Healthcare Technology - 3rd Healthcare Disruptive Technologies & Innovations (HCDT&I) Virtual Day Recap - Credit Suisse | PLUS
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22 March 2020
Equity Research
Americas | United States
Healthcare Technology
3rd Healthcare Disruptive Technologies &
Innovations (HCDT&I) Virtual Day Recap
Healthcare Technology & Distribution | Management Meeting
Last week, we hosted our 3rd Healthcare Disruptive Technologies & Innovations (HCDT&I) day
Research Analysts
virtually. Presenters included executives from Altruista Health, Buoy Health, Livongo, Quartet
Health, Somatus, Welltok, Iora Health, and Heal. We also hosted sessions with Will Brady, the Jailendra Singh
Chief of Staff to HHS Deputy Secretary, and Dr. Sylvia Romm, Atlantic Health System’s CIO. 212 325 8121
jailendra.singh@credit-suisse.com
Technology Playing a Critical Role in Dealing with the COVID-19 Pandemic.
Dealing with the COVID-19 pandemic was a key discussion topic at our HCDT&I day. Jermaine Brown
Artificial Intelligence (AI) focused companies, such as Buoy Health, released a COVID-19 212 325 8125
jermaine.brown@credit-suisse.com
screening tool that took the CDC guidelines and layered them on top of the AI. Companies
such as Livongo and Somatus serve chronic care populations, which are most vulnerable to Adam Heussner
the coronavirus. Their role and solutions in these circumstances vary from helping members 212 325 4727
manage stress/anxiety to sharing a detailed picture of member’s underlying conditions with adam.heussner@credit-suisse.com
the appropriate provider to best inform the treatment (if needed). Livongo has not seen any
disruption to date in sales activity. Quartet Health, which serves individuals with mental
health conditions, is focused on the rapid acceleration of digital care options to help its
members deal with fear and anxiety related to the pandemic. The COVID-19 pandemic has
pushed Iora Health and Heal (both companies have historically relied on in-person
interactions with members) to make changes to their clinical protocols, increase their focus
on virtual care, etc. Finally, companies such as Welltok, are leveraging its consumer data
and multi-channel communication platform to increase communication, education and
support to its members and partners. Finally, Altruista Health noted that its RFP backlog
has not been impacted by COVID-19. However, the company notes that the new sales
may be impacted given that it’ll be difficult for people to come together to make decisions.
Both Keynote Speakers Highlighted the Importance of Telehealth in the Current
Circumstances. Dr. Romm noted that telehealth utilization has increased recently, driven
by its usage to triage patients, patients avoiding crowded places, and physicians wanting to
protect their staff/self. Dr. Romm also emphasized that, though an extremely valuable
resource in the current environment, telehealth has been burdened by regulations which
have hampered its adoption curve in recent years. Mr. Brady, in his session, noted that the
Administration’s decision to waive several telehealth restrictions & expand the access to
telehealth services will provide the incentives for physicians to provide virtual care & for
patients to adopt telemedicine as a first line of defense. Mr. Brady also noted that the
effectiveness of the role telehealth plays in these unusual circumstances will influence how
the telehealth industry needs to be regulated going forward.
Consumer Engagement Remains Critical. Several of the presenting companies
highlighted the increasing importance of consumer engagement. Payers and providers are
now increasingly evaluated through rating systems that incorporate customer satisfaction
and engagement. The focus remains to deliver care in better, cheaper, and more efficient
ways in locations that are easier to access and convenient for consumers.
DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS,
LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business
with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could
affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.22 March 2020 Table of Contents Keynote Speakers 4 Will Brady (Chief of Staff to U.S. Department of Health and Human Services Deputy Secretary) ..................................................................................................................... 4 Dr. Sylvia Romm, Atlantic Health System’s CIO ............................................................... 6 Altruista Health 10 Business Model ........................................................................................................... 10 Market Opportunity ...................................................................................................... 10 Value Proposition ......................................................................................................... 11 Defined Initiatives to Drive Continued Growth ................................................................. 12 COVID-19 Impact to Business ...................................................................................... 12 Buoy Health 13 Creating A Front Door to Healthcare ............................................................................. 13 Role as a Health Navigator ........................................................................................... 13 Revenue Model ............................................................................................................ 14 Selling to Health Systems ............................................................................................. 15 Responding to COVID-19 Pandemic ............................................................................. 15 Heal 17 Business Model ........................................................................................................... 17 Physicians and Other Company Staff ............................................................................ 17 Financials .................................................................................................................... 18 Responding to COVID-19 Pandemic ............................................................................. 18 Iora Health 19 Business Model ........................................................................................................... 19 Focus on Medicare Advantage ...................................................................................... 19 Sourcing Patients......................................................................................................... 20 Target Markets & Hiring Physicians ............................................................................... 20 Responding to COVID-19 Pandemic ............................................................................. 21 Livongo Health 22 Business Model ........................................................................................................... 22 Roadmap to Growth ..................................................................................................... 23 Telehealth or Virtual Health? ......................................................................................... 24 Responding to COVID-19 Pandemic ............................................................................. 24 Financials .................................................................................................................... 24 Quartet Health 26 Two-Sided Business Model Treats Patients Holistically ................................................... 26 Healthcare Technology 2
