In this episode of Health Tech Deals, Jess thinks the music has stopped as Rock Health reports Q1’s funding total being below Q4 2022! No $100m rounds today! But still $37m for Real; $40m for Iris Telehealth; only $16m for 9am Health but lots of Livongo connections; $30m for Eko and $15m for Papa-lookalike Duos
-Matthew Holt
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 today’s health care tidbits, there’s an old chestnut that I can’t seem to stay away from. I was triggered by three articles this week. Merril Goozner on GoozNews looked at the hospital building boom. Meanwhile perennial favorite Sutter Health and its price-making ability came up in a report showing that 11 of the 19 most expensive hospital markets were in N. Cal where it’s dominant. Finally the Gist newsletter pointed out that almost all the actual profits of the big health systems came from their investing activities rather than their operations.
None of this is any great surprise. Over the past three decades, the big hospital systems have become more concentrated in their markets. They’ve acquired smaller community hospitals and, more importantly, feeder systems of primary care doctors. Meanwhile they’ve cut deals with and acquired specialty practices. For more than two decades now, owned-physicians have been the loss leader and hospitals have made money on their high cost inpatient services, and increasingly on what used to be inpatient services which are now delivered in outpatient settings at essentially inpatient rates. Prices, though, have not fallen – as the HCCI report shows.
The overall cost of care, now more and more delivered in these increasingly oligopolistic health systems, continues to increase. Consequently so do overall insurance premiums, costs for self insured employers and employees, and out of pocket costs. And as a by-product, the reserves of those health systems, invested like and by hedge funds, are increasing–enabling them to buy more feeder systems.
Wendell Potter, former Cigna PR guy and now overall heath insurer critic, wrote a piece this week on how much bigger and more concentrated the health plans have become in the last decade. But the bigger story is the growth of hospital systems, and their cost and clout. Dave Chase likes to say that America has gone to war for less than what hospitals have done to the American economy. That may be a tad hyperbolic, but no one would rationally design a health care environment where non-profit hospitals are getting bigger and richer, and don’t seem to be able to restrain any aspect of their growth.
Well at least my hair is under control today. What’s not under control is the chatter about Olive from Erin Brodwin at Axios, even if I don’t get Jess’ joke about the internet of Health Care. Meanwhile deals in nursing recruitment for IntelyCare ($115m), Avi Medical (50M Euros), Eleos Health ($20m), Evernow ($20m) and $25m for Vivosense–note my total inability to say their investor’s name!–Matthew Holt
I’m delighted to have a new contributor on THCB today. Blake Madden writes an excellent health care business newsletter called The Healthy Muse, which I highly suggest you subscribe to. Recently he gave his take on Optum’s latest big acquisition and it’s the first of I hope many pieces of his we’ll run on THCB–Matthew Holt
by BLAKE MADDEN
On March 29, UnitedHealthcare’s Optum announced its acquisition of LHC Group for $170/share. The transaction values LHC at about $6.4 billion including debt.
I know we all joke about working for UnitedHealthcare one day, but it’s terrifying when you think about their sheer scale. Even scarier when you look at Optum’s growth:
LHC Group is an important acquisition for Optum. Payors are continuing to morph into ‘payviders’ and UHG / Optum has a huge competitive advantage given its 60k aligned physician base. Acquiring LHC Group accelerates this payvider trend but also allows UHG to catch up to Humana, who now owns all of Kindred, in the post-acute sphere.
Meanwhile, Optum is deploying its grand vision of integrated care delivery right before our eyes. It’s happening whether you like it or not.
Even though I provided a first-impressions breakdown on Twitter related to the deal, I had to break this deal down into more detail and give you guys my thoughts on why the LHC acquisition is so significant.
Let’s dive in.
LHC Group is well-positioned on a few fronts in the fast-growing home health sector:
In summary, LHC Group is a great operator in a high-growth industry: Home Health.
