Tag Archives: PHM

Signify Premium Insight: Optum Health a Master of its own Destiny in Fully Accountable Care

In a recent earnings call with investors, UnitedHealth CEO Andrew Witty revealed that its healthcare services unit, Optum Health, plans to treat four million people in fully accountable care models this year. 

While this is nearly double the 2.2M people Optum Health treated in fully accountable care in 2022, it is a realistic ambition. With a large (and expanding) network of primary care practices, specialists and diagnostic chronic care outpatient centres in the US, Optum Health is a success in its own right. The fact that its ambitions are supported by UnitedHealth (the number one US medical insurance company) and Optum Insights (a top risk stratification population health management (PHM) tech vendor) within the United Health family presents a formidable ecosystem. This will drive more Optum Health customers towards fully accountable, value-based care (VBC) in 2023. 

The Signify View  

The unique interconnections between provider (Optum Health), tech vendor (Optum Insights) and insurer (UnitedHealth) is a ‘dream ticket’ to true VBC for Optum Health’s primary care customers. This continues to put the company at a significant advantage over other providers, who must rely on either acquiring the technology and payer services to deliver fully accountable care, or establish strategic partnerships.  

As fellow primary care providers scramble to acquire the technology – spending large sums in the process – to propel themselves further into VBC, Optum Health will retain its competitive advantages for now. The company’s goal to serve four million people in fully accountable care in 2023 is sound. 

Revenue Boost 

Serving more people, more comprehensively is UnitedHealth’s underlying growth mantra in 2023 and one which also underpins Optum Health’s revenue performance. It reported double digit year-on-year revenue growth in Q4 2022 of $47.9B ($182.8B for the full year). Furthermore, in 2022 Optum Health says it increased revenue per patient by 29%, attributing this partly to the ‘expansion of VBC arrangements’. 

It is little surprise, then, that Optum Heath feels it can support its customers in bringing another 1.8M more people into fully accountable care this year. The majority of these people will already be on UnitedHealth’s insurance plans (both government-backed Medicare Advantage and commercial plans), a large, neat, ready-made patient pool for Optum Health’s customers. Optum Health says fully accountable care for these people will be provided in both clinics and at home, CEO Wyatt Decker telling investors on the earnings call that the company sees ‘significant opportunity’ in harnessing home health to drive its VBC ambitions. Optum Insights’ PHM technology will be central to supporting this.  

Note of Caution 

While Optum Health’s optimism around its 2023 plans is justified, it will be mindful of the stuttering journey from pure fee-for-service contracts to fully accountable care in the US since 2015. A November 2022 report by alternative payment models think tank, the Health Care Payment Learning & Action Network (HCPLAN), sheds light on this journey. It shows that nearly 60% of all reimbursement remains part of a traditional fee-for-service model. There was modest growth from 2015 (when 77% of reimbursement was in fee-for-service contracts) until 2019, but has stubbornly flat-lined since (see chart below). 

Risk and Less Reward 

While Covid was partly responsible for this plateauing, there has been another force at play.  

Prior to 2018/2019, providers tied into VBC contracts were paid a lump sum to care for their populations. They were incentivised for providing care ‘under budget’, sharing any savings they made with the payer or government. If the provider came in ‘over budget’, it could simply recoup the excess from the payer or government. In these ‘one-sided’ risk deals, there was effectively no risk to the provider. In 2018, nearly two-thirds of providers were on these ‘one-sided’ risk contracts. 

The risk profile of fully accountable care contracts began to change in 2018/2019, largely driven by changes in CMS rules, forcing the transition to two-sided models at a much accelerated rate. Many deals now require healthcare providers to assume ‘two-sided’ risk. They are still incentivised to reduce the costs of healthcare provision as per the upside risk-only contract. But if they come in ‘over budget’, they must absorb a significant amount of this cost themselves. Around 50% of providers are now on a two-sided risk contract but, for many, the removal of the ‘comfort blanket’ of ‘one-sided’ risk has been challenging, and has slowed the transition to fully accountable care over the last three to four years. The graph below shows the increasing share of two-sided risk providers are now taking on. 