22 March 2020 $5-10 Billion TAM with Few Competitors....................................................................... 27 Value Creation Opportunities ........................................................................................ 27 On Shortage of Mental Health Specialists ...................................................................... 27 Competing with Tele-Behavioral Services....................................................................... 28 Quartet’s Response to COVID-19 Pandemic ................................................................. 28 Thoughts on Regulations .............................................................................................. 28 Somatus 29 Business Profile and Market Opportunity ....................................................................... 29 Tech Platform Improves Network engagement and Proactive Outreach ........................... 30 Government Regulation ................................................................................................ 30 Update on Somatus’ Response to COVID-19 ................................................................ 30 Welltok 31 Well-Diversified Client base .......................................................................................... 31 5-15x ROI Across Market Segments ............................................................................. 31 Competitive Landscape ................................................................................................ 32 Integrated Partnerships ................................................................................................ 32 Responding to COVID-19 Pandemic ............................................................................. 32 Financials .................................................................................................................... 32 Healthcare Technology 3
22 March 2020 Keynote Speakers Will Brady (Chief of Staff to U.S. Department of Health and Human Services Deputy Secretary) See our note: Healthcare Disruptive Technologies & Innovations Series: HHS Shares Views on COVID-19 Efforts & Role of Innovation; Virtual Meeting Takeaways With over 80 thousand employees and an annual budget of over $1 trillion, the U.S. Department of Health and Human Services is one of the largest government organizations in the world. It regulates over 20% of the US economy, pays for over 30% of healthcare in the US, and provides medical response for natural disasters and billions in education grants. The HHS is the largest R&D facility in the world. This department purchases over $25 billion in goods and services and grants over $100 billion per year. Update on HHS’s Response to COVID-19 Pandemic Mr. Brady notes that the U.S. is entering a new phase where testing will be much more readily and easily accessible as a result of the transition from public health laboratories to private sector automated high-throughput testing. Individuals are tested at the recommendation of their providers using evidence based guidance and CDC guidelines, which have always allowed for clinical discretion. With the administration unleashing the private sector in particular, the capacity is expected to increase to a level potentially sufficient to meet demand. This week more than one million high-automated throughput tests will become available and the U.S Food and Drug Administration (FDA) is working around the clock to authorize new testing options and monitoring to address supply chain challenges. The national public/private partnership that HHS launched last week will help complement state and local efforts and fill gaps. The HHS is also working to make testing easily accessible to those that need it most, namely the healthcare workers, first responders and those with preexisting health conditions. In addition to the lab testing efforts and increasing availability, HHS is gathering information from health centers to gain on-the-ground perspectives on responses to the coronavirus. HHS’s Biomedical Advanced Research and Development Authority (BARDA) highlighted the “technical expertise” of Mesa Biotech, a San Diego-based molecular diagnostic company, and announced funding to develop its coronavirus diagnostic test, which the company says would provide results in about 30 minutes. The effort is to support the company to complete developmental work needed to obtain Emergency Use Authorization from the FDA. The FDA’s emergency authorizations fast-track unapproved medical products for use during a public health emergency. Mr. Brady notes that, with the community spread in a number of countries, temporary travel restrictions and screening help the administration buy some time for further preparation to combat the virus spread. HHS is engaged in combating this outbreak from multiple fronts. The department will continue to operationalize a multilayered, cross-agency public health response (e.g. enhanced screening, educating the public etc). The Administration also secured funding from congress to help cover therapeutics, vaccines, PPE, state/local support and surveillance. A Phase 1 clinical trial evaluating an investigational vaccine designed to protect against COVID-19 recently began at Kaiser Permanente Washington Health Research Institute in Seattle, funded by National Institutes of Health (NIH). The study is evaluating different doses of the experimental vaccine for safety and its ability to induce an immune response in participants. HHS is also proactively reaching out to manufactures of FDA regulated products to gather supply chain information to mitigate shortages. These steps will help determine what stresses the healthcare facilities are experiencing and how to remove these pressure points since these facilities play a vital role in response efforts. HHS recently announced that the administration is purchasing 500 million N95 respirators over the next 18 months for the Strategic National Stockpile (SNS). Through guaranteed orders, this acquisition encourages manufacturers to immediately increase production of N95s for use by health care professionals. These Healthcare Technology 4