Continue reading…What’s with my baseball hat? Find out in this episode! Apparently, someone thinks my hair is a bit out of control and needs some trimming. In this episode of Health Tech Deals, Jess and I review Clarify Health raising $150 million; Season raising $34 million; Altoida grabbing $20 million; nirvanaHealth getting $60 million; and Pluto Health raising $9 million–Matthew Holt
By GEORGE HALVORSON
This is the third part of former Kaiser Permanente CEO George Halvorson’s critique of Medpac’s new analysis of Medicare Advantage. Part 1 is here. Part 2 is here. Eventually I’ll be doing a summary article about all the back and forth about what Medicare Advantage really costs!-Matthew Holt
Risk status and RAF
What is on the MedPac radar screen and what keeps their attention and what actually takes up several long portions of the annual report this year is the other factor that changes the payment levels to the plans — the risk status of their enrollees.
The capitation levels that are paid to the plans are affected very directly by the health status levels of the actual enrollees.
Risk levels for the members set and change the payment levels for the plans. The very first capitation programs didn’t factor in relative risk status for the members, and it was possible for some care sites to make major profits on capitation just by enrolling healthier than average people and by being paid an average cost level for each area for the people they enrolled.
That initial payment process has evolved very intentionally into having diagnosis-based cost factors that attempt to link the health status of the members and a fair payment level for the plans. The plans identify for the risk filing process the diagnosis levels for the members and their payment levels as plans are directly affected by the risk levels they report for their members.
People have had some concern about whether some parts of that coding process have been done badly, incorrectly or with purely avaricious intent.
There have been significant levels of concern expressed about whether the plans might be able and willing to produce and present inaccurate and distorted information in the process. That alarm was triggered in part by the fact that some of the plans made getting that information into their annual filings a high priority and some were more successful than others in that process.
It is good to have accurate diagnosis information.
We actually should as a nation and a health care macro system want to see an expansion of our data base and our medical records on basic levels of diagnostic information.
As a nation and as a macro care system we should definitely want to have full diagnosis information for each patient. Care can be better when caregivers have the right diagnosis for all of their patients.
How CMS has changed Risk Adjustment
CMS just did a brilliant thing and completely eliminated the filing system and process for risk coding and data.
The CMS Hierarchical Conditions Categories Risk Adjustment Model was just killed. CMS just took the system that has created the vast majority of concerns and churn about the issues of coding intensity and shut it down.
It no longer is a factor for any risk scores. CMS will still look at the relative risk levels of patients but will get that information completely from patient encounter filings and direct patient information and not from any plan filings or reports.
An entire industry of organizations working to enhance risk scores just became obsolete and irrelevant.
Continue reading…By MATTHEW HOLT
I have always thought that THCB almost always had an April fools post. I mean never on the Epic scale–today they’re merging with the other Epic, the Fornite gang–but most years I’d have said we had one. So in an effort to avoid the work I should be doing I went back to to archives to look and find the truth.
THCB started in August 2003 and in April 2005 the “tradition” started with this very worthy & not very clever April Fool about how George W Bush had signed national health care into law. The nothing more April Foolish until 2009 when then TCHB editor John Irvine wrote a piece about me joining Cato.
I got going on the whole thing in 2010 when just after the ACA was passed I declared that THCB and all its various contributors were finding other stuff to do. (They’re all basically back on #THCBGang these days!). The theory was that health care was now solved and we were going to cover fly fishing and renewable energy. If I had just bought that Tesla stock…
So now we were getting into the swing of it and yet no more fools for 4 years! The next one was a goodie though. At the time I was railing against the term mHealth which was battling my preferred term Health 2.0 as the definitional term for the sector. Neither term realized that “digital health” was winning. I explained that we were renaming Health 2.0 “mHealth & Associates” and that employees were going to be referred to as mHealth Ass. and Indu thought I was the “biggest mHealth Ass”. The wonderful coda to this is about 3 weeks later Indu and I met our then most important client, Holly Potter at Kaiser Permanente. She asked us when the name change was happening!! I still tease her about that when I see her!
