From Eric Gombrich’s recent article on finding clinical-economic balance.

Primary Care

Retailers in Healthcare: A Catalyst for Provider Evolution

The era of retail healthcare has arrived, with Definitive Healthcare’s latest report showing that retail clinic claims volumes have tripled since 2017, outpacing growth in urgent centers, EDs, and physician practices.

Definitive’s deep dive gives a great overview of the current landscape and lays out several paths for traditional providers to respond to the wave of new entrants gunning for market share.

Big retailers dominate the market, with 85% of the nation’s 1,800 retail clinics owned by major players like CVS (63% share), Kroger (12%), and Walgreens / VillageMD (8%).

• These clinics are more likely to be in high density areas where they’re easier to staff and can reach a larger population, but it was still surprising to see that only 2% of them are in rural areas considering how often retail clinics are touted as a way to improve access.

• Retail clinics’ most popular use cases in 2022 were immunizations (39%) and COVID exposure (31%), but claims were still up 21% after excluding COVID-related procedures.

Definitive lays out three options for provider orgs wondering whether to partner or compete as retail clinics start capturing patients with promises of lower costs and greater convenience.

1) Partner with retailers. As a partner, retailers bring large store footprints, robust consumer analytics, and provide an important referral stream for both PCPs and specialists.

• Ex. Target retail clinics in some Southern California stores are staffed with Kaiser Permanente clinicians, giving Target a well-established healthcare brand to draw customers into its stores and giving KP a way to attract new members with high-traffic locations that don’t require a huge infrastructure investment.

2) Compete with retail-like strategies. Traditional providers can start leveraging consumer-first strategies to prevent patients from flocking to retail clinics for convenience.

• Ex. That might look like offering extended hours and more walk-in appointments to meet patients when they’re available. Definitive cites a Robert Wood Johnson survey that found 59% of consumers choose retail clinics because of convenient hours, while 56% choose them because they don’t need to make an appointment. 

3) Consider acquiring retail clinics. Health systems can acquire retail clinics to add access points while leveraging their brands, NPs to staff clinics, and physicians for oversight.

• Ex. When Walgreens shuttered 160 retail clinics in 2019, Advocate Health and Piedmont Healthcare acquired ownership to benefit from the already-established clinical spaces and their ability to generate demand based on pre-existing trust in local communities.

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The Wire

• Hyro Lands $20M: Hyro is the latest conversational AI startup to attract VC attention, landing $20M to help replace chatbots and automate workflows in messaging services like call centers, mobile apps, and websites. The startup works with enterprise clients across a wide range of industries, but will be focusing on tasks such as scheduling and prescription management in healthcare. The round highlights the tale of two cities unfolding in digital health, where it’s the best of times for generative AI funding, and a less-than-ideal climate for everyone else.

• Hospital Margins Break Even in April: Hospital operating margins finally broke even in April, although Kaufman Hall expects the upward momentum to be short-lived as debt levels and charity care begin climbing as states start unwinding the pandemic’s Medicaid coverage requirements. Although total expenses fell slightly month-over-month, operating revenues declined even faster, falling 5% due to volumes dropping across the board – including inpatient, outpatient, and the ED.

• BJC-Saint Luke’s Merger: Health system consolidation isn’t showing any signs of letting up, with BJC HealthCare and Saint Luke’s Health System planning to merge into a combined system with $10B in revenue across 28 hospitals in Missouri, Kansas, and Illinois. BJC and Saint Luke’s don’t share a geographic overlap, and intend to continue serving their distinct markets while retaining their separate brands. Similar to other recent cross-market mergers, BJC and Saint Luke’s are looking to combat margin pressures with economies of scale while avoiding the regulatory scrutiny seen by same-market mergers.

• CancerX Founding Members: The CancerX accelerator co-hosted by Moffitt Cancer Center and DiMe unveiled the founding members that will be collaborating to achieve the goals of the White House’s Cancer Moonshot initiative. The list is a Who’s Who of oncology and digital health leadership that now has access to mentorship, funding, and clinical partnerships as they begin working on novel approaches to help cut the cancer death rate by 50% over the next 25 years. CancerX is slated to announce its first demonstration project in April 2024, and it looks like participation is still open to join the inaugural cohort.

• RPM in Cancer Care: A patient-provider survey (n=290) from the Association of Community Cancer Centers found that both cancer patients and their oncologists view symptom tracking and “alerting care teams of needed medical interventions” as the top benefits of RPM. Although 41% of providers viewed remote monitoring tools as a way to improve outcomes, only 17% of patients thought the same. The survey also found that 40% of oncologists are already implementing RPM at their practices, and another 28% are considering upcoming implementations.

• Strive Closes $166M: Value-based kidney care company Strive Health closed a massive $166M Series C round to lean into expansion within Medicare Advantage, Medicare, and health systems. Strive provides in-home and virtual care for chronic kidney disease patients, leveraging its analytics platform to identify appropriate interventions and connect patients with care teams, nurses, and case managers. It’s a big round in part because it’s a big addressable market, and Strive’s 80k patients are still a small share of the 37M US adults living with CKD.

• Bayer Precision Health: Bayer launched a new Precision Health business unit to develop consumer products that deliver personalized insights through “novel delivery mechanisms.” The pharma giant, which recorded $53B in 2022 revenue, believes digital health could be its next arc of growth and that “the best of precision health will be driven by partnerships.” Bayer’s no stranger to precision health partnerships, having already embedded Ada Health’s AI symptom assessment into several of its brands and launched a heart disease screening tool from Huma Therapeutics on the Aspirin website.

• TEFCA Participation Plans: Half of hospitals plan to join the Trusted Exchange Framework and Common Agreement (TEFCA), according to a new AHA survey. Multi-hospital systems were more likely to have participation plans than independent hospitals (61% vs. 29%), and 65% of hospitals that participate in the big three national HIE networks (eHealth Exchange, CommonWell, or Carequality) plan to participate. The data comes shortly after Epic released a list of 25 customers that pledged to join TEFCA and stated that it’s optimistic that nearly all of its 2k hospital customers will join.

• Upfront Expansion: Urgent care centers seem like the hot new service line, with patient engagement startup Upfront Healthcare launching a dedicated business unit to serve the high-demand sector less than a week after Zocdoc announced a similar move. Upfront’s push into the space will be supported by its recent acquisition of PatientBond – already a major player in urgent care – as it begins developing purpose-built solutions to improve the patient experience while driving higher retention and utilization of additional services.

• Vivalink’s 14-Day ECG Patch: Wearable remote monitoring company Vivalink launched a new ECG monitoring patch that supports a “continuous 14-day live stream” per patch application, with the goal of reducing both clinician and patient burden. Intended for ambulatory use such as post-op monitoring, the patch complements its real-time ECG feed with a range of other data points like heart rate variability, respiration, skin temperature, step count, and posture detection.

• Behavioral Health Comorbidities: The 22% of patients with a diagnosed behavioral health condition drive roughly 41% of total healthcare spend, per a new claims analysis from Evernorth. The analysis found that 87% of behavioral health patients also have one or more medical conditions (commonly circulatory, endocrine, and MSK disorders), resulting in treatment costs that are 2-3x higher than for patients without a behavioral condition. On the bright side, behavioral treatments make a clear impact. Type II diabetics with severe depression who received behavioral treatment had $1,649 lower costs per member per year compared to those without behavioral care.

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