Month: February 2023

Vytalize Closes $100M for Primary Care Transformation

Posted on by Jason Barry

If there was still any debate about the flavor of the month in the digital health VC club, primary care enablement company Vytalize Health just settled it with its $100M Series C round.

Primary care enablement is the name of the game 2023. In the last few weeks alone, Aledade acquired Curia, Pearl raised $75M, and Privia launched new ACOs in Connecticut, North Carolina, and Delaware.

Vytalize is now adding to that momentum with a nine figure funding round less than a year after raising its $53M Series B. The company got its start as a Medicare-focused primary care practice in 2014, but has since vertically integrated to combine a risk-bearing entity with an in-home clinic model that supports other clinics with their transition to value-based care.

  • The Vytalize platform’s feature list includes all the usual suspects: patient data analytics, practice management tools, enrollment support, and finance solutions.
  • Vytalize’s biggest differentiator is that it equips its clients with a virtual and in-home clinic that helps manage high-risk populations outside of the office setting – a task made easier due to the acquisition of patient communication company MedPilot in 2021.

The influx of capital will help Vytalize integrate a wider network downstream from its primary care partners (hospitals, specialty networks, ancillary providers), while also establishing relationships with more Medicare Advantage and commercial plans.

  • Vytalize currently partners with 400 practices delivering care to more than 250k senior patients. Roughly two-thirds of these are small practices, with the remaining third mostly larger provider orgs.
  • The funding will also help Vytalize keep ahead of any growing pains. It now operates in 36 states, up from 16 during its last raise in April 2022. 

The Takeaway

Decisions made at the primary care level have a huge impact on care quality and costs given how much downstream utilization is directed by PCPs. Plenty of startups have sprung up to help providers improve these decisions while being reimbursed for their success, but Vytalize is looking to carve out a niche as a novel type of ACO with its own virtual / in-home clinic to help deliver better patient outcomes in the white space between appointments. 

Aledade Acquires VBC Analytics Provider Curia

Posted on by Jason Barry

There are dozens of companies fighting for the independent primary care crown, but as of right now it looks like that crown belongs to Aledade. After adding more than 450 new practices in 2023, Aledade is now the nation’s largest network of independent primary care.

How does a value-based care enabler defend that crown? If you’re Aledade, you acquire VBC analytics company Curia to push your advantage.

Curia uses “practical applications of AI” to optimize the targeting of patient care, identify risk gaps, and predict the likelihood of adverse outcomes – three areas core to Aledade’s value-based performance. 

  • The acquisition follows a pilot where Aledade leveraged Curia’s predictive algorithm to target patients with the highest risk for two-year mortality with advance care planning services. Safe to say that went well. 
  • Aledade now plans on folding Curia’s tech into its existing solutions while exploring new use cases such as preventing hospitalizations and improving engagement programs.

To give you an idea of what it takes to have the largest independent primary care network in the country, Aledade works with over 1.5k practices, 5k PCPs, and 15k clinicians across 45 states.

  • Aledade recently closed a $123M Series E that helped it scale to over two million patients covered by 150+ value-based contracts across Medicare, Medicare Advantage, Medicaid, and commercial payors. 
  • Playing in all of those different arenas gives Aledade a big leg-up on most of its VBC enablement competition. MA-focused comparable agilon health last reported 356k members live on its platform, and Oak Street had 59k at-risk members when it was scooped up by CVS for $10.6B.

The Takeaway

Aledade’s scale and nearly half a billion in funding both seem to suggest that an IPO would be a logical next move, although it’s CEO Dr. Farzad Mostashari is on the record saying “the most likely scenario for Aledade to be able to continue our mission is to remain an independent company.” Although that could just be a headfake, the fact that Aledade recently changed its legal structure to a Public Benefit Corporation suggests that it intends on walking the talk and remaining independent as it focuses on delivering better outcomes for everyone, not just its shareholders.

DHW Q&A: Building Better Experiences With Nuance Communications

Posted on by Jason Barry

With Peter Durlach
Nuance Communications, Chief Strategy Officer

In this Digital Health Wire Q&A, we sat down with Nuance Communications Chief Strategy Officer Peter Durlach to discuss what it takes to create great patient experiences and the evolving role of artificial intelligence in healthcare.

