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What the Pandemic Taught Us About Value-based Care

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By RICHARD ISAACS

You’ll recall that we ran a long piece (pt 1, pt 2) about Medicare Advantage from former Kaiser Permanente CEO George Halvorson earlier this year. Here’s a somewhat related piece from the current head of The Permanente Medical Group about what actually happened there and elsewhere during the pandemic–Matthew Holt

The COVID-19 pandemic has provided important lessons regarding the structure and delivery of health care in the United States, and one of the most significant takeaways has been the need to shift to value-based models of care.

The urgency for this transformation was clear from the pandemic’s earliest days, as shelter-in-place orders caused patient visits to brick-and-mortar facilities to plummet. That decline dealt a financial blow to many fee-for-service health care providers, who are paid per patient visit, treatment or test performed — regardless of the patient’s health outcome.

Prepaid, value-based health care systems, on the other hand, have demonstrated that they are better equipped to respond to a continually evolving health care landscape. Because they are integrated, with a focus on seamless care coordination, and they are accountable for both the quality of care and cost, these systems can leverage technologies in different ways to rapidly adapt to major disruptions and other market dynamics. Priorities are in the right place: the patient’s best interests. Value is generated by delivering the right level of care, in the right setting, at the right time.

Because value-based care focuses on avoiding chronic disease and helping patients recover from illnesses and injuries more quickly, it has the promise to significantly reduce overall costs in the United States, where nearly 18% of gross domestic product was spent on health care before the pandemic — significantly more than comparable countries. That figure rose to nearly 20% in 2020 during the pandemic.

While providers may need to spend more time on implementing new, prevention-based services and technologies, they will spend less time on managing chronic diseases. And thanks to the preventive approach of value-based health care organizations, society benefits because less money is spent managing chronic diseases, costly hospitalizations and medical emergencies.

Value-based organizations drive additional societal benefits. They understand that building trust with patients requires cultural competency — tailoring services to an individual’s cultural and language preferences. During the pandemic, building trust was especially important with underserved communities, where mistrust of health care systems is prevalent.

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Aledade: Mandy Cohen joins, Farzad speaks

Aledade is the “build an ACO out of small independent primary care practices” company. It was founded by former ONC Director Farzad Mostashari and has been growing fast and profitably in the last few years, having raised just shy of $300m. Farzad recently both tweeted out the latest and put up a slide deck about their financial and business progress. Aledade also announced a major star signing in Mandy Cohen, previously Secretary of HHS in North Carolina, who is becoming CEO of a new division called Aledade Care Solutions. I had a wide ranging conversation with both of them about what Aledade has done and what it is going to do, as well as the general state of play in primary care and risk taking–Matthew Holt

TRANSCRIPT (lightly edited for clarity)

Matthew Holt:

Okay, it’s Matthew Holt with THCB Spotlight. I’m really thrilled to have Farzard Mostashari and Mandy Cohen with me. So, both of these two doctors have spent a lot of their time in public, much of their career in public service, Farzad for many years was in New York City, and then later was at ONC. Mandy was at CMS, and more recently, was Secretary for Health in North Carolina. In fact, towards the end of the Obama administration, Farzad was doing venture capitalism in a bar and got given a check and founded Aledade. And the news just recently, was that Mandy, who has just finished her term in North Carolina, is now going to join Aledade and start a new division there. So, I thought we would chat about how Aledade’s doing, what it’s doing, and what it’s going to do in the future and hopefully, yeah.

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Quickbites: Equip; SameSky, Jenny Schneider (GC) & Calibrate

I’ve decided to try a new format for some interviews with digital health leaders. The other week I was at the Digital Health Innovation Summit in San Diego. I did a fair amount of tweeting from the conference but thought I’d also grab a few of the participants for some rapid fire interviews. They’re only 5 mins each but hopefully this “Quickbite” format will catch you up on some interesting players (even as they got buffeted a bit by the wind and the marine air corp!)–Matthew Holt

The Interviewees are. Kristina Saffran, CEO Equip; Abner Mason, CEO SameSky Health; Jennifer Schneider, ex-Livongo and now EIR at General Catalyst; & Isabelle Kenyon, CEO Calibrate: Their videos are below in order

Kristina Saffran, Equip
Abner Mason, SameSky Health
Jennifer Schneider, ex-Livongo, General Catalyst
Isabelle Kenyon, Calibrate

#HealthTechDeals Episode 9: Signify buys Caravan; Koneksa; Jasper; Vynca; Doximity

Jess & I are worried about Peleton’s CEO! Well that not worried. Signify Health buys Caravan Health for $250m ; Koneksa gets $45m; Jasper Health gets $25m; $30m for Vynca; & Doximity pays $82.5m for scheduling co Amion, while going gangbusters on its numbers. Matthew Holt

TRANSCRIPT

Jessica DaMassa:

Matthew Holt, you and our loyal listeners might recall how a few weeks ago I bring up the fact that no one is talking about Peloton and the fact that it’s killing TV characters left and right. Then what happens all of a sudden? Boom! Take out of Peloton. The stock has tanked. The CEO is gone. Thousands of people laid off. Am I the harboror of terrible things that are yet to come? It’s this episode, the February 10th episode of Health Tech Deals.

