Telehealth Struggles to Live Up to Expectations

Telehealth demand hasn’t exactly lived up to expectations, but that might have more to do with manic forecasting than real-world performance when a 6,000x utilization increase isn’t enough to satisfy the naysayers.

There’s nothing like forced adoption to kickstart a market, and the combination of in-person office closures and pandemic-era legal flexibilities caused telehealth utilization to vault from less than a million visits in Q4 2019 to over 60 million visits by Q2 2020.

(Overly) enthusiastic forecasts quickly followed the early data, but Trilliant Health’s latest telehealth tracker shows that demand has only headed downhill since the initial spike. 

  • As of Q3 2023, sustained declines have left telehealth volumes 54.7% below their peak, and the trendline doesn’t appear to have found a bottom.

Recent high-profile retreats from players Optum and Walmart have sparked solid viewpoints from pessimists and optimists alike, although the general consensus is that patients don’t view telehealth as a substitute for in-person care for most conditions.

  • Since 2019, behavioral health has represented a consistently increasing share of overall telehealth utilization, and accounted for a substantial majority (67%) of all virtual visits in Q3 2023.

E-prescribing increases closely mirrored the telehealth growth, and now represent a significant share of prescriptions for many drug classes:

  • 30.3% of antidepressants, 38.9% of stimulants, and 5.4% of opioids. It’ll be interesting to see the GLP-1 data when it catches up.

The Takeaway

Event-driven demand shocks don’t last forever, and the telehealth slowdown showed that reality is usually more nuanced than an overnight paradigm shift. New modalities don’t magically create better businesses, but they can be the tools that founders use to build them.

The Hidden Cost of Mental Health Inequities

Mental health inequities across the US are racking up an annual tab of over $477 billion, and a new report from Deloitte and the Meharry School of Global Health didn’t offer a particularly rosy forecast given our current trajectory.

If left unchecked, the authors expect the annual burden to reach $1.3 trillion by 2040, a brutal total considering the “avoidable and unnecessary expenses” behind it.

Drawing on data from government agencies and Komodo Health, the researchers identified four primary cost drivers stemming directly from mental health inequities.

  • Avoidable ED utilization resulting from untreated or undertreated mental health conditions. 2024 Expenditures: $5.3B
  • Chronic physical conditions linked to mental health’s role as “the invisible counterpart to physical health.” 2024 Expenditures: $23.9B
  • Productivity loss due to mental health-related unemployment and missed work days. 2024 Expenditures: $116B
  • Premature deaths from suicide, substance use disorders, and mental illness associated with comorbid conditions. 2024 Expenditures: $332.2B

Disadvantaged populations are disproportionately impacted across all four categories due to a “legacy of policies” creating structural inequality, and the report lays out several solutions taking different routes to the same destination: equal access for those who need it most.

  • One way to get there is to address the provider shortage by integrating behavioral care with primary care. Not only do PCPs already manage areas like depression, but they’re also experts in the chronic conditions more prevalent among mental health patients. 
  • From a regulatory standpoint, Congress should look at reimbursement policies that “create unintended barriers to treatment.” A prime example is Medicaid being “woefully underfunded” to ensure access to care for the 40% of nonelderly beneficiaries with a mental health or substance use disorder.

The Takeaway

If the moral argument for addressing mental health inequities wasn’t enough to inspire action, this business argument should be just as compelling to payors and employers. Although the answers to the problem are obviously easier said than done, the report succeeded in framing up the massive cost of not solving it at all.

A Delicious Primer on Food-as-Medicine

Rock Health dished up a fantastic primer on the food-as-medicine market, serving as a helpful cheatsheet of which trends will stay fresh the longest, and which ones are already stale.

Fertile grounds for new FaM models have been created by shifting consumer behaviors around diet and wellness, with 20% of US adults saying the pandemic prompted healthier choices. [Graphic: Three eras of food-as-medicine]

  • Payors are also grappling with the rising costs of treating the nearly 50% of Americans with diet-related illness, and FaM offers an avenue to reign these in without pricey medications like GLP-1s.
  • Policy changes have also planted the seeds for growth, with new initiatives helping scale FaM programs like medically tailored meals. One wild stat is that FaM partnership volume in the last 18 months has surpassed that of the prior seven years combined.