Then another 4 year gap. In 2018 I revealed that Trump had appointed me to run the VA. I also predicted war with Russia in 2021. So wasn’t too far off! Then we hit a roll, in 2019 I scooped the world with the news that Facebook was entering the EMR business….not too far from the truth.
Finally in 2020 Michael Millenson told us that Trump was urging Covid sufferers to only get care at for-profit facilities. As it turned out, given how well so many hospital systems have done in the pandemic, he may not have been joking.
So in 19 years we have run 7 April Fools. Which by my calculation suggests that THCB is about 35% foolish. Which I guess is lower than I thought.
Matthew Holt is the publisher and main fool at THCB
By TRAVIS GOOD
The health care industry is rapidly embracing new technologies. Covid-19 changed the way many industries operate, and healthcare is one industry that was particularly affected by the pandemic. Many health care organizations were already undergoing digital transformations, but Covid exponentially sped up those processes. Health care providers and health-tech companies were forced to adapt to the new normal and change the way they operate. Here are 3 major ways health care has changed in recent times.
1. Increased popularity of telehealth services:
Covid made telehealth appointments a necessity, but even in a post-Covid world virtual visits are likely to remain a core component of modern healthcare. According to McKinsey, telehealth utilization was 78 times higher in April 2020 than in February 2020. It remained nearly 40 times as popular in 2021 as compared to pre-pandemic levels.
Research shows that both patients and physicians are fans of telehealth. Many patients prefer the convenience of being able to speak to their doctor from home and physicians feel that offering telemedicine allows them to operate more efficiently. Phone and video-based medical appointments became mainstream in 2020, and they are unlikely to go away anytime soon.
2. More wearable medical devices with connected ecosystems:
The number of wearable medical devices in use has skyrocketed over the past 5 years. The wearable medical device market is expected to reach $23 million in 2023, a major increase from $8 million in 2017. Gadgets like heart rate sensors, oxygen meters, and exercise trackers are all becoming increasingly popular. Many popular consumer products such as cell phones and smartwatches ship with built-in medical tracking technology.
Continue reading…By GEORGE HALVORSON
This is the second part of former Kaiser Permanente CEO George Halvorson’s critique of Medpac’s new analysis of Medicare Advantage.Part 1 is here. The final part will be published on THCB later this week. Eventually I’ll be doing a summary article about all the back and forth about what Medicare Advantage really costs!-Matthew Holt
We clearly do have significant levels of quality data about the MA plans because we have extensive levels of quality programs and recognitions that exist in MA . Those programs get better every year — and MedPac should be reporting and even celebrating each year how many additional plans are achieving high scores in those areas as part of their report.
MedPac should be describing and celebrating progress that is being made in that five-star space and the members of the Commission don’t seem to know that information exists.
In fact, they sink lower than that pure denial in their report this year. They actually say in this year’s report that they have deep concerns about the quality of care for MA and they say clearly that they have no useful data to use for thinking about how MA is doing relative to quality issues.
Saying that there is no quality data about the plans is another MedPac falsehood (MPF) and, as they so often are, that particular falsehood is disproved quickly and easily by their own documents. In the final section of this year’s report where they were asked by Congress to do a report on the quality of care in the Special Needs Plans. The MedPac writers achieve that explicit goal in large part by using the easily available HEDIS quality data for those patients and for the other patients in the plans and by comparing both sets of numbers to relevant populations.
So this year’s report has that set of NCQA quality data for the MA plans included in it. MedPac is using it now even though they say no data exists and that means that’s another falsehood to say it doesn’t exist.
We know what the quality data of the five-star program is and we know what the HEDIS Scores are for the MA plans, and we also know how much MA costs us in every county because the bids give us that information.
We know that the plans bid below the average county fee-for-service Medicare costs in every county and we know what the total costs are by person for each county.