At the same time, the overall direction of travel is towards fully accountable care and reducing the costs of providing healthcare. The value of the global VBC IT market is expected to reach $11.3B in 2025 (with the US accounting for 80% of this), from $6.8B in 2021. This will support the speeding up of the transition to VBC, as more providers see the potential upside from VBC outweighing the financial burden they might now take on in two-sided risk contracts. 

Competitive Threats 

Optum Health is, of course, not the only provider navigating this environment, and there are plenty who see the wider potential of VBC despite having to take on more risk. In our headline predictions for digital health in 2023 (see Insight here), we state that Walgreens, CVS and Amazon are examples of new entrants to this market. We predict that they will become household names in primary care provision this year, swallowing smaller health systems and independent practices and scaling rapidly as a result. 

Even more significantly in the context of the VBC journey, the large US retail pharmacy chains are now also acquiring risk stratification, analytics and workflow tools to support PHM. These provider-technology relationships (much like the Optum Health-Optum Insights relationship) are vital to VBC, and will accelerate the transition in 2023. 

We also predict that Big Tech will move into the digital health mainstream on the back of VBC. Amazon’s HealthLake data aggregation tool has the potential to disrupt in 2023, and the company will pursue more acquisitions during the year to flesh out its portfolio. Similarly, VBC will be the springboard for Google’s digital health strategy. 

Master of Destiny 

The upshot is that many healthcare providers are now jostling for position, assembling the components needed to deliver fully accountable care. Optum Health was a pioneer in this, and in UnitedHealth and Optum Insights has a complete, unrivalled package other providers will struggle to match for the foreseeable future. 

Where most providers are feeling their way into 2023 with acquisitions and new partnerships, Optum Health’s relationships with UnitedHealth and Optum Insights are mature and strong. In a world where providers are taking on additional risk in their VBC contracts, there is more pressure than ever to manage populations and costs. New market entrants must put their faith in new relationships to navigate this new normal. 

Big retail and big tech are knocking on the door, but this should present few real headaches for Optum Health for now. If any company can substantially move the dial from fee-for-service to fully accountable care after a three-year lull, it is Optum Health, a master of its own destiny. 

Signify Premium Insight: InterSystems and the great PHM cultural shift

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In theory, recent contracts that data technology provider InterSystems has secured with two Integrated Care Systems (ICSs) in the UK lays solid foundations for forays into embryonic European PHM markets. But they also raise wider questions on where exactly the UK PHM market is heading, how fast and, ultimately, where the likes of InterSystems fit in. 

The Signify View 

The two recent deals for InterSystems will consolidate data from siloed systems in the North West London and West Midlands ICSs. This is part of a broader drive by ICSs in the last few years to put in place ETL and shared care record solutions, bringing together EHRs from GP/primary care practices, social care councils, hospital trusts, mental health trusts and other hospitals.  

The five-year North West London contract, in partnership with Amazon Web Services (AWS), will enable social care, mental health and community trusts, local authorities and third-parties, to migrate their on-premises workloads to InterSystems’ HealthShare Health Connect Cloud on AWS. Ultimately, it will provide a better view of the health records of around 2.1 million people. Similarly, the West Midlands ICS deal will bring together around 400 health and social care providers from six local authorities in that region.  

While both deals further affirm the success of InterSystems’ HealthShare solution, they should also now be viewed in the wider context of the UK PHM market. 

The PHM Maturity Model (see below) shows the market’s expected evolution over the coming years. Currently, it is still in its formative years, with investment concentrated on data consolidation. Most of this investment has already taken place, thereby limiting the upside potential for the likes of InterSystems in this space going forward. 

Next Steps 

The focus will move to ICSs, Primary Care Networks (PCNs), acute trusts and other primary/community NHS providers examining how to leverage new harmonised patient data pools to support integrated care, and upscale a care management process that is, at present largely manual.  