22 March 2020 guaranteed orders offer reassurance to manufacturers that they will not be left with excess supply if private sector orders are cancelled once the COVID-19 response subsides. Manufacturers typically avoid ramping up production without such a guarantee. Finally, the FDA is working to authorize new testing options to monitor and address any supply challenges in addition to these efforts. A number of state and local government and private providers have already opened up drive- through testing as they know how best to meet their communities’ needs. The CDC also enacted guidelines that has made it possible to test more people with the same number of tests. As a result of these measures, state and local partners can make testing more accessible. The HHS has also taken unprecedented steps to expand Americans’ access to telehealth services during the outbreak including expanding Medicare coverage for telehealth visits across the country and allowing telehealth to be provided directly to the home which was not permitted under prior federal law. The administration also waived potential HIPAA penalties to allow telehealth visits to occur through everyday technologies like FaceTime, Skype and other video and audio communication tools. The HHS has also provided flexibility for healthcare providers to reduce or waive beneficiary cost sharing for telehealth visits paid for by the federal healthcare program. These three actions in particular will provide the incentives for physicians to provide virtual care and for patients to adopt telemedicine as a first line of defense. This will not only help hospitals save supplies but also reduce exposure for patients. In response to a question if these telehealth restrictions could be waived permanently (not just in case of the public emergency), Mr. Brady notes that the current environment is unique in so many ways. However, Mr. Brady notes that the effectiveness and role that telehealth plays in these unusual circumstances will influence how the telehealth industry will be regulated going forward. Driving Innovation via Four Key Buckets Best Practices for Approval and Reimbursement to Limit Uncertainty One of the key drivers of innovation that the HHS is employing is making sure that people who are innovating understand what needs to be done to get from an idea to commercialization. Some steps that the HHS is taking to meet these goals are to decrease regulatory reimbursement and cycle times and burden, particularly the time gap between SBA approval and CMS coverage of innovation. The HHS is also increasing new technology add-on payments (NTAP) from 50% to 65%. By way of background, NTAP is a mechanism in which Medicare pays for innovative devices and is used for a limited time to reimburse manufacturers delivering and providing innovative technologies that fit the criteria. The HHS plans to improve clarity by removing the regulatory hurdle of substantial clinical improvement for breakthrough devices and provide clarity on NTAP eligibility. Mr. Brady notes that ambiguity and uncertainty are factors that stifle innovation. There’s a framework in the FDA called “breakthrough devices” that allows for an accelerated review process if there’s no equal alternative and the therapy provides an outcome that is unmatched. HHS took the action to align those two standards, i.e. if the breakthrough standard is met, you don’t have to go through another process to explain why you have a substantial clinical improvement in CMS. Looking forward, the department is looking to further improve coverage of innovative technologies, reforming parallel review so devices are approved by both the FDA and CMS simultaneously and clarifying terminology such as “reasonable and necessary” so people can understand the standards necessary to be a part of the Medicare program. Transitioning to Value-Based Care The second bucket is transitioning to value-based care to ensure that the highest quality care can be delivered at the best cost. The department wants people to be incentivized to deliver outcomes and empower patients. Some actions that the HHS are taking to achieve these goals are Primary Care First and Direct Contracting CMMI Models, which allow for providers to take on risk for patient outcomes in total cost of care vs process metrics and more burdensome tracking and management. Healthcare Technology 5
22 March 2020 Mr. Brady highlighted one of the key areas of focus is kidney care. There’s been a lack of innovation and new treatment therapies in this space. The Kidney Care Models are focused on improving organ transplant and dialysis at home so that patients recover faster. In addition to those larger efforts, the HHS has also reimbursed for virtual visits, remote patient monitoring within CMS and the FFS program. As patients become better connected, the Administration wants patients and their providers to be better connected and coordinate for care. The Administration removed meaningful difference requirements to allow for tailored MA plans focusing on certain needs of the population. In addition, the HHS allowed MA plans to vary supplemental benefits based on an individual’s specific medical condition and needs. Looking forward, the department is focused on removing barriers. One of the primary ways of doing that is reforming the Anti-Kickback Statute and Stark Law to allow for value-based arrangements, outcomes-based payments on personal and management services, bundled warranties of medical devices and services and provide protection for the sharing/donation of cyber security products and EHRs. Consumer engagement and empowerment The HHS has been focused on empowering consumers through data. The recent rules by the Office of the National Coordinator and the CMS opened up electronic access to personal health records and claims data thus allowing patients to make the best healthcare decision and to manage their care. The HHS has also focused on banning pharmacy “gag clauses” to make sure that patients are informed about alternative options for purchasing prescription drugs in the pharmacy. The HHS is also focused on “meeting patients where they are” such as reimbursing for virtual visits and remote patient monitoring. In addition, the department has another CMMI model called ET3 which focuses on emergency services and treating patients both at home via emergency management services or taking them to where they think is best for their care. Finally, the HHS is also looking to change the incentive structure to allow for patients to be taken to the most appropriate place of care. Looking forward, there’s an effort underway to develop a quality roadmap for healthcare to address the amount of quality metrics (over 25 thousand) which is currently unmanageable. The HHS also has proposals out on price transparency and to encourage the increased use of telehealth. Liberating Data to Drive Value The last bucket relates to liberating data to drive value and encompasses the first three buckets. There are two real mediums that will have a major impact on liberating data and making it more available as well as allowing providers to use the data that make them most effectively deliver care - Office of the National Coordinator (ONC) and the CMS. Within the ONC, measures that are proposed to liberating data include adopting standard APIs, standardizing data sets so that information is easily understood and accessible. The ONC also proposed prohibiting restricting communications. The CMS published a complimentary rule that gives patients access to claims, encounter and plan data. The CMS rule would also require admission, discharge and transfer information of patients to be shared with their PCP and designated providers as this helps accelerate healthcare delivery. The HHS is also working to make government data available while prohibiting information blocking. Two items on the horizon are improved pricing transparency and a synthetic data hub which is directed by an executive order to begin combining synthetic data from claims, clinical, demographic etc. for researchers to model various innovations. Dr. Sylvia Romm, Atlantic Health System’s CIO See our note: Healthcare Disruptive Technologies & Innovations: Takeaways from Our Virtual Meeting with Atlantic Health System's CIO Healthcare Technology 6