We need to know what the real costs are and we need to look at how we get the very best use of the Medicare dollar. MedPac should make it a priority to figure out how to get the best use of the Medicare dollar using both bids, capitation, and various kinds of ACO-related payment processes. ACOs all create better care than traditional fee-for-service Medicare, and the people who are critical of ACOs for not saving enough money should rethink their priorities. They should be happy with any use of the Medicare dollar that gives more for the member and patient
If an ACO that has team care and patient centered data flows just breaks even on costs relative to fee-for-service Medicare, that should be celebrated and supported as being a much better use of the Medicare dollar.
We should make patients our top priority. ACOs make patients their priority. MA Plans clearly set up benefits and care practices around the patient’s the top priority. Only fee-for-service Medicare completely lets the patient down by being rigid on benefits, rigid on service, and making costs a higher priority than people’s lives and doing that badly and inefficiently. We should be working through MedPac each year to see which approach to buying care actually gives us the very best use of our Medicare dollar.
Continue reading…By GEORGE HALVORSON
This is the first part of former Kaiser Permanente CEO George Halvorson’s critique of Medpac’s new analysis of Medicare Advantage. The rest will be published on THCB later this week. Eventually I’ll be doing a summary article about all the back and forth about what Medicare Advantage really costs!-Matthew Holt
MedPac just did their annual report on Medicare Advantage (MA) and they were extremely wrong on several key points.
The MedPac staff has a long tradition of being critical of MA, and they also, unfortunately, have a long tradition of being inaccurate, misleading, and consistently negative on some key points for no explicable or easily understood reason.
They achieved a new low this year by spending more than 20 pages of the report warning us all in detail about the upcoming cash flow distortions and coding abuses that they say are coming from a risk adjustment model and system that actually no longer exists in 2022 as a functioning system for our Medicare program — and they are also continued their distortion about Medicare overpayment of the plans by running an artificial cost number that functions only to deceive and not to inform and by using what is essentially a fake news number several times in the report.
Coding and Risk Adjustment
CMS has now officially canceled and retired the CMS Hierarchical Conditions Categories Risk Adjustment Model that has been used for almost two decades to calculate risk for plans. It is dead and completely gone for 2022 — and MedPac explained bitterly for more than 20 pages why it was a damaging approach and they somehow did not mention that it was now gone.
CMS has some very good thinking people who brilliantly took that whole set of coding linked issues off the table by making the system that was being potentially abused simply disappear.
MedPac wrote more than 20 pages in this year’s official report about MA complaining about that exact process and system and they didn’t mention that it was gone or explain why it was important to not have that data flow create the risk level information that we will now be using to get diagnostic information into the system.
The new approach for determining patient risk levels is fraud proof. There is no way to put wrong data into the information flow that they are now going to use to see and determine which patients are diabetic and which have heart disease or who has drug abuse issues for the risk discernment processes.
The impact on low income Medicare patients & union members
MedPac also had a major content deficit in their report and managed to leave the most important aspects of the work being done now by the plans to help offset some of the damage done to too many Americans who have been damaged by social determinants of health issues for far too long in their lives. MedPac also completely failed to report and discuss the important reality of the fact that we have now reached the point where two-thirds of our lowest income Medicare beneficiaries are all voluntarily in the MA plans.
They also left out of their report the fact that a significant number of union trust funds and a significant number of employer retirement programs that had made significant promises of retirement health care benefits to their retirees over the past decades are actually having those commitments kept, met, and even enhanced with the relatively new employer-sponsored MA plans that work directly with employer settings.
Five million people who might have had their retirement health care programs bankrupt, underfunded, or at serious risk have found a very strong safety net in the MA program — and MedPac does not think that development was important to understand and probably celebrate.
Anyone looking at the future politics and funding of the MA program will find both that overwhelming support for MA from our lowest income people and from our most well-connected employer retirement funds to be good and important to understand.
MedPac missed every bit of that agenda and set of accomplishments in this year’s report.
Continue reading…
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