Tag Archives: Medicare

Signify Premium Insight: Addressing VBC Pain Points: UpStream’s $140M Vision

Last month, primary care services and technology provider UpStream Healthcare announced it had raised $140M in its latest funding round. The company says the money will enable it to scale nationwide. This will mean helping more primary care practices in the US move into value-based care (VBC), and increasing income from reimbursement contracts for senior Medicare and Medicare Advantage patients. 

However, if it is to successfully scale the business, UpStream will need to address several customer pain points.   

The Signify View 

We have written regularly in recent Insights about how VBC is steadily transforming primary healthcare models in the US. With neither the technology nor resources of large health networks, independent practices find it harder to transition to VBC. In response, an ecosystem of technology and service providers, including UpStream, has emerged to support this transition.   

Solid Foundations 

UpStream was established in 2018, and occupies a solid position in US primary care management. Its technology platform (powered by Innovaccer) helps around 2,900 physicians co-ordinate care for approximately 175,000 senior patients on Medicare plans. The company claims it has helped its customers (mainly small, independent practices) reduce in-patient and post-acute spend by 20%. This aligns well with VBC principles. 

Tech Pain Point 

With a $140M war chest, UpStream can now work towards its scaling up goals. Success will hinge on it addressing several customer pain points that currently stand in the way of them achieving true VBC. 

The first challenge for any primary care practice when operating under a VBC-based contract is understanding its population. It needs a longitudinal view of all its patients’ healthcare interactions. Not just those provided by the practice in question, but interactions with hospitals, specialists, community service providers, out of network providers etc. However, for most the IT required to do this is not in place. While large health systems have the resource, budgets and technical knowledge to put in place IT that aggregates data from these multiple sources, independent practices and smaller networks face a huge challenge.

A recurring complaint from primary care practice decision makers is the lack of interoperability between the platforms they need to aggregate data across to obtain this longitudinal view, and the heavy lifting required to do this integration and data aggregation. Each practice has its own EHR, but this only provides a narrow view of each patient’s full health history. When the providers’ need is to pull information to obtain a longitudinal view, manual processes must typically be followed. Buyer demand is for solutions that provide an automated route to obtain this combined view using IT. This includes not just clinical data from EHRs, but also payer data, data on the patient’s healthcare journey, or information from regional HIEs. Such visibility and understanding of the population lies at the heart of VBC. Without it, a practice cannot prioritise patients or develop a clear workflow strategy to care for them.

Independent practices also lack the resources, expertise or time to buy, implement and manage technology to alleviate these pain points. However, there is an appetite among some to invest in technology and care management solutions if they can envisage a return on their investment in the form of increased revenue from reimbursements under VBC contracts. PCPs prefer upside financial risk where they will not be penalised for not reducing healthcare costs/meeting targets. UpStream offers monthly Guaranteed Advanced Payments for Quality (GAP-Q), completely opposite to the traditional VBC contract where physicians wait for reconciliation with a payer. 

Instead of practices having to procure and implement the PHM technology needed themselves, UpStream does this for them and provides a service to support the data integration process. Further, it can then also provide the expertise, care management services and IT that allows for risk stratification and care co-ordination processes to be followed. This is essential for providers looking to maximise revenues under VBC contracts such as Medicare Advantage.

Age Old Problem 

Another challenge facing some independent practices relates specifically to senior care, which is UpStream’s focus area. Decision makers describe the difficulty practices face engaging with this population segment, whether in scheduling appointments or encouraging them to visit a primary care physician. Many seniors, for example, prefer to consult a specialist rather than primary care physician. Furthermore, social determinants of health (e g food security, housing, transport and mental health) play a bigger role in this segment. These factors all make it harder for practices to operate under VBC contracts when supporting this patient cohort, purely from a “patient activation” perspective. 

Formidable Partnership 

UpStream is well placed to address the technology pain points described above. The company’s platform is powered by Innovaccer, which has a good track record of data integration and a renowned PHM solution. Innovaccer already has integrations with hundreds of EHRs, meaning it can quickly integrate new customer EHRs into its platform. Unlike IDNs, which tend to prefer to buy their PHM solutions from their EHR vendor. The platform also has the potential to use artificial intelligence (AI) to run risk segmentation, though this depends on robust and comprehensive data which offers a full, longitudinal view.