22 March 2020 Headquartered in Morristown, N.J., Atlantic Health System is an integrated health care delivery system powered by a workforce of 16K team members. The system is comprised of 350 sites of care, including six hospitals. Atlantic Health System’s Response to COVID-19 Pandemic Dr. Romm notes that the guidelines of social isolation have brought a lot of anxiety and stress in the community Atlantic Health System serves. Atlantic Health has been putting in a lot of technology around education and early triage in order to keep people out of physical spaces (or limit the physical interaction). For instance, Atlantic Health set up patient facing nurse/physician hotlines eight days back. The hotline is strictly dedicated to COVID-19 and is continuing to ramp as efforts to control the virus spread increase. However, Dr. Romm notes that the system ended up getting overwhelmed almost immediately by the number of people calling in with questions. In fact, the hotline has already been staffed up to eight nurses and three physicians to accommodate volumes. With some areas of hospitals not running at full capacity (e.g. elective surgery centers), Atlantic Health has been able to allocate staff from those areas to places in most need, like the nurse hotline setup. The health system has also started to move to chat bots to help with the assessment, to guide people around symptoms and exposure to COVID-19, to emphasize the important of social distancing, etc. The health system has set up a drive-through sample collection center for the COVID-19 testing. These drive-through testing centers serve as a means to make sure people continue to get the right care, but in a way that doesn’t bring increased risk to others. Atlantic Health is continuing to build other tools to ensure they are reaching people. Dr. Romm notes that, when looking at the first places that had coronavirus outbreaks, they are starting to see that the social isolation works. In fact, China has reported for the first time having no new domestic cases of COVID-19. However, that took a lot of regulation of human behavior – something the U.S. might not be able to do because of cultural differences. Dr. Romm notes that how we as humans react, will dramatically change what this pandemic looks like in different areas. Role of Telehealth Dr. Romm notes that, though an extremely valuable resource in the current environment, telehealth has been burdened by regulations which have hampered its adoption curve in recent years. For instance, up until recently, providers needed to be licensed not only in the state where they are located but also in the state where the patient is. If a physician wanted to be licensed in all 50 states, that would cost between $40-$50k – before considering ongoing renewal fees. Under previous law, for example, if someone in New York had their PCP in New Jersey and if the physician in New Jersey wanted to follow up with that New York patient, technically – they wouldn’t be allowed to do that. However, now, both regulators and those practicing are realizing that a lot of the geographical boundaries don’t make sense. In response to the coronavirus outbreak, regulations around geographic, reimbursement, and privacy regulations have all seen relaxation. In terms of HIPAA as well, regulations have become less strict on enforcement of procedures on some platforms. For example, even though some technologies such as Apple FaceTime, Facebook Messenger video chat, Google Hangouts video, and Skype are not technically HIPAA-compliant, the HHS Office for Civil Rights announced that it will not impose penalties for non-compliance with HIPAA requirements against health care providers as long as the use of those technologies is in connection with the good faith provision of telehealth during the COVID-19 nationwide public health emergency. An interesting question posed by Dr. Romm was that of whether or not physicians who are being forced to use telehealth solutions during the coronavirus outbreak will stand up to keep the regulations relaxed once the outbreak ends or regulations revert to the pre-COVID-19 levels. Through the loosening of regulations, the Atlantic Health System has gotten more physicians on boarded and practicing in the last two weeks than in the previous year combined. Healthcare Technology 7
22 March 2020 The Atlantic Health System uses a combination of telehealth solutions. MDLive is used for their direct-to-consumer urgent care. However, because of the recent surge in volumes, the Atlantic Health is also setting up a second platform, which is adding a video technology within its EHR platform, Epic. Dr. Romm notes that the telehealth utilization has been increasing driven by its usage to triage patients, patients avoiding crowded places, and physicians wanting to protect their staff/self. To the last example, there is no reason to put a patient and/or the physician at-risk for having someone come in for a standard medication change visit when that interaction needs only a phone call. Given the long period of time where people carrying the disease are contagious and not showing symptoms, it has forced health systems to treat their patient populations in a more strategic manner. With respect to the readiness of telehealth companies for this demand surge, Dr. Romm notes that it would have been nearly impossible for them to have been prepared for such an event. Dr. Romm clarifies that the urgent care telemedicine companies can generally be split into two categories: 1) those that provide technology solutions to physicians, who see their own patients, and 2) those that provide clinical services that are technology-enabled. Teladoc Health (TDOC) for example, sells clinical services that are tech-enabled to health plans, employers, etc. that happened to be by phone and video. Whereas other companies, like Zoom (ZM), for example, sell their technology to physicians who see their own patients. The former category have been on a physician-recruiting binge as they have way more patients than they can possibly care for with the number of physicians typically kept on staff. In fact, physicians who have come on board to telehealth companies have reported seeing 10x the number of patients they normally do. On the other end of the spectrum, tech companies that provide solutions to physicians (albeit lower-priced platforms), have been reported to (a) be rejecting new physicians from purchasing their tech or (b) their tech has become spotty because it is reaching its capacity limits. However, Dr. Romm notes that these companies are ramping up capacity levels to need demands, and long-term, once volume levels come down post-outbreak the new/improved infrastructure is still going to be there (similar to how the lead-up to the Dot-Com bubble led to an immense array of telecommunications networks being built where ~80 mln miles of fiber optic cable was installed in the U.S. which allowed for the maturation of the internet we know today). Overall, Dr. Romm notes that the U.S. healthcare system was not designed to have a 50% increase in PPE, testing equipment, and the technology infrastructure. But, everyone involved is working long hours to make this work. Other Quick Takes ACO Strategy Atlantic ACO was created to reduce the growth of health care expenditures and improve quality of care through cooperation and coordination amongst providers. It comprises more than 1,700 physician participants who are affiliated with Atlantic Health System. Atlantic ACO aims to achieve the following goals: a) Undertake joint activities to improve health care delivery by developing and implementing effective clinical and administrative systems; b) Promote and create strategic physician and hospital alignment; c) Engage the Medicare Fee-for-Service patient population towards improved health in coordination with their primary care physicians; and d) Achieve improved care for individuals and improved health for populations, and reduce the growth of expenditures. Atlantic Health has a business intelligence unit that works very closely with its ACO. They also have a division of integrated care, which is part of the hospital division and works on creating a clinically integrated network and making sure that there are good transitions and focus on value- based care. Around 18% of Atlantic Health’s revenues are in downside risk contracts (the downside risk is not specific to the ACO but is in other populations as well). Dr. Romm notes that the vast majority of health systems don’t have any downside risk contracts. More than a year ago, Atlantic Health migrated all of its EHR data to the AWS cloud, enabling them to have Healthcare Technology 8
22 March 2020 greater abilities in data analytics and better understand there different populations and their needs. Population Health Atlantic Health uses EPIC’s Healthy Planet. However, they do not have an actual population health management department per se. But instead, the health system’s focus on population health management falls under what they call ‘Integrated Care’. Dr. Romm described population health as being about understanding the different populations and the risks and then treating those populations. Dr. Romm believes that when you have integrated services, you can start understanding your patient populations as well as the inherent risk factors. Tech with Most Runway in Medicine When asked what technologies or other aspects of medicine have great potential over the next few years, Dr. Romm indicated that unquestionably, machine learning (ML) is going to get much bigger, mostly because of the amount of data that has been collected over the past 10 years and the opportunity to analyze that data has also been improving. Healthcare Technology 9
22 March 2020 Altruista Health Presenters: Ashish Kachru, CEO, Craig Wigginton, CTO; Tom Joyer, CCO; and Munish Khaneja, CMO Headquartered in the Washington, D.C. area, Altruista Health delivers care management and population health management solutions that support value-based and person-centered care models. Altruista’s GuidingCare technology platform integrates care management, care coordination and quality improvement programs through a suite of sophisticated yet easy-to-use web applications. The company has 35k daily users, 3k mobile users, over 5 billion transactions per year, grew at a 30% CAGR from 2015-2020e. Altruista has over 450 employees, 25% of which are US based, the remainder are in Hyderabad, India. Business Model Altruista Health was founded in 2007 with a mission to remove barriers to care through intuitive care management solutions that enable information sharing and collaboration. It is leading provider of mission-critical care management enterprise solutions that enable payers, providers, and members to collaborate across the continuum of care. Management believes Altruista Health is a top 3 player if not the largest amongst peers (Med Physician Owned by HCSC, Casenet owned by Centene) in terms of revenues and number of lives on its platform. As a company with a fully modular SaaS platform that’s deeply embedded into mission-critical customer workflows, the company has high customer stickiness/retention ratios and benefits from high (80%) gross margins. The company’s market opportunity is over $2 billion with multiple vectors for continued growth. The $2 billion market opportunity consists of a $760 million market opportunity from payers, $600-700 million from provides, $160 million from employers and the remainder from specialty providers. The company has a large number of managed lives across the most sophisticated health plan customers and a measureable ROI. Management noted that the company has a rapidly expanding, blue-chip customer base with consistent net revenue retention. And as a result of recent executive management, R&D, implementation, and infrastructure investments, the company has significant operating leverage. Management notes that for the most vulnerable populations, which was becoming a larger part of the health insurance industry, no one spent the time really creating a chronic disease management platform and a member centric model. Because of the rapid release cycle of a SaaS product, management has the ability to sign on a few health plans and really develop the knowledge. As more complicated populations came onto the platform, the company was able to develop partnerships with additional health plans such as UNH, despite UNH having its own systems for other populations. UNH chose Altruista Health for the care coordination tool for its entire Medicaid population. In a two year period, Altruista was able to take on 4 million lives (6 million currently) across 26 states onto the platform. The company experienced continuous growth in both the core population (Medicare, Medicaid as the vulnerable population) and the dual eligible. Altruista Health is now the largest system that the LTSS dual eligible patients are on nationally. Market Opportunity Adults over 65 will make up 20% of the U.S. population by 2050. Over 11 million adults have 5 or more conditions. The ability to manage multiple conditions is more important especially when the industry has transitioned from single disease management to chronic multi-disease management and complex care management. 35% of deaths are attributed to chronic diseases and 75% of healthcare spending goes towards chronic disease treatment ($6 trillion by 2050). National health expenditures will grow at a 5%+ CAGR through 2023 and reach nearly 20% of U.S. GDP. Management notes that the inadequate care coordination is responsible for $25 – $45 billion in annual wasteful spending. The ability to have a member centric model that allows for role-based delegation of the work of the health plan to a risk taking entity where value- Healthcare Technology 10
22 March 2020 based care has already been important. Risk-bearing models for provider systems require a stronger level of coordination. It becomes very difficult for health plans to scale when they build they own components of the system. Altruista Health is able to scale and is supporting clients in being able to rapidly bring items onto its platform. 86% of payers are expected to make population health software investments within the next 12 months with an increased focus on solutions that offer analytics, tracking and reporting of health needs for large populations. Payers are also investing in software that enables workflow integration of care management and member services. Management noted that one of the company’s differentiators is its shift to patient-centric care as connecting members to the payer is becoming a focal point of software investment. Value Proposition Management notes that the while company started in care management (chronic disease management for the vulnerable population), the world has transitioned to population health management. As a health plan, you must also look at utilization and appeals and grievances because you must be able to highlight the care that a person needs based on the stratification of the program that they’re set up in. Altruista has to support them with services and in some situations, those services are either high cost, experimental or potentially unnecessary. The key is automation. While the company is not seeing a true reduction in utilization management, there is a lot more automation where certain cases can be expedited through the system via the automation processes. On regulatory pieces, the appeals and grievances space has become more complex as Medicare, Medicaid and NCQA push hard to ensure that the patient is cared for. Within predictive analytics, management noted that Altruista is the first company to actually invent a risk tool within the platform and a focus on who needs to be cared for next. The company also looked at the cost structure in a way where it is able to look at the next costliest patient based on their sickness. Overall, the company is looking for a model that keeps adding onto core functionality after which, it finds the best in class partners and works with the health plans to bring that information as easy and quickly as possible to the provider. With more of a focus on the provider end user, the company is moving further into the provider portal where it supports full automated prior authorization workflow. Management noted that it was the first to move to Social Determinants of Health (SDoH) and will work further with referral management to ensure members have access to the right services at the right time. The growth in demand from customers to integrate into the provider and SDoH portals has driven Altruista to invest heavily into API integration. This is all possible due to the fully-integrated data model that sits underneath its GuidingCare (has NCQA pre-validation) platform and the API framework that the company has built. The core technology is what allows the company to keep extending these integrations. Finally, on population health management, the company plans to take all info and hand it back to the provider as they take on more risk and ownership of the entire care management structure. From inception, GuidingCare has been designed to ingest a large volume and wide variety of data to: Aggregate and integrate data from a variety of sources, including claims, eligibility, pharmacy, HEDIS/STAR, HRA and EMR systems in order to identify the population; Prioritize the population based on real-time business rules enabling dynamic population-ranking for engagement; feed the data into the GuidingCare platform which then drives it across the disciplines of care management, utilization management and population health; Improve health via integrated care and disease management, utilization management and team-based communication and coordination; and then measure the outcome via real-time analytics. Across the four disciplines within care management for the payer space (medical management and care coordination, pop health, member engagement, integrated bus solutions) the platform is presented as discreet modules within the system. As an example, the payer may implement care management first and then, a few months later, build into rolling out utilization management. The payer can then train their team and extend into SDoH referrals for the community-based providers and then add on appeals and grievances. Healthcare Technology 11
22 March 2020 Where a health plan normally has 15-20 discreet systems, the design of the platform allows Altruista to the implement those modules incrementally. The system is designed to be modular with discreet URLs and tabs within the application. These different products and components are fully integrated across the spectrum (similar to Microsoft Office 365) and are all backed by the GuidingCare core SaaS data model. On RFPs, management noted that the company will continue to participate in RFP and currently has 12 active. If an RFP is issued, 50% of the time, it’s awarded to Altruista (amongst 10-15 companies). The company has averaged 12 new customers per year 2019 and 2020e and implemented 13 new clients in 2020. In addition, the highly sticky nature of core care management platform presents significant opportunity for upsell / cross-sell within existing customer base. Defined Initiatives to Drive Continued Growth On areas of growth, management noted that there’s the potential to increase its customer base within the company’s existing segments as potential customers are using internally developed “spreadsheet tracking”/legacy systems, which presents significant white space opportunity for Altruista’s solutions. Also, significant recent investments in sales and marketing functions position Altruista well to compete effectively against competitors. Within its existing customer base, which is very sticky, management noted that Altruista is well-positioned to capitalize on upsell/cross-sell opportunity. On new customers and populations, management noted that Altruista’s ability to address the needs of the highly complex dual-eligible population provides an unmatched ability to address adjacent populations such as PBMs, providers and employers. In addition, its deep relationships with blue-chip customers provide highly tangible opportunity to onboard payers’ full books of business. The modular nature of the company’s solution suite coupled with mission-critical nature of Altruista’s solutions has resulted in significant upsell/cross-sell historically, particularly with large accounts. On new innovations, management noted that Altruista has a dedicated product development team of over 300 individuals focused on a fully-funded roadmap for 2020. In addition, there are significant near-term opportunities include Internet of Things applications (e.g., location-based services, precision medicine, home monitoring, remote patient monitoring) and machine learning (e.g., predictive modeling with disparate data, dynamic utilization management, “smart” assessments). On M&A Opportunities, management noted that Altruista’s rapidly increasing scale positions the company as a potential consolidation platform in a highly fragmented industry. COVID-19 Impact to Business On potential risks of COVID-19 impacting RFP processes, roll-outs and new tools/technologies, management noted that Altruista has a unique position with clients where the company assigns an executive sponsor to each customer. This executive sponsor is responsible for the success of the client relationship and has remained in communication with clients every week on actions taken as a result of COVID-19. While there remains a lot of uncertainty, the company is very nimble, is currently working on 12 active RFPs, and has a large backlog that will keep it busy for a long period of time. On the one RFP that was paused, management noted that it was related to a state renewal contract and was not paused as a result of the coronavirus outbreak. No new tools, management noted that upgrades will continue and it has not seen any delays on implementation. Looking ahead, however, new sales may be impacted given that it’ll be difficult for people to come together to make decisions. On operational protocols, management noted that about a third the company’s workforce already worked from home so it was a simple task for the whole work force to transition to working from home. Healthcare Technology 12
22 March 2020 Buoy Health Presenter: Dr. Andrew Le, CEO & Co-Founder Headquartered in Boston, MA, Buoy Health operates as a personalized all-in-one platform to help guide consumers to make better decisions about their health. Consumers can chat about their symptoms with Buoy Assistant and research their benefits through Buoy Dashboard. The service is available 24/7 to help consumers navigate health. For employers, Buoy offers customized configurations to surface benefits information and wellness programs, guide employees to in-network providers, and fully integrate with other health portals. The product was launched in March 2017 and has 9 mln users and adds a new member every 13 seconds. Notable investors include Humana, Cigna, Optum, Fidelity, and Quest Diagnostics. Creating A Front Door to Healthcare Buoy was founded under the premise that when people get sick, they try to become a medical expert and a health benefits expert, in real-time, and in that order. However, not everyone understands all of the intricacies of the healthcare system. In fact, 72% of people start their healthcare journey on Google by searching for their symptoms in an attempt to self-diagnose. Even if someone has a medical background and can self-diagnose, chances are that they still need a helping-hand on the benefits side. As such, people feel like they are drowning in information – which is where Buoy gets its name from: ‘to help keep you afloat’. When people turn to Google to self-diagnose, they are required to sift through an enormous amount of information on what their symptoms mean and what they should do next – which results in some big problems. For example, 56% of ER visits are non-urgent which results from an overreaction of symptoms. Also, 47% of high cost claimants have acute conditions, which results from people assuming they are fine when in fact they are not and end up seeking care after their conditions have worsened – a costly endeavor. Buoy, thus created an AI health platform that helps people figure out what to do when they become sick. The program interviews people like a doctor would. After about 2-3 minutes of communicating with a patient, the platform can narrow down the library of diagnoses to a maximum of three possibilities, with reasons for each. The AI utilizes a library of 1,848 diagnoses, 8,422 symptoms, and 407 risk factors. Then, based on who they work for – or who their payer is – Buoy can navigate that patient to the right care at the right time within their network of care. Buoy AI was built from founders reading thousands of clinical papers by hand to teach the software program the underlying statistics behind medicine. It took four years – from 2013- 2017 – to conduct the meta analysis of diagnoses to build a sophisticated network of medical information. The program does not function like a decision tree, but instead uses reasoning based on statistics that a medical student/doctor would understand had they combed through the underlying medical literature. Additionally, Buoy’s list of diagnoses is not specific to acute care, but takes into account diagnoses from all body systems and provides assistance in the following areas: pediatrics, behavioral health, internal medicine, orthopedics, specialty care, dental, and geriatrics. As more and more people use the platform, the AI gets more sophisticated based on the millions of interactions with users as well as from what the end-diagnosis ended up being. Dr. Le noted that users inform Buoy what ended up happening in their health situation ~15% of the time, and with each instance the algorithm is curated and improved. Role as a Health Navigator Buoy sells mostly to health plans and self-insured employers. When someone gets sick, they either go to their health plan hub or they go to their employer hub, where they’ll find Buoy. From there, Buoy helps drive them to their in-network options. Buoy also finds patients looking for help navigating their healthcare needs through Google. As previously mentioned, 72% of Americans use Google as their first step. To that end, Buoy uses a team of writers who Healthcare Technology 13
22 March 2020 constantly compete on Google for search engine optimization (SEO) to attract people searching for symptoms. The company competes in this regard with others, such as Healthline and WebMD. However, when consumers come to Buoy from Google they are asked who their health plan is – where 59% of people inform them. If that health plan is a partner with Buoy, then they can claim the efficiency for having captured that person who otherwise wouldn’t have come to the health plan’s portal – which is completely independent than the health plan’s traditional B2B2C marketing tactics. Once Buoy gets up to speed on what the consumer is looking for, they are able to hand them off to whatever set of services they want. The granularity of the data Buoy is able to generate through its referral engine presents valuable insights. Data obtained is not just related to the patient’s clinical situation, but things like time of day. For example, if it’s late at night, and the clinical situation is not an emergency, Buoy might show options to the patient that are open starting the next day. Alternatively, if the clinical situation is more dire, Buoy would show telehealth options, emergency rooms, or urgent care centers. Another data point collected is that of location. Buoy collects 100% of people’s IP addresses, which provides a good estimate of their zip code thereby allowing Buoy to show relevant options for care that are available in their area. Revenue Model Buoy’s revenue model is based on per-member per-month (PMPM) in addition to performance guarantees based on cost savings. Generating revenue through performance guarantees is based on where the client would be headed in terms of costs vs what their costs are after having used the solution. Dr. Le described the business as a nurse line combined with what an intensive benefits navigation call center, like an Accolade or a Quantum Health does. What makes Buoy different, however, is that they become involved earlier in the healthcare journey which means they have to do less of the claims redirection than an Accolade or Quantum would do. Further, the company is digital only which means there is no need to replace what payers are really good at, like standing up customer service call centers. Buoy does not need their clients to rip any of those services out in order to install their solution. Dr. Le indicated that there is a misconception that Buoy is some sort of millennial-only product. In fact, 11% of users are over the age of 65, while the company’s main demographic is 18-40 year old women. Further, around 10% of people use the platform for their kids as well as people that use it for their elderly parents. The key component of their business model revolves around distribution of information – serving as a middle man between the healthcare system and the consumer. Dr. Le noted that a lot of companies will have an AI chat interface and will then hire doctors for telemedicine, which is the key money maker for those companies. A potential conflict of interest can occur when an AI chat platform is combined with telemedicine where the company makes money on a per-visit basis. Dr. Le thinks Buoy is in a valuable position as a navigator of healthcare – an impartial referee that guides patients to what’s best for them. Their PMPM and performance guarantee model showcase this value-based approach. Another key component of Buoy’s business model is their data approach. By using their proprietary data and not just claims and EHR data, they are able to gather insights from people who went to the hospital (i.e., where the claims/EHR data is captured) as well as the data they obtain through their own interactions. According to Buoy’s data, when people have a symptom, 40% of the time they don’t see a doctor at all. As such, if a company were to overlook the dataset of people that were sick but did not go to the hospital, you run the risk of having a selection bias in the recommendation. Additionally, Buoy has found that the ‘tipping point’ – the point at which it becomes more likely for someone to seek primary care vs self-treat – is 72 hours while the average person who uses Buoy has been sick for less than 12 hours. Although Buoy has a valuable follow-up feature enabled now, it opted to not start out with one. The thought process behind this was that it is extremely difficult to know exactly when to follow- up with a patient. If the follow-up occurs too soon, it might be annoying and turn the patient off. If it is too late, the reason for following up might not even be relevant anymore. Buoy found that the right time to follow up is: ‘it depends’. Based on the millions of interactions, the AI has Healthcare Technology 14
22 March 2020 started to develop a deep understanding of when people are about to make a decision to go seek care. For example, Buoy has found that for a 40-yr old man with moderate shoulder pain, the likelihood that they self-treat begins to fall over-time and at 110 hours, they reach a tipping point and become more likely to seek primary care. Being able to introduce care solutions at the inflection point of self-treat or seek primary care provides Buoy a unique opportunity for employers to show their employees they truly care about their well-being. The healthcare system today functions similar to a directory. It has not gotten to a level that takes that directory, interprets that directory, and shows you what you need and when you need it. A large component of that problem is because there isn’t enough data to know when consumers need healthcare; most data used is claims data, which is after the decision has already been made. Selling to Health Systems Buoy started out selling to a lot of health systems. In fact, they sold their solution into a healthy system in Milwaukee which was rolled out to all of their patients. The company found that they were changing the intended care path for those patients. Based on data from a health system, Buoy was reducing the intent of people to go to the ER by 50%, 48% in urgent care, 42% in primary care, and 60% in telemedicine resulting in $174 in savings per use while maintaining a net promoter score of 80. However, when Buoy showed this data to their health system clients they were not so happy as health systems rely on those ER visits, urgent care visits, etc. to find patient’s healthcare problems, which result in revenue for them. The health systems would rather have Buoy take care of their Medicaid populations or their employees, who they are fully at-risk for. This resulted in Buoy realizing they were in the wrong space and eventually prompted them to move over to the risk-bearing side of the healthcare ecosystem. Responding to COVID-19 Pandemic On February 5th, Buoy released a COVID-19 screening tool that took the CDC guidelines and layered them on top of the AI. The company has also been exchanging data back and forth between the CDC as the situation has developed. By using the CDC guidelines, Buoy puts people into three buckets: 1) low-risk, 2) at-risk, or 3) high-risk. Telehealth’s role in the coronavirus outbreak has largely been to triage patients virtually and place them into the three buckets of risk. However, at a time like this, a doctor’s time is highly valuable and time spent triaging may not be the best use of it. Buoy’s view is that doctors using telemedicine should be seeing those who are at-risk, so they can potentially prescribe them a test. As the situation develops, Buoy intends to do different things for people placed into each of these ‘risk buckets’. For example, those patients who are likely to have contracted the disease, but who are having no respiratory distress should not enter a hospital and take up resources that could be allocated to someone in a more critical condition. Buoy is essentially acting as an air traffic controller, directing people to the most appropriate course of action. Based on CDC guidelines, 87% of the people screened by Buoy have been deemed to be at low-risk. When asked about how effective AI technology could be in the current situation where there isn’t a great data experience to learn from, Dr. Le agreed in that if a doctor cannot discern between the flu and COVID-19 without a test, a computer program is not likely to be the answer. However, the value Buoy brings to the situation is in their COVID-19 screening tool and the guidance they give to people declared as low-risk. If someone starts developing any sort of symptoms of COVID-19, they are likely to assume the worst and want answers. That is where the AI takes over and attempts to alleviate their fears and gives them a better idea of what their diagnosis could be. Buoy had partnered with researchers from HealthMap, a digital epidemiology tool developed by a team at Boston Children’s Hospital. HealthMap has been working on tracking the coronavirus from the onset and has been tracking disease outbreaks for 15 years. As part of the collaboration between the two, HealthMap provided clues to Buoy so they could look into specific areas across the U.S. One of those tips was that one of the patients confirmed to have the virus in Washington, had been walking around for a month without being tested. With that Healthcare Technology 15
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