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Q3 Healthcare Trends | Evolent Take-Private
August 29, 2024
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Together with
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“Value is a byproduct of great care — payment models cannot force it into existence.”
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Orthopedic Surgeon Benjamin Schwartz, MD
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It’s rare that a mid-year trend roundup qualifies as the biggest story of the week, but it’s also rare that they’re as stellar as the one that former HHS policy leader Paul Mango just released.
Mr. Mango served juicy takes on three of the biggest trends shaking up the industry:
Trend #1) Payor transformation has been full-speed-ahead as payors seek success in managing beneficiaries with chronic conditions by developing their own disease management platforms (not to mention new arcs of growth help justify their climbing P/E ratios).
- Evernorth is now 80% of Cigna’s total revenue and a whopping 68% of its profit – mostly as the result of its Express Scripts acquisition in 2018. In the first half of the year, Evernorth grew 29% while Cigna as a whole grew 4%.
- United was obviously an early mover into non-health plan assets, but Optum is now the key growth driver for the entire enterprise. United Healthcare remains Optum’s largest client (accounting for two-thirds of its revenue), but Optum now represents 25% of UNH’s total revenue and 49% of its profit (thanks in large part to OptumRx).
Trend #2) Provider tailwinds are adding up as several key performance measures improve simultaneously, including higher volume, increased acuity for inpatients, and lower labor costs.
- HCA just posted same store revenue up 10% due to a combination of the aforementioned tailwinds. ACA exchange volume was up 46% (total commercial volume rose 12.5%), and contract labor costs were down 25%.
- Even Community Health Systems, whose performance has lagged other national hospital chain operators, saw a 3.2% increase in admissions and a 4.7% bump to same store revenue. CHS axed contract labor costs by 39% year over year.
Trend #3) Medicare Part D upheaval has been emanating from the Inflation Reduction Act, which will take full effect on the 1st of next year.
- Mango boils down the IRA’s impact on Part D as such: it shifted the economic burden from beneficiaries who are heavy consumers of prescription drugs to the payors issuing the plans.
- Medicare Part D has been around for twenty years and during that time the combination of the beneficiary’s premium and government’s subsidy only rose to $64.28. “The impact of the IRA in one year’s time will cause that to rise to $179.45.
The Takeaway
Where is all this payor transformation heading, especially as providers increasingly view them as competitors? Will health systems sustain their momentum, or is recent performance a reflection of pent-up pandemic demand? All eyes will be on next quarter’s numbers to find out, and you’ll be the first to know when we see them.
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BrainX Live Event: Implementing Ambient AI
Curious about the tangible benefits that ambient AI is already bringing to health systems? Tune in to this recording of Nabla CMO Dr. Ed Lee and Cleveland Clinic’s Dr. Paul Bryson speaking with the BrainX Community about their lived experiences with the hottest tech in healthcare.
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A First Principles Approach to Responsible AI
Playback Health has over 15 years of experience breaking down complicated technology problems into basic elements then reassembling new solutions from the ground up, and just published a short-and-sweet guide to help others take a “first principles approach” to responsible AI.
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K Health’s First-of-its-Kind AI Knowledge Agent
K Health’s AI Knowledge Agent is a first-of-its-kind GenAI system purpose-built for the clinical setting, with a familiar feel hiding some major innovation under the hood. Discover how the AI Knowledge Agent is bringing new levels of personalization to answering patient medical questions and changing what it means to have a “digital front door” in the process.
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- Evolent in Talks With Potential Acquirers: Evolent Health is in talks with potential acquirers weighing a take-private transaction that could value the management services organization at over $4B. That’s a hefty chunk of change, and the current front runners in the conversation are big time private equity players like TPG, KKR, and CD&R, as well as Optum/UnitedHealth and Elevance. For Elevance’s part, the acquisition would pair nicely with its recent push into VBC through Mosaic Health, although insiders shared with Reuter’s that the payor isn’t a serious candidate for a full-fledged takeover.
- AI Authorization =/= Validation: An article in Nature Medicine questioned the FDA approval process for AI solutions, claiming 43% of the 521 AI-based regulatory authorizations included in the review lacked clinical validation data. Researchers criticized the FDA’s practice of letting vendors use retrospective rather than prospective data for regulatory submissions, and said the study raised important questions about AI safety. Other investigations have found AI products actually have fewer post-market event reports than general medical devices.