Addressing patient engagement problems will be more challenging. UpStream will need to invest a sizeable chunk of the $140M to build teams to engage with patients to set up appointments, make sure they attend annual wellness visits, and follow care plans. This labour-intensive approach introduces potential problems with staff burnout and staff retention. 

While these are unwelcome (and costly) by-products of providing senior care, this is a potentially rich seam of business if UpStream can adequately resource its customers. This is where the real rewards of Medicare and Medicare Advantage reimbursement lie, and cracking this code will put the company in a very strong competitive position.

Competitive Ecosystem 

UpStream is one of a growing number of so-called practice management company/managed service organisations which have emerged to meet growing demand for care management technology and services. There are some big hitters here: Signify Health (whose model has similarities to UpStream’s) was bought by retail pharmacy chain CVS last year for $8B. VillageMD bought urgent care provider Summit Health for $9B, also last year. CareCentrix, Agilon, Privia and Tebra also vie with UpStream in this market. All have a common goal: to help healthcare systems, payers and independent practices make more money from VBC.  

Big tech and the large retail pharmacy chains are also starting to bulldoze their way into primary care. Amazon lost out to CVS in its bid to buy Signify Health last year, but the logistics giant has unfinished business in this market. Other retail pharmacy chains like Walgreens are also making inroads. It is estimated that this year retail primary care clinics will account for double the share of the US primary care market than they did in 2022.

UpStream and its rivals will watch these developments with interest, but with few real concerns in the short- and medium-term. 

Cottages to Consolidation 

In the long run, the ‘cottage industry’ nature of the market will give way to greater consolidation. Independent practices will be squeezed out, and some will be bought by the larger companies.

That may well be the fate that eventually befalls UpStream, whose target customer base of independent practices is slowly shrinking as they are swallowed up by IDNs. For now, however, the potential for new customers in primary care technology/services outweighs the losses of a declining total available market. 

With $140M ready to deploy, and an excellent ally in Innovaccer, UpStream is set to scale. If it can help its customers better engage with patients and deliver true VBC, the company has excellent medium-term prospects. In truth, current funding may be insufficient for UpStream to scale nationally, but expanding to 20 states over the next 12 months will still be a success. And from there, future investor interest should be forthcoming. 

Signify Premium Insight: Intermountain Subsidiary Leaves Hospitals Behind

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Amid growing pricing pressure on medical imaging in the US, Intermountain Healthcare recently announced it is launching an outpatient imaging subsidiary under the Tellica Imaging brand name. The first three locations of the new chain of standalone outpatient imaging centres are set to open in late 2021, with five more set to follow in 2022.

As well as operating under a new brand name, the outpatient imaging centres will also offer MRI and CT scans at flat-rate prices which are lower than the same imaging exams in a hospital-based setting.

The Signify View

Some types of imaging examinations will always need to be performed in hospitals. The nature of emergency or interventional imaging, for example, negates the possibility of it being performed elsewhere. For many non-emergency diagnostic imaging exams, however, there is a growing trend for some exams which would typically have been performed in a hospital, to increasingly be taken on by outpatient imaging centres.

The Covid 19 pandemic has been one factor in this shift, with providers trying to keep patients out of hospitals wherever possible in order to minimise their potential exposure to the coronavirus. However, in a bid to rein in healthcare spending in the US, payors have also been increasingly pushing their customers towards outpatient imaging centres, where the cost of imaging exams can be significantly less than in a hospital setting.

More broadly, changes to reimbursement brought about in the latest fee schedule from the Centers for Medicare and Medicaid Services (CMS) is also set to alter the complexion of the medical imaging market. There is a growing body of evidence that suggests the changes brought about in the fee schedule are going to affect single site imaging centres most severely. These smaller independents will therefore find it increasingly difficult to compete with the larger outpatient imaging networks, which can leverage the economies of scale to be more aggressive on pricing. This is one of the factors driving consolidation in the outpatient medical imaging market, which, to an ever-greater degree, is being dominated by large outpatient networks.

An Equal Fight

Hospital groups will be loath to lose business to these imaging groups, and so, in Intermountain’s case, establishing an outpatient network of its own makes a lot of sense. The newly formed Tellica will be able to compete for outpatient imaging business on an equal footing with the other outpatient networks. It will, like its competitors, be able to offer lower cost imaging than in Intermountain’s hospitals.