As the FaM market begins to sprout, startups are facing an increasingly complicated menu of funding sources and potential partners

Value chain segment #1: Food access

  • Food and supply chain – Providers of healthy groceries, prepared meals, or digital marketplaces for third-party products, including delivery partners and food “farmacies” that fill clinician’s produce prescriptions. Examples: Mom’s Meals, Uber Health
  • Service navigation – Services that refer consumers to food access programs and support enrollment, often through community orgs like FQHCs. Examples: Findhelp, Unite Us

Value chain segment #2: Nutrition care

  • Medical nutrition counseling – Virtual or in-person nutrition counseling with dietitians to provide tailored nutrition plans and resources. Examples: Foodsmart, Season Health
  • Behavior change support – Tools for tracking diet and outcomes, educational content, and recommendations. Includes non-digital services like nutrition and cooking classes. Examples: Heali, SeekingSimple

Value chain segment #3: Program enablers

  • Fintech – Targeted tools and vouchers (category-restricted to healthy products) that enable consumers to use food benefits provided by their health plan. Examples: Solutran, Soda Health
  • Data and food benefits management – Data on consumer behavior or food products to help payors optimize benefit design, measure program impact, and inform engagement strategies. Examples: DietID, NourishedRx

The Takeaway

The food-as-medicine market is turning into a “cornucopia of innovation,” but founders looking to take advantage of new funding mechanisms now have to separate the wheat from the chaff when it comes to business models and potential partners.

The 50 Best Digital Health Newsletters, Influencers, and Podcasts for 2024

We’re dedicating today’s top story to bring you an updated list of the people and publications that we rely on to find the most interesting digital health stories from across the web. Assuming that you already subscribe to Digital Health Wire, these are the 50 other newsletters, websites, and podcasts to follow if you want to keep up with the latest and greatest in healthcare.

Although we stay on top of all the mainstream outlets and digital health journals, some of the best content is usually found just off the beaten path. We’re a newsletter, we love newsletters, so we’re kicking things off with our favorite healthcare newsletters. 

When we’re done rounding up the headlines from the major news sites and back out of our morning newsletter rabbit hole, we can count on finding more fresh perspectives from these specialty publications and blogs.

These days most of our favorite content isn’t published, it’s tweeted. These all-stars are the ones doing the tweeting.

And finally, the podcasts that let our ears take over when our eyes are tired from all the blogs and tweets. We have a soft spot for founder interviews, B2B trends, and long form conversations.

It’s a lot to keep up with, but if you want the best digital health news out there, these sources will do more than get you started. You can also subscribe to Digital Health Wire and we’ll do the heavy lifting for you:)

PS – This list could easily have been a top 100, so if there’s a publication or news source that we’re crazy for not including, hit reply and let us know!

Transcarent Lands $126M Series D

Although Transcarent was already a unicorn, it might be about to grow another horn after landing $126M in Series D funding at a $2.2B valuation.

The Transcarent platform makes it easy for employees to access all of their care needs using a single convenient interface – their phone – while also simplifying how employers provide and track that care.

  • The platform connects members to comprehensive experiences including Everyday Care, Pharmacy Care, Surgery Care (through partnerships with health systems and ambulatory care providers), and Behavioral Health Care.
  • At a time when point solution fatigue is crippling employers and telehealth companies are imploding due to a lack of downstream revenue from other services, Transcarent’s approach definitely has a few things going for it.

The fresh funding will be used to accelerate Transcarent’s AI capabilities, support commercialization, and more than likely acquire other companies (plus the customers they bring along with them).

  • Transcarent apparently had upwards of $100M in the bank before closing the latest round, but it would appear that $226M is a more comfortable starting point when you’re looking to build-out your AI and sign some new partnerships.

The reason behind the AI push is the interconnected nature of the platform itself, which has already enabled several AI features that are harder to pull off with a more narrow approach.

  • For example, if a doctor on Transcarent’s platform reports that a patient has sinus pain, the AI will flag their seasonal sinus infections in their medical history, and can then pull the prescriptions they’ve used in the past – expediting both diagnosis and treatment.
  • If Transcarent’s last phase of growth was about reaching the scale to make that happen, the next phase will revolve around rolling out as many of these features as possible.

The Wire

If you needed any more proof that the market is looking for platforms instead of point solutions, Transcarent’s valuation should give you plenty. Both employers and consumers want a single platform to manage healthcare, and it turns out that providing one leads to good things.

How Walmart F—– Around and Found Out

White flags are flying left and right, with Walmart announcing its retreat from care delivery less than a full week after Optum made a similar surrender.

Walmart’s five-year foray into primary care is ending with the closure of 51 health centers, the shuttering of its telehealth service, and the cancellation of any active ambitions in the space.

  • The press release chalked up the “difficult decision” to a challenging reimbursement environment and high operating costs, which ultimately made the business unsustainable.

The abrupt finale arrives shortly after Walmart laid out plans to nearly double its footprint to 75+ health centers by the end of 2024, as well as several other marquee announcements.

  • As recently as November, Walmart was inking health system partnerships with the likes of Orlando Health, and Bloomberg was even reporting on a potential acquisition of ChenMed that would have opened the doors to the Medicare Advantage market.

So what happened, and why couldn’t the nation’s largest retailer succeed in delivering care to the millions of underserved patients where it already has a presence? Mainly because retail clinics aren’t set up to succeed.