To date, funding has concentrated on data aggregation tools that give a single view of the patient across different settings. A nice view to have, but not one that will save money for the NHS. The real savings will be in predictive, preventative tools for risk stratification, better care management workflows and clinical decision support. This is where we expect more funding from the likes of the Unified Tec Fund. 

In this regard, vendors and the ICSs say the risk stratification technology (developed by the likes of InterSystems, Oracle Cerner and Orion) is now in place to support the move into predictive analytics. 

Furthermore, PHM lies at the heart of the NHS Long Term Plan, which was launched in 2019. PHM is a critical building block for ICSs, and as a result government IT investment in this area should largely escape the expected swathe of cuts the NHS will be forced to make in the coming months and years. 

But, at last month’s InterSystems conference, we attended presentations by the West Midlands and Cumbria and the North East ICSs. While both insisted they had all the building blocks, and the integrated care records in place, they were unable to confirm when they would, or could, move on to the analytics and predictive phase. We published an insight following the InterSystems 2019 conference (see Insight here), and the narrative does not seem to have progressed much since. 

The Bottleneck

The barriers to progress appear to come from within the NHS at this stage. Achieving the first phase of the PHM journey was relatively easy for the provider, because it did not require healthcare professionals to fundamentally change the way they work. Using aggregated data is a similar process to that which preceded it. With overlay systems, healthcare professionals simply get a better, bigger picture of a patient’s history. The problem now is that, to make use of the more sophisticated tools now being developed, the NHS will have to undertake a cultural shift. It will need to move on from platforms, and invest in people and processes to proactively make use of the tools. This change will not come easy for the NHS. 

The UK healthcare infrastructure at large will also need to adapt to move this process forward. It will not be solely the ICSs responsible for driving change: PCNs will increasingly take the baton to make use of the predictive analytics tools at their disposal, and unlock the market. Given this, it will be PCNs that must be the focus of funding if the PHM market is to move forward at any speed.  

Hand Holding 

So, what is the role for the likes of InterSystems, Oracle Cerner, Graphnet, Patients Know Best and Orion in this PHM evolution?  

In the UK, these vendors have the analytics, care management and health insights-type solutions for PHM available to sell to the PCNs and ICSs when they are ready. In the meantime, however, the vendors will need to identify opportunities to drive new revenue streams. There are two potential ways this could happen. 

First, during last month’s InterSystems conference, we got the sense that the PCNs, ICSs and other stakeholders in the industry need some sort of guidance from vendors on how to take the next steps on this journey. The vendors therefore have an opportunity not just in analytics solutions, but also to becoming more embedded with the PCNs and ICSs to consult on and navigate IT strategies. 

Second, as the various PHM stakeholders work out how to move forward in the UK, Europe could still prove to be a happy hunting ground for data aggregation solutions vendors. Value-based care is in its infancy in Europe (especially compared to the US), and France, Germany and the Nordic countries are all embarking on journeys in this regard. The proven track records and experiences of Oracle Cerner, InterSystems and Orion in the UK could be a welcome springboard for them into new geographical markets.  

Leap Of Faith?

The UK ICS network is establishing a more connected, predictive, preventative healthcare system. This is paving the way for a transition to analytics, which is where the NHS will have real opportunities to save money. 

However, despite many of the ingredients being in place, this process has hit a roadblock. This roadblock will only be overcome if the NHS can overcome entrenched ways of working (and it is very much in its interests to do so), and if all stakeholders in the industry can find new ways to work together to drag the PHM market into a new era.  

The industry is talking the talk, but it is not clear if it is yet ready to walk the walk.

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Signify Premium Insight: Cleerly Exceptional: $223m Funding lets Heart Health Specialist Join AI’s Top Table

This Insight is part of your subscription to Signify Premium Insights – Medical ImagingThis 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 ResearchTo view other recent Premium Insights that are part of the service please click here.

