. You might think that means it is in the second opinion space, or in the care navigation space. And you’d be right, but not completely right. Julian Flannery the CEO tells me that it’s much more than that and has greater ambitions too. I took really deep dive into Summus with conversation with Julian and a thorough demo of the service from Dennis Purcell the COO–Matthew Holt
matthew holt
Medicare Advantage Is a Superior Program (Part two)
By GEORGE HALVORSON
Former Kaiser Permanente CEO George Halvorson has written on THCB on and off over the years, most notably with his proposal for Medicare Advantage for All post-COVID. He wrote a piece in Health Affairs last week arguing with the stance of Medicare Advantage of Don Berwick and Rick Gilfillan (Here’s their piece pt1, pt2). Here’s a longer exposition of his argument. We published part one last week so please read that first. This is part two – Matthew Holt
Medicare Advantage is better for the underserved
The African American and Hispanic communities who were particularly hard hit by those conditions and by the Covid death rates have been enrolling in significant numbers in Medicare Advantage plans.
The sets of people who were most damaged by Covid have chosen in disproportional numbers to be Medicare Advantage members. Currently 51 percent of the African Americans on Medicare are in Medicare Advantage plans and more than 60 percent of the Hispanic Medicare members will be on Medicare Advantage this year.
That disproportionate enrollment in Medicare Advantage surprises some people, but it really should not surprise anyone because the Plans have made special, direct, and inclusive efforts to be attractive to people with those sets of care needs and have delivered better care and service than many of the new enrollees have ever had in their lives.
The Medicare Advantage plans have language proficiency support competencies, and language requirements and capabilities that clearly do not exist anywhere for fee-for-service Medicare care sites. A combination of team care, language proficiency, and significantly lower direct health care costs for each member has encouraged that pattern of enrollment as well.
The $1600 savings per person has been a highly relevant factor as more than twice as many of the lowest income Medicare members — people who make less than $30,000 a year — are now enrolled in Medicare Advantage plans.
Medicare Advantage’s critics tend to explicitly avoid discussing those enrollment patterns, and some of the most basic critics actually shamelessly say, with what must be at least unconscious malicious intent in various publications and settings, that the Medicare Advantage demographics for both ethnicity and income levels are a clone for standard Medicare membership. Those critics have said that there is nothing for us to learn or see from any enrollment patterns or care practices based on those sets of issues.
Many people who discuss Medicare Advantage in media and policy settings generally do not focus on or even mention the people in our population who most need Medicare Advantage — the 4 million people who are now enrolled in the Special Needs Plans.
Special Needs Plans for Dual Eligibles
The Special Needs Plans take care of low-income people who have problematic levels of care needs and who very much need better care.
Continue reading…Medicare Advantage Is a Superior Program (Part one)
By GEORGE HALVORSON
Former Kaiser Permanente CEO George Halvorson has written on THCB on and off over the years, most notably with his proposal for Medicare Advantage for All post-COVID. He wrote a piece in Health Affairs last week arguing with the stance of Medicare Advantage of Don Berwick and Rick Gilfillan (Here’s their piece pt1, pt2). Here’s a longer exposition of his argument. We are publishing part one today with part two coming soon – Matthew Holt
The evidence for Medicare Advantage being a superior program compared to standard fee-for-service Medicare is so overwhelming that anyone who cares about actual Medicare Patients or who cares about the financial future of Medicare should be strongly supporting having as many people as possible enrolled in that program as soon as we can effectively make that happen.
Compared to fee-for-service Medicare, Medicare Advantage has better benefits.
Compared to fee-for-service Medicare, Medicare Advantage has a better tool kit at multiple levels.
Medicare Advantage has team care, connected care, and electronically supported care processes — and we know beyond any debate or dispute that those advantages exist for Medicare Advantage over standard fee-for-service Medicare because fee-for-service Medicare does not pay for those sets of services and literally labels it billing fraud if a caregiver who provides team care in a patients home to prevent a congestive heart failure crisis or to keep a life threatening and function impairing asthma attack from happening sends a bill to standard Medicare for those services.
The superiority of Medicare Advantage is beyond question.
Standard fee-for-service Medicare has no quality care processes, no quality reports and no quality standards or expectations at all. Standard Medicare actually has absolutely no quality data and does not hold any provider accountable for the quality of the care they deliver.
Medicare Advantage has an extensive quality agenda and tracks more than 40 categories of quality and service at the plan level. Medicare Advantage plans build continuously improving programs around those Five-Star priorities and measures, and we know from our current reporting that even during Covid, the percentage of Medicare Advantage patients with cardiovascular disease who are currently on statin therapy went up from 80.86% of patients a year ago to 83.36% this year.
The ratings by the Medicare Advantage members for customer service by their plans went from 90.56% a year ago to 90.87% this year.
That is not a big improvement but having satisfaction numbers that start out that high actually go up during Covid days is an accomplishment and it is one of the reasons why we should be encouraging people to join the plans and its why fee-for-service Medicare is a measurably inferior approach for so many people.