Durlach was an early pioneer in voice-enabled technology before joining Nuance and establishing its healthcare business in 2006. He’s since guided Nuance’s strategy across virtual assistants, imaging AI, and patient engagement, while overseeing Microsoft’s $19.7B acquisition of the company in 2022.

Let’s kick things off with a birds eye view of Nuance’s healthcare business. Can you share a bit about the overarching strategy? 

One of the best ways to think about the Nuance platform is as a conversational AI or ambient technology stack that can be highly tuned for specific B2B problems.

The healthcare division is very focused on creating solutions that drive meaningful outcomes in one of four buckets: 1) can we improve the clinician experience; 2) can we improve financial performance; 3) can we improve clinical quality; 4) can we improve the patient experience.

Zooming in on the patient experience side, can you walk us through Nuance’s services within that bucket?

People have been talking about improving the patient experience for decades, but investment in the space didn’t really take off until a couple years before COVID and only accelerated under the moniker “digital front door.” The reason it took off is because so many new competitors are trying to siphon business away from traditional providers.

When we saw this starting to unfold, we brought over the same underlying technology that’s been providing great consumer experiences in areas like retail, banking, and airlines, then built an application layer on top of that stack that tackles common problems for every provider.

To give one example, the Access Center is more important than ever as patients forget their portal passwords or want to log in to a telehealth visit, yet the staffing shortage is making it so that none of these providers have the ability to keep up. We provide the technology that helps them improve the experience without driving up staffing costs.

How do you think about steering the direction of Nuance’s healthcare business from a roadmap and prioritization perspective?

We start by thinking about the technology platform, then figuring out what apps to build on top of it. Nearly every provider is trying to consolidate vendors, not only for themselves but for their patients.

From the patient’s point of view, it’s a terrible experience if you phone a call center on one system, then interact with a chatbot on another, then receive an SMS from a third vendor. It’s also terrible for the provider to have to build the back end to all these separate systems or deploy these patient journeys across completely disparate platforms.

We do a lot of market research with clients where we ask about their biggest pain points, and one of the things we find time and time again is that the 80-20 rule holds true. 20% of potential applications can solve 80% of the pain. We’re focusing on that 20%.

What are some of the other common pain points that you’ve seen on the provider side during your market research?

I think that one of the biggest challenges in healthcare is that a lot of places still have silos between different areas of whatever they’re calling “digital.” The website, the voice side, the SMS. These silos get in the way of a comprehensive strategy.

You can’t have the people who manage the call center thinking about workflows and technology independently from the people worried about SMS and the website. Some organizations are starting to put these silos under the same leader, but even that isn’t necessarily a slam dunk. 

Patient-centric health systems realize that all of these modalities are just different ways to communicate the same information, and it’s the connected journey that’s important.

AI has been enjoying a moment in the sun with ChatGPT and Microsoft’s investment. How do you see these types of large language models impacting healthcare? 

First, let me just say that these new models are truly breathtaking. They’re mind blowing. Does that mean they’re perfect? No. Is there a fundamental technology shift happening? 100%.

In healthcare, the bar is a lot higher because the model’s mistakes can kill people. That means we’re probably going to see non-medical decision making use cases like prior authorizations or patient engagement proliferate quickly because a mistake isn’t going to kill somebody.

On the clinical side, it’s going to be far more complicated because the downside is much greater, plus you have the FDA in the middle of it. How do these models fit into regulatory guidelines? What’s the indication for use? Can you explain the black box? I truly believe it’s transformative tech, but it won’t suddenly solve every problem without some bumps along the road.

What do you think have been the keys to success for Nuance and for anyone looking to transform the healthcare industry going forward?

The single most important thing for us might sound a little cliche, but it’s the fact that we’re laser focused on the outcomes we deliver for our clients. That’s the anchor point for everything we do.

If you’re a company that’s building something in healthcare, you need to be able to move a metric that your clients care about and that they’re willing to invest in. Once you have that metric, you shouldn’t be wasting time on anything else. 

When you ask people what problems they solve, a lot of the time they’ll show you the tech and do a demo. It’s the classic tech company thing to do. They should be thinking about the client problem, the metric they can impact, and an economically viable way to make that happen.

That focus is the biggest key to our success, and it can really help crystalize the mission of anyone else in healthcare.
For more on Nuance’s Healthcare AI Solutions & Services, head over to their website.