Payers in the broader market have also played a substantial shift towards outpatient imaging focus, with a number, such as Anthem and UnitedHealthcare, now refusing coverage for non-emergency hospital-based imaging, such is the current discrepancy in price between in-hospital and outpatient-based imaging.

There are many reasons for the discrepancy. Outpatient groups can focus solely on imaging, so are able to tailor their services to efficiently addressing less complex, higher volume imaging exams. In contrast, hospitals must maintain the ability to conduct a broader array of exams and more advanced scans, even if it means purchasing more expensive equipment that is infrequently used and facing the additional staffing costs that comes with more specialised doctors.

Tellica’s spending can also be more focused. The provider will not, in most cases, have to stretch to purchasing the most premium specialised imaging equipment, and instead invest in imaging solutions that can expedite its workflow and enable it to attend to patients more efficiently. Increasing volume and capacity of imaging can also offset the lower reimbursement rate per scan, while also creating opportunity for the health system to bring in new patients. The deployment of AI tools in the outpatient setting may also have a material impact in terms of efficiency and care quality for the provider given its much more myopic focus, with the outpatient setting expected to experience faster adoption of AI versus the hospital setting.

More, and More Affordable

The effects of this shift to outpatient imaging will ripple out across the medical imaging sector. Modality vendors are likely to see an overall increase in the volume of medical imaging equipment being sold. However, this will be balanced by a fall in the premium models as hospitals, which typically purchase the more advanced products, will require fewer systems. Conversely, there is set to be an increase in mid-range ‘workhorse’ models, which will, in most cases, be an outpatient centre’s preference. As such, the market average selling price of systems will fall. This change in the complexion of the market could also see sales leak from premium international vendors, to other cost-competitive vendors, such as United Imaging, which may not be able to compete in the upper echelons of the imaging market but are competitive in the mid-range and keen on pricing. This will move the focus away from top end features, forcing vendors to highlight the fundamental value and efficiency of their systems more clearly.

These changes are also set to have an impact in the imaging IT market. Providers such as Tellica, which grew out of a hospital network, will likely become license extensions opportunities of the  original hospital network’s imaging IT system, utilising the same vendors and the same solutions. This may give the likes of Tellica an advantage from a deal size perspective, enabling them to take advantage of their larger buying power.

There are still some benefits unique to specialist outpatient imaging networks. The opportunity for imaging IT amongst these newly formed networks, is from their nimble structure, allowing them to be reactive to shifts in the market quicker than larger hospitals. In a similar vein these providers are also typically more innovative in adopting new technology, due to the drive for efficiency to remain competitive and profitable. These growing outpatient imaging networks  are therefore likely to be among the first providers to take advantage of informatics vendor’s efficiency-focused products. This could be particularly true as products are increasingly tailored to address the needs of outpatient imaging providers, such as GE’s recently released TruePACS system, for example.

Scale and Efficiency

Intermountain’s launching of Tellica fundamentally represents a hospital network responding to the changing tides in the medical imaging market, and effectively cutting its pricing in the outpatient space to maintain competitiveness. Intermountain is not the first to make such a move but it does highlight the increasing interest in the space. As this interest in outpatient imaging centres grows and more providers look to compete in the space, prices will continue to fall, and margins will  tighten. This will ensure consolidation continues, with it becoming increasingly unfeasible for small independent imaging centres to thrive given they will be unable to capitalise on economies of scale or take advantage of larger, network-wide plays to adopt tools to drive efficiency forwards.

Resultantly, smaller imaging IT vendors will also find it more difficult to compete. Many of their customers are the smaller, independent outpatient imaging providers; as these are replaced by larger outpatient networks with much larger and complex network-wide deals, some of these smaller imaging IT vendors could falter.

Intermountain’s creation of Tellica shows it is willing to adapt to a changing market. It has entered an increasingly competitive and rapidly consolidating space and is hoping to go toe-to-toe with some of fastest growing providers in medical imaging. It can utilise its broader buying power, and the nimbleness that a new brand affords, but key to this success will also be its ability to scale rapidly. The outpatient imaging market is one where scale and efficiency bring success. If Intermountain’s Tellica can achieve both, then it has a strong future ahead.

 

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This Insight is part of your subscription to Signify Premium Insights – Medical Imaging. This content is only available to individuals with an active account for this paid-for service and is the copyright of Signify Research. Content cannot be shared or distributed to non-subscribers or other third parties without express written consent from Signify Research. To view other recent Premium Insights that are part of the service please click here