Standard Medicare does not have a clue about who is getting their statin Medications and they officially don’t care.
In fact, some of the fee-for-service Medicare doctors and care sites who are paid only by the piece for care from the standard Medicare program actually often make more money when care fails, because when a patient has a major asthma crisis or a congestive heart failure crisis, that negative outcome for a patient can generate multiple medical fees and it can too often trigger a $10,000–$20,000 total additional cash flow to the caregivers whose care sites failed that patient by not helping improve the health of the patient before the crisis was triggered.
Why is Medicare Advantage’s purchasing system better?
Medicare Advantage plans are paid by Medicare by the month for each patient and they are not by the piece for each item of care.
Because Medicare Advantage plans are paid by the month for each patient, and must, by contract, provide complete care to each patient, it makes extremely good sense for the plans to help patients in ways that prevent asthma attacks and that prevent congestive heart failure crisis, and that avoid and help reduce the levels of blindness and amputations for their diabetic patients that can too easily happen to those patients if you don’t manage and guide that care.
The Medicare Advantage approach for all of those categories of care is obviously far better for the patients than the fee-for-service Medicare inadequacies in care.
Continue reading…Health in Two Point 00 – The LAST Episode (247)
It’s the very last episode of Health in Two Point 00! (We’re not going away just changing the name next week). Six deals in 2 minutes! Embold Health gets $20m; Brainomix gets $21m; $25m for Zing Health; Quartet buys Innova Tel; Prolucent Health gets $11m; and Mightier gets $17m. And now we are done with 2021! And to announce the new name, we are wearing evening dress! – Matthew Holt
Nate Maslak, CEO of Ribbon Health
Nate Maslak, CEO of Ribbon Health talked with me late last year (2021) after his $40m round from General Catalyst and Andreesen Horowitz. We dug into the really thorny problem of information about physicians. This has so many facets and ramifications but most people only see it when their doctor somehow isn’t in their health plan’s network. But it’s much, much more than that. Nate joined me in nerding out on this topic and explaining how Ribbon is working to fix it — Matthew Holt
Simple Bills are Not So Simple
By MATTHEW HOLT
I went for an annual physical with my doctor at One Medical in December. OK it wasn’t actually annual as the last time I went was 2 & 1/2 years ago, but it was covered under the ACA, and my doc Andrew Diamond was bugging me because I’m old & fat. So in I went.
I had a general exam and great chat for about 45 minutes. Then I had blood work & labs (cholesterol, A1C, etc) and a TDAP vaccination as it had been more than 10 years since I’d had one.
Today, about one month later, I got an email asking me to pay One Medical. So being a difficult human, I thought I would go through the process and see how much a consumer can be expected to understand about what they should pay.
Here’s the email from One Medical saying, “you owe us money.”
Continue reading…Matthew’s health care tidbits: #DigitalHealth valuations
Each week I’ve been adding a brief tidbits section to the THCB Reader, our weekly newsletter that summarizes the best of THCB that week (Sign up here!). Then I had the brainwave to add them to the blog. They’re short and usually not too sweet! –Matthew Holt
For my health care tidbits this week, it’s time to bring up the disconnect between the continual collapse of #DigitalHealth stock prices and the continued increase in private sector investment and valuation in the same sector.
All of nine months ago, way way back in March 2021 market leader Teladoc hit a stock price of $308. Last week it hit a low of just under $90. Meanwhile several companies have IPOed or SPACed this year and almost all of them have seen their stock fall dramatically. For example, pioneer online mental health company Talkspace is now at a market cap of under $300m. This week a different mental health company Cerebral which was only founded in January 2020 raised $300m at a private valuation of over $4 billion. Yes they could have bought out Talkspace for that amount! In October Medicare Advantage plan Devoted Health raised money at a $12 billion valuation which exceeded the market cap of rivals Clover, Bright Health and Oscar–each of which has more members.
So what’s going on? Part of this is the wash of money still going into venture funds. Interest rates are historically low, while inflation is picking up, so that money has to go somewhere. Additionally some of the companies that SPACed out were probably unable to get such a good valuation in a private round. But it can’t be that all the 50 or so public companies are lower quality than the private ones. That indicates that either the private valuations aren’t real (because there are so many protections built into the deal for investors), or that the private and public valuations are going to get closer together. There is of course one more possibility–some of the private companies may pursue M&A and buy out some of the public ones. But in any event, this current arbitrage cannot last forever.
It’s not unlikely the public stocks may pick up. But we’ve seen private and public market bubbles before and the aftermath isn’t usually pretty.