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Matthew’s health care tidbits: #What is insurance again?

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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, I was reminded on Twitter that many Americans really don’t understand health insurance. A spine surgeon no less in this thread (no jokes about arrogance please) was telling me that he was paying ~$8,000 a year ($4,000 in insurance and $4,000 in deductible) before he got to “use” his insurance–which, as his medical costs were low, he never did. Others were complaining that the cost of employee premiums were over $20K. They all said they should keep the money and (presumably) pay cash when they do use the system. It’s true that most people don’t use their insurance. That’s the whole point. When you buy house insurance, you don’t expect your house to burn down. You are paying into a pool for the people whose house does burn down.

In the US we are on average spending $12k per person on health care each year. But spending on most people is way under that and for a few it’s way, way over. If you take the rough rule that 50% of the spending is on 10% of the people then 35 million people account for $2 trillion in spending–that’s ballpark $60,000 each. They are the ones with cancer, heart disease, complex trauma, etc, etc. The rest of us are “paying” our $4,000, $8,000 whatever, into the pool to cover that $60,000.

There are only two ways to lower that cost for the healthy who aren’t “using” their insurance. One is to exclude unhealthy people from that insurance pool, which makes the costs for everyone else much less. We did that for years with medical underwriting and it was nuts because it screws over the unhealthy. Fixing the pre-existing condition exclusions was the only bit of Obamacare everyone agrees on–even Trump. But now we are ten plus years into this new reality, some people have forgotten how bad it was before.

The other way is to reduce the costs in the system and lower that $4 trillion overall. How to do that is a much longer question. But it isn’t much connected to the concept of insurance.

Inside Wheel’s $150M Series C: CEO Talks “Long Game” for Stealthy Virtual Care Infrastructure Biz

By JESSICA DaMASSA, WTF HEALTH

Wheel’s CEO Michelle Davey says the white-label virtual care startup’s $150M Series C – led by notable health tech mega-funders Lightspeed Venture Partners & Tiger Global – is “really about the long-game.” We get into the details of this purposeful funding round and what it means for the future of Wheel, as well as the play-by-play analysis of what happened over the past 9 months, since the company closed its $50M Series B. (FYI: Wheel’s total funding is at $216 million to-date.)

Wheel is currently running behind-the-scenes for an undisclosed client list of brands, facilitating 1.6 million virtual visits a year for digital health companies, digital pharmacies, retailers, and, now, even traditional healthcare providers. That number is expected to triple by the end of 2022, and we get into what’s fueling that growth and whether or not Michelle believes that this institutional push toward online care will persist as the pandemic wans and the world continues re-opening.

Armed with this fresh funding, how will three-year-old Wheel continue to differentiate its offering from legacy telehealth infrastructure providers like Amwell and Teladoc? How will it win against their legacy relationships with legacy healthcare providers? Or, is Wheel’s big bet on the continued scaling of what Michelle calls “next generation healthcare”? Wheel has added A LOT of tech to its own infrastructure recently, providing asynchronous options, better clinician matching, more triaging and navigating, and, with this funding, are is now talking about adding “diagnostic services” to round out their service line. What, exactly are we talking about here in terms of business model evolution? Tune in and find out what this stealthy startup is up to!

THCB Gang Episode 80, Thursday Jan 27

Joining Matthew Holt (@boltyboy) on #THCBGang for an hour of conversation on the happenings in health care and beyond were regulars medical historian Mike Magee  (@drmikemagee) and writer Kim Bellard (@kimbbellard), and TWO special guests.

Shantanu Nundy @DrNundy  is Chief Medical Officer of Accolade and last year we had him on to talk about his book Care After Covid. This week, with Lisa Cooper and Kedar Mate he wrote in Jama adding “advancing health equity” as a new part of the “quintuple aim.”

Our second guest was Janae Sharp @CoherenceMed from the Sharp Index, which is dedicated to increasing awareness of and reducing physician suicide and burnout through support and data science

Were we ever going to be able to cover everything about physician burnout and health equity in just one hour? Yes, it was unlikely but we gave it our best shot!

The video is preserved below. If you’d rather listen to the episode, the audio is available from Friday as a weekly podcast available on our  iTunes & Spotify channels. 

Infermedica raises a big round and demos new product

Infermedica is a company that started by creating symptom checking and chatbot functionality in Poland back in 2012. It’s spread to delivering that patient-facing diagnosis functionality via API and now as preparation for a physician visit. Today they announce a $30m series B and demo their new product which helps prepare a visit, and integrates into the clinician workflow. I spoke with CEO Piotr Orzechowski and Chief Product Officer Tim Price–Matthew Holt.

Interview & Deep Dive into Summus Global

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

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.

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