  • Scaling brick-and-mortar clinics is simply a low margin endeavor. Reimbursement is low, provider costs are high, and the telehealth piece looks more commoditized every day.
  • Even with Walmart’s economies of scale and armies of foot traffic, the system it was operating in doesn’t incentivize preventative care, but rather expensive procedures that it didn’t offer in-house.

The perfect storm of inflating costs and shiny technology that fails to actually reduce those costs is proving too much for retailers and telehealth companies alike. The only ones succeeding seem to have an edge that makes it possible:

  • They have access to better rates (One Medical’s health system relationships)
  • They have boosted margins from marking up generics (Hims & Hers)
  • They control premium through value-based care arrangements
  • They have some form of subscription revenue

The Takeaway

The moral of Walmart’s story is that even if you have all the best ingredients, the meal is still only going to be as good as the recipe. Having groceries and doctors under one roof doesn’t lead to more health visits if people don’t want to see a doctor where they get their groceries.

Telehealth Linked to Quality as Extension Deadline Looms

Efforts to extend regulatory flexibilities for virtual care gained some wind in their sails from a new study in Health Affairs that linked telehealth use to significant quality improvements and a relatively modest bump in spending. 

Researchers assigned Medicare patients to health systems according to care patterns in 2019, then segmented the providers based on their telehealth adoption in 2020 (5.5M patients, 576 systems). They then analyzed outcomes for 2021 and 2022.

Patients at health systems in the highest quartile of telehealth use (27% of all visits) had an increase of 0.21 outpatient visits per patient per year, a relative increase of 2.2% compared to systems in the lowest quartile of telehealth use (9.5% of all visits).

  • These patients also had 14.4 fewer non-COVID ED visits per 1,000 patients per year, a 2.7% relative decrease.
  • Further, the patients at high-telehealth systems saw improved adherence to medications like metformin and statins, although there were no clear changes in hospitalizations.

Those improvements came at the cost of an additional $248 per patient per year at high-telehealth systems, a relative increase of 1.6% above the lowest quartile.

  • The authors noted that this increase was largely driven by inpatient admissions and pharmaceuticals, but offset by decreases in outpatient spending.

Where do we go from here? With many virtual care flexibilities set to expire at the end of the year – like allowing Medicare patients to receive telehealth in their homes – regulators are on the clock to create more permanent policies.

  • Policymakers have already proposed a bevy of bills to extend the flexibilities, but the debate carries on as the deadline looms.

The Takeaway

Given the access benefits, quality improvements, and modest increase in spending, this study only makes it harder to justify rolling back telehealth coverage for Medicare patients. The evidence is mounting, and it’s not too hard to picture a world where the arguments against telehealth only grow weaker as technology improves and providers optimize their virtual care services.

Epic vs Particle: The Data Exchange Debate

It probably would have been impossible to wander onto any of your healthcare newsfeeds last week and miss the drama unfolding between Epic and Particle.

If for some reason the solar eclipse blacked out your internet, the basic timeline looks like this:

  • April 8 – Rumors began circulating that Epic cut off data access to patient information platform Particle Health.
  • April 9 – Particle confirmed that Epic ceased responding to medical record requests through the Carequality network (updates ongoing).
  • April 10-11 – All hell broke loose.
  • April 11 – Epic released an Issue Notification detailing the issues and steps toward a resolution.
  • April 12 – Our shepherd through the dark forest of interoperability, Brendan “Health API Guy” Keeler, published a masterful breakdown of the situation and its downstream implications.

Without wading too far into the data exchange weeds, Particle “combines data from 270 million plus patients’ medical records by aggregating and unifying healthcare records from thousands of sources”… sources like Carequality.

  • Carequality is effectively one of the country’s largest health information networks, facilitating data exchange between qualified network members (i.e. Particle) who agree to only query patient data for “Permitted Purposes” such as Treatment, Health Care Operations, or Public Health Activities.
  • The problem at the heart of the Particle controversy arises due to the fact that Treatment is the only purpose that organizations like Epic are actually required to respond to, causing all sorts of companies to warp their true purposes to Treatment-shaped requests.

Epic’s Issue Notification went as far as specifically naming certain Particle customers that it felt violated the Treatment case, including a company named Integritort that was allegedly using the patient data to try and identify potential class action lawsuit participants.

  • Particle maintains that all of its partners directly support Treatment, and that “the ability for one implementor to decide, without evidence or even so much as a warning, to disconnect providers at massive scale, jeopardizes clinical operations for hundreds of thousands of patients as well as the trust that is so critical to a trust-based exchange.”

The Takeaway

Since we know a perfect takeaway when we see one, we’ll leave it to the Health API Guy to wrap up the story:

“The tactical actions and who’s right or wrong really isn’t that important. Instead, they can serve as a catalyst and accelerant for the change needed. These events occurred because fraud and abuse are happening because the status quo of the networks only working for Treatment leads to the worst possible incentives. Health data is needed by a broader set of stakeholders in order to serve the patient.”