- Clarify Demand Forecasting: Clarify Health integrated demand forecasting analytics into its comprehensive growth intelligence solution, providing forward-looking insights down to the service code level to help health systems mitigate risk and drive growth. The new features pinpoint the geographies or service areas with the most growth potential, allowing systems to stay in front of market shifts instead of reacting to them.
- Ambience Launches at John Muir: Ambience Healthcare’s ambient AI tech is rolling out at CA-based John Muir Health, with “16 specialties accounted for” across two facilities and a network north of 1k physicians. Fortune’s coverage of the launch included some good insight into the evolution of Ambience’s platform and the roots of the partnership, with John Muir’s CMIO sharing that her doctors “aren’t just adopting the technology, they’re latching onto it.”
- CancerX Check-In: The CancerX collaboration led by DiMe and Moffitt Cancer Center debuted a new suite of public resources to improve cancer care for providers and their patients. The Digital Navigation ROI Calculator quantifies the return that health systems and cancer centers can capture by investing in patient navigation to boost access and reduce financial toxicity. The calculator is supported by a Digitally Enabled Patient Navigation Blueprint that ensures patient navigation programming is reimbursable, standardized, and plays nice with existing workflows.
- Team-Based Documentation Benefits: A large investigation in JAMA Internal Medicine found that team-based documentation strategies – like AI scribing and co-authored notes – increase clinician productivity. An analysis of 18k ambulatory physicians and notes taken between September 2020 and April 2021 linked team-based documentation to a 6% increase in visits and a 4.1% decrease in EHR time. Interestingly, physicians with under 40% of their notes co-authored by a team member didn’t see a time benefit.
- Digital Youth Mental Health Landscape: In typical Rock Health fashion, the consultancy produced a top tier overview of the digital youth mental health startup landscape, complete with analyses on solution types, care models, and go-to-market strategies. The report outlines where innovation is currently focused within youth mental health to help solidify pathways for the next generation of players, adding to a renewed interest in the vertical that attracted 34% of total digital behavioral health investment last year.
- MD Ally Series A: MD Ally landed $14M in Series A funding to help hospitals control costs and prevent overcrowding by diverting non-emergency care away from the ED. The startup works with public safety systems and payors to ensure callers receive the appropriate level of care for their medical concerns through virtual triage services, reportedly allowing its customers to cut an average of $2,200 in avoidable costs.
- Prior Auth Trends: Infinitus pulled together a report on prior auth trends using data collected by its AI agent calling 500 different payors, and the unsurprising takeaway is that the entire process is still a hassle. Fax remains payors’ most popular form of sharing PA determinations (offered by 27%), although the percentage of payors that shared via “website” or portal showed the largest increase year over year (up by a third to 16%). A bit of good news was that the dramatic increase in PA use hasn’t increased turnaround time for receiving determinations.
- Lilly Slashes Zepbound: Lilly took aim at online GLP-1 compounding pharmacy competitors, offering vials of its Zepbound weight loss drug (aka tirzepatide) for a significantly reduced monthly cost of $399-$549, as long as it’s ordered through its LillyDirect telehealth platform. That’s far less than the current $1k/mo for Zepbound pens, as well as the going rate for Novo Nordisk’s Wegovy, a sign of the times and the growing competition in the white-hot GLP-1 segment.
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Lift MA Plan Performance by Impacting SDoH
Social factors and non-medical issues strongly influence health outcomes, and addressing these contributing determinants of health can not only improve the lives of patients, but also enhance Medicare Advantage plan success. Learn how Clear Arch Health’s remote monitoring services are helping MA plans deliver cost-effective care while enabling more seniors to age independently.
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RPM Made Easy with a User-Friendly Platform
Seamlessly integrate Withings RPM with your existing EHR system and empower your care team to focus on what matters most – patient care.
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The State of Payor Enrollment and Credentialing
We’re on the brink of a new era in healthcare. From AI-enabled chatbots to GenAI, Medallion’s latest report sheds light on how healthcare organizations are prioritizing automation, actively shaping their future with it, and hoping it can live up to its promise. Get the full report here.
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