The “Prove It” Era of Digital Health

Posted on by Jason Barry

A few different articles have been published over the past month on the topic of employer priorities, and they all seem to be getting at a similar point: we’re entering the “prove it” era of health vendor partnerships.

Over the last decade, a hot labor market created an enthusiastic audience of employers looking to attract talent through new health benefits. Now, with premiums on the rise and a looming recession, these same employers are paring down their offerings with a heavy focus on integration and cost control.

Nearly 90% of employers are planning to make changes to their health vendor partnerships this year – only 46% did so in 2022 – and 55% intend to do the same with their wellbeing programs (per WTW survey results).

In a recent Modern Healthcare article, Andreessen Horowitz General Partner Julie Yoo said that “benefit managers are having a ‘come to Jesus’ moment around pricing.” If the last few years revolved around giving employees plenty of options, the next few will be “hyper-focused on return on investment.”

  • Yoo made the point that companies that take on risk-based contracts will be looked upon more favorably to employers going forward. 
  • By delegating more risk to providers, employers can lower costs and will be incentivized to keep patients out of high-cost settings.

The other major trend that’s coming up in these conversations is vendor fatigue, with the term “point solution” quickly becoming derisive among benefits managers and investors.

  • Even compelling one-off solutions are having their sustainability questioned if there isn’t an integration and navigation component backing them up. 
  • Business Group on Health CEO Ellen Kelsay said that “a lot of these companies come and talk about the merits of their own solution in a vacuum. They’re not paying attention to what success will look like for the patient and the employer.”

The Takeaway

There’s very little slack left in the system for nice-to-have offerings that aren’t driving quality or lowering costs. Point solutions in that bucket are going to have to start taking a close look at potential M&A partners or different distribution channels. The good news is that the flip side of that coin is also true. For companies that can demonstrate a healthy ROI with a comprehensive offering, this is shaping up to be a great time to get solutions in front of employers.

CVS Acquires Oak Street, Reports Strong 2022

Posted on by Jason Barry

CVS said it was going to do it. People doubted CVS would do it. CVS did it.

To say that the retail health giant’s fourth quarter revenue beat was overshadowed would be an understatement, but in case your internet was out this week: CVS acquired Oak Street Health for $10.6B ($39/share).

Here’s the Q4 report by the numbers, then we’ll get to the juicy stuff:

  • Full year revenue of $322.5B, up 10% (Caremark up, Aetna up, Retail up)
  • CVS now 5th largest US company by revenue after Apple, Amazon, Walmart, United
  • Full year net income of $4.2B, down 48% ($5B of opioid lawsuits didn’t help)

Now for Oak Street. The general idea behind the acquisition is also the title of its snazzy investor presentation: Creating the Premier Medicare Value-Based Care Platform.

  • Oak Street Health employs 600 primary care physicians across 169 clinics. It focuses on capitated primary care for Medicare Advantage and Medicare (59k at-risk patients).
  • Unlike many of the other primary care operators left on the market after Amazon / One Medical and VillageMD / Summit, Oak Street has locations in 21 states – decent enough proof that the model is scalable and translates to different geographies. 
  • It’s also one of the only companies that checks every box on CVS’ list: strong leadership; integrated tech platform; agnostic to different geographies and payors; demonstrable capability to improve outcomes; clear path toward profitability. 

As for synergies, CVS sees 500 million of them, or at least five that can unlock $500M in value.

  • Accelerating Oak Street patient growth through CVS Health channels
  • Improving Oak Street’s economics through integration with CVS assets
  • Improving the retention of Aetna MA members through the Oak Street experience
  • Driving greater utilization of CVS Pharmacy and Caremark capabilities
  • Reducing costs from external public company and lease expenses

The Takeaway

CVS is a big company, and it needed to acquire a big player to move the needle in primary care. Although $10.6B is a hefty cost – and definitely a result of the physician M&A wars that CVS helped start – it only represents a 3.1x multiple on Oak Street’s project revenue for 2023. By comparison, Amazon forked over a 2.9x multiple for One Medical half a year ago.

Looking ahead, CVS expects Oak Street to expand to 300 clinics by 2026 at its current growth trajectory and without any further boost from the acquisition. When asked about this on its conference call, CVS said that it’s “exploring alternative avenues of accelerating synergy realization.” Buzzword Bingo. That means CVS doesn’t have a plan to speed this up yet, but it’s looking into it.