Health in 2 Point 00, Episode 243|Quartet, Ribbon, Lyn Health, Medallion & Safely You
I cough my way through this episode of Health in 2 Point 00 in his original interview sweater. There’s $60m for Quartet (mental health), Ribbon Health gets $43.5m to fix provider lists, Lyn Health reinvents the medical group with $10m (sort of), Medallion gets $30m to fix cross-state line provider credentialing & Safely You gets $30m to use AI to prevent falls in nursing homes. -Matthew Holt
Matthew’s health care tidbits: Athenahealth & Private Equity
Each week I’ve been adding a brief tidbits section to the THCB Reader, our weekly newsletter that summarizes the best of THCB that week (Sign up here!). Then I had the brainwave to add them to the blog. They’re short and usually not too sweet! –Matthew Holt
For my health care tidbits this week, it’s time to delve into the private equity firms’ buying and selling of Athenahealth. That’s of course the practice management/EMR firm bought by private equity companies led by Elliot Capital Management–they of the Israeli spy agency dirty tricks division–for roughly $6.5bn in 2018. Many (including me) have wondered how, given it was already doing about $1bn a year in revenue then, Athenahealth could be sold for $17bn three years later. After all it’s hardly likely to have tripled its revenue in a mature market! This comment by “Debtor 23” on @histalk is very instructive:
“Elliott did quite a bit better than 3x on its investment. The original deal was funded with about $4.8B of debt and $1B of equity from the hedge fund sponsors. Add in the acquisition cost of Centricity (call it $500M of equity, $500M of debt) and the equity investors are all-in with $1.5B of equity and $5.3B of debt. They sold off some assets for a total of ~$600M in cash, so net equity in play is $900M. They turned that equity into $11.7B (assuming no interim debt pay down), which is a 13x return. 13x feels ridiculous….but….if you’d invested that same levered-up $6.8B in the Nasdaq (QQQ) on the same timeline (Elliott began buying ATHN in spring 2017)…you could sell today for $18.1B. Absurd as this whole deal sounds, it has actually underperformed the market. This story is more about tech multiple expansion/bubble broadly than it is about improving management or running the business.”
So much like Renaissance and other hedge funds that rely on leverage, essentially Elliott leveraged Athenahealth up with debt to the tune of 80% of its value. So after slashing and burning R&D, selling assets (like the HQ which they apparently got $500m for) they probably got costs down & profits way up. When it was public under CEO Jonathan Bush, Athenahealth never tried to be that profitable. It was always fixated on the next big thing (the last one was building the future state inpatient EMR with Toledo & using the BIDMC tech it bought from John Halamka). That’s one reason its PE ratio was 100+.
So if Elliott can get some sucker to pay up and manages to turn $1bn into $13bn, how do the next greater fools–H&F and Bain Capital–do it? Well they need to layer Athenahealth up with even more debt (as money is currently so cheap) and keep generating enough cash to pay the debt. Of course at that price and with this mature a market it’s going to be super hard to grow the company enough to justify another leap in sales price, but it might be doable to service or even pay down some of the debt and take it for an IPO for a couple of billion more if the market stays nutso. So if H&F and Bain Capital basically shrink their equity portion down to $1-2 billion, and get it to IPO in a year or so for say $20Bn, they will at least double or triple their money. Not quite 13 x but not terrible.
And if it all goes wrong and Athenahealth can’t service the debt? Well the beauty of leverage and debt is that it attaches to the company – not to the PE fund that put it in that position. So all the new owners will have at stake is a reasonably small amount of equity. Of course if the shit hits the fan and Athenahealth goes bankrupt the employees and customers may not be so happy, but who cares about them? (Apart from that hasbeen CEO who got kicked out!)
Lyn Health Out of Stealth: A Niche Healthcare Navigator for Polychronic Patients
By JESSICA DaMASSA, WTF HEALTH
Straight out of stealth and launching today! Lyn Health is out to provide specific, personalized care for patients with three or more chronic conditions in a way that’s meant to compete with healthcare navigator-advocators like Accolade, Transcarent, and Included Health INSTEAD of the crowd of digital health chronic condition management platforms like Teladoc’s Livongo, Vida Health, One Drop, Omada Health, etc. etc.
With employers and health plans getting increasingly burnt-out on point solutions for chronic care – leading many of those businesses to “platform out” themselves in recent years – will a niche-market navigator really stand-out? Is effective care for polychronic patient populations so specialized that it merits adding a specific, targeted service on top of the more general navigator, primary care provider, or chronic care platform solution that an employer or plan might already have in place?
Lyn Health’s CEO Rick Abbott stops by to introduce us to this seed-funded startup, which has raised $10M (backed by Summer VC) and has already attracted some yet-to-be-named health plan and Fortune 500 employer clients. Rick explains that market need that Lyn Health is aiming to satisfy, and how he’s leveraged what he’s learned about the cost of polychronic care from his past life at Premera Blue Cross into an approach that he believes will work to help employers both reduce spend and improve the day-to-day patient experience of managing multiple chronic conditions. Lyn Health is set-up to deliver care with its own physicians and social workers, connecting with patients in a digital-plus-bricks-and-mortar format. And, as for that business model, we get into the big question: at-risk or not?
Excited to meet this startup on the day of its official launch!