In other words, now’s the time to make viable paths for other Permitted Purposes a reality.

Rock Health Q1 2024 Funding Recap

If Rock Health’s Q1 2024 Digital Health Funding Report makes one thing clear, it’s that the times of transition are behind us, and we’re now fully entrenched in a new digital health funding cycle.

The first quarter saw $2.7B in digital health venture funding across 133 rounds, marking the lowest quarterly total seen since 2019. It’s not as bad as it sounds.

  • Although total funding wasn’t trending in the right direction, the pace of the funding was actually healthy, and the 133 rounds was the highest in the last six quarters.

The average transaction size of $20.3M mostly tells the tale of growth-stage companies having to justify their valuations based on clinical outcomes rather than fancy storytelling.

  • Crowded markets are pushing enterprise customers to seek out outcomes data as a way to differentiate players and evaluate value-for-investment.
  • As outcomes data becomes a moat and a customer draw-in, investors are seeking out companies that can demonstrate efficacy early – making outcomes data more central to fundraising conversations… and at earlier stages.

AI drove a record share of funding. While not exactly too surprising, AI-enabled companies captured 40% of Q1’s funding total ($1.1B across 45 deals), compared to 33% of 2023’s funding pot and 29% of 2022’s.

  • As AI energizes the sector, it isn’t too hard to follow the funding to the areas with the most perceived promise: scribing, precision medicine, and care enablement.
  • Abridge raised a colossal $150M Series C, AI precision health company Zephyr AI landed a $111M Series A, and a suite of high flying startups landed huge rounds, including Ambience Healthcare ($70M), Fabric ($60M), and Codametrix ($40M).

The last theme is familiar: creative fundraising continues to be a crowd favorite, especially as public market delistings cause investors to rethink their exit potential.

  • Nearly half (48%) of Q1’s funding rounds were unlabeled, compared to 44% of all transactions in 2023.
  • Founders are going above and beyond to entice investors with more upside in the event of an exit, as seen with Transcarent structuring its $125M Series D to offer funders 2.5x their investment should the company M&A or IPO. 

The Takeaway

Expectations have been reset for digital health startups, causing them to evolve their strategies and reorient around different metrics of success (strong outcomes / margins vs. high projected growth). These expectations are undoubtedly higher than they were during the pandemic era of loose capital, but that’s probably not a bad thing for a sector that’s still striving for maturity.

The Cost of Manual Workflows, and Where Automation Can Help

We cover new solutions promising to swap manual workflows for automated operations on a weekly basis, but it’s rare that we get a chance to devote a full deep dive to the motivations driving the innovation:

  • What workflows would see the biggest benefit from automation?
  • What areas are healthcare orgs hoping to evolve in their operations?
  • What teams stand to gain the most from automation? 

Medallion’s 2024 State of Payer Enrollment and Credentialing Report gave us that chance, shedding light on those answers through a survey of nearly 350 healthcare executives.

Among the key findings from the report was the fact that 45% of respondents say their staffing levels are “inappropriately low,” yet 34% also feel the need to further cut headcount expenses.

  • Those numbers are a recipe for burnout. 57% of enrollment and credentialing teams have experienced turnover in the past year, along with 36% of CNAs, 15% of NPs, and 11% of PAs.

One of the main reasons why enrollment and credentialing teams are feeling the pressure so acutely is because of the manual nature of their workflows.

  • The payor enrollment process involves wrangling information from providers to fill out applications, staying on top of the evolving requirements of various health plans, communicating the enrollment status of every provider, and constantly following up with payors by email or fax. 
  • Those slow turnaround times directly impact the bottom line, with 46% of respondents reporting that unoptimized enrollment workflows cause them to miss out on revenue.

That isn’t even half the battle, with the credentialing process taking just as long to gather provider data, check qualifications, and complete primary source verifications.

  • 84% of credentialing teams experience turnaround times of 15 days or more, which unfortunately isn’t too surprising considering that 30% manually verify credentials by visiting individual sites.
  • Every day wasted waiting on credentialing is a day the provider isn’t seeing patients, and that missed reimbursement turns out to cost an average of $10k each day.

If those problems hit a little too close to home, automation is more than likely going to play a major role in the solution. An end-to-end platform like Medallion might be the right way to make that happen, and you can check out our coverage of the platform for a complete overview of how it can help fully automate payor contracting and enrollment, credentialing, and licensing.

The Takeaway

It’s no easy task to balance operational costs with a mission to provide high-quality care, but with the US healthcare industry spending over $800B every year on administrative tasks, it’s time to find a way to thread that needle. For a closer look at these issues and how Medallion might be able to help, make sure to head over to the full report.

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