Either way, it’s hard to imagine that CVS’ existing scale won’t help make this work for both sides. CVS unlocks extra capacity with 1,100 MinuteClinics, has Aetna plans that can highlight Oak Street, and might soon have Signify home visits bringing patients into the ecosystem. This is a tipping point acquisition, and it’ll be exciting to watch.

Accenture’s Nonnegotiable Patient Expectations

Posted on by Jason Barry

Healthcare consumerism isn’t new, but the last few years have rearranged the list of what patients are looking for in their providers more than any other time in recent memory.

To uncover what factors are currently patients’ top priorities, Accenture surveyed more than 21k US healthcare consumers since 2017, finding that loyalty is now more important and harder to come by than ever.

  • 30% of respondents switched to a new provider in 2021, up 4% since 2017.
  • Nearly 80% of patients who switched cited poor care navigation as the reason for leaving, including bad experiences with staff and inadequate digital solutions.
  • Millennials were nearly 8x more likely to switch providers than older adults (46% vs. 6%) – an important trend to keep an eye on considering that they’re in a unique position to make healthcare decisions for both their children and aging parents.

Accenture identified four focus areas for organizations looking to build patient loyalty in an increasingly competitive landscape.

  • Access: 71% cited access as the top factor in selecting a provider (availability, convenience, the ability to connect with providers through preferred channels).
  • Ease of Doing Business: People who find their providers “very easy” to work with are 9x more likely to stay. Even providers who were “somewhat easy” to work with were 3x more likely to keep patients.
  • Digital Engagement: 79% of patients who described themselves as “highly digital” were likely to stay with their providers. These patients exclusively prefer digital engagement and only fall back to traditional channels when digital methods fail.
  • Trust: Patients who trust their provider were 5x more likely to stay (84%), and almost 7x more likely to stay than those who don’t trust their providers at all.

The Takeaway

Accenture’s report underscores how important it is to lead with the patient experience when building loyalty… and just how difficult of a job that is to actually get right. Patients trust providers who make them feel heard and informed about the state of their health, but building true loyalty “not only requires the ability to meet people where they are, it also means understanding where they are going.”

UCSF Study: EHR Design and Provider Behavior

Posted on by Jason Barry

A new study published in JAMIA gave us a good look at how EHR design – particularly choice architecture – can significantly influence provider behavior.

University of California, San Francisco researchers investigated several workflows at a UCSF medical center where the existing choice architecture was potentially nudging providers toward waste or misuse.

The first workflow involved ordering “free phenytoin” levels, a costly send-out test that often results in delayed care for patients, despite a readily available “total phenytoin level” being sufficient in most cases.

  • The researchers hypothesized that the EHR alphabetically presenting “free phenytoin” before “total phenytoin” to providers searching for “phenytoin level” was influencing them to order the more costly and time-consuming test.
  • They then replaced the alphabetical structure with an order panel presented to any provider searching for “phenytoin” that gave an explanation of the circumstances when each test is appropriate.
  • They simultaneously nudged providers toward the “total phenytoin” test that is “almost always correct” by making it the default selection. The intervention improved the rate of correct test orders from 92% to 100%.

Another workflow the researchers examined was the prescription of benzodiazepines for procedural anxiety. The EHR originally set the default quantity for benzodiazepines to the same quantity needed for patients routinely taking the medications for a chronic disease, therefore nudging providers to overprescribe the pills.

  • The researchers created a new order called “Lorazepam (Ativan) tablet 0.5 mg for imaging/procedure” specifically for imaging patients with a default quantity of two tablets with zero refills.
  • The new order included a default comment “for anxiety (prior to imaging study or procedure)” to nudge providers toward the appropriate quantity. This intervention was also successful.

Despite the success at UCSF, the authors emphasized that organizations must balance the potential benefits of any EHR improvements against their implementation costs. The phenytoin nudge consumed six hours of implementation time and the Lorazepam nudge took almost 3x that long, which might make other investments more worthwhile depending on the org.

The Takeaway

Although choice architecture is the name of the game for pretty much every product and design team, it’s doubly important when the choices directly impact people’s health. This study was great at wrapping numbers around how this plays out in a medical setting, and it was also interesting to see the cost-benefit analysis that still takes place when deciding whether to implement a solution that clearly improves outcomes.

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