Co-written by Dr Sanjay Parekh

Cleerly, the cardiac AI vendor which emerged from stealth last year with a $43m Series B funding round, has seen its total funding increase five-fold thanks to a bumper Series C round. The vendor, which had previously raised a total of $56m, closed its Series C financing round of $223m in late July, taking its total funding to $279m.

The round, which places Cleerly among the very upper echelon of AI vendors in terms of funding, will allow the vendor to expand its team, while also allowing the AI outfit to extend its commercial reach, granting more providers and patients access to the tool. Despite investors’ confidence, however, does Cleerly, still a very young and unproven vendor, really warrant such financial backing?

The Signify View

Cleerly is unusual. Aside from the fact that it has taken one of the largest ever sums in a single funding round for a medical imaging AI vendor, and that it has done so at an unprecedented pace, it does not easily fit into the same categories as other vendors with similar funding totals. For the most part, vendors which can boast of more than $100m in total funding fall into one of two categories. Either they offer multiple or divested products, offering providers a breadth of capability, or a depth of capability along a clinical use case, or they are from China. Cleerly, like HeartFlow which has raised more than $550m in funding, does not fit easily into either, currently offering only a single cardiac tool.

This, however, is a tool which could have a significant impact. Heart disease is one of the world’s greatest health burdens, but all too frequently it is only discovered when a patient suffers a major cardiac event. If the patient survives, treatment usually involves expensive invasive and/or pharmaceutical interventions. Assessing heart health before a patient experiences serious symptoms can also be difficult, and is usually dependent on tests for surrogate biomarkers (e.g., cholesterol), or sequelae of the disease (e.g., ischaemia or stenosis). Cleerly’s solution aims to end this shaky reliance and instead, directly measure, quantify, and classify atherosclerosis itself.

Individual Symptoms

This can, in the first instance, provide value by aiding diagnosis. A patient may present with chest pain, for example, and Cleerly’s solution would be able to ascertain whether that patient has an increased risk of cardiovascular disease, which results in the patient having an elevated risk of a more serious cardiac event in the future, or whether it was a single transient incident that required lifestyle management rather than pharmaceutical or surgical intervention. Being able to accurately determine a symptomatic patient’s cardiovascular health would therefore be highly valuable to a provider.

This value looks liable to increase in the short term too. Optellum, a vendor focused on lung nodule malignancy detection recently demonstrated that its Virtual Nodule Clinic solution qualifies for CPT code 0721T for quantitative CT tissue characterisation, thereby granting reimbursement for the solution’s use. Cleerly’s tool is in some ways similar, quantifying tissue from a CT scan in order to assess a patient’s risk of a serious pathology (measuring, quantifying, and classifying plaque). It may therefore be likely that Cleerly will pursue use of this CPT code, deeming its solution eligible for reimbursement and pushing for this in the near future. This would overcome one of the main obstacles holding back the use of AI solutions, at hospitals making sales look even more promising. As such, working to attain such reimbursement should be among Cleerly’s priorities.

This however misses the true potential of Cleerly’s solution, the potential that prompted investors to pull out their cheque books so readily.

A Bolder Vision

Cleerly states that it envisions “a world without heart attacks”. This will not be achieved by the better management of patients showing up at emergency rooms with chest pain. Instead, this vision ties into the more significant opportunity offered by solutions such as that developed by Cleerly, which helps explain investors’ enthusiasm.

Instead of looking to only help in the diagnosis of symptomatic patients (on an individual case basis), Cleerly’s solution may be used to help manage the health of entire populations. Instead of waiting for patients to present with symptoms related to heart health, Cleery’s solution could be used for opportunistic screening, and used in the background for every patient that has  a chest CT. In doing so, those at a high risk of cardiovascular disease, even in the absence of immediate symptoms, could be given help sooner, and their yet-to-manifest serious cardiac event could be tempered or even averted through lifestyle changes or preventative medicine.

The real prize from such an approach, however, is realised when providers are able to not only treat  those who have been scanned in response to symptoms or surrogate biomarkers, but when the use of a solution such as Cleerly’s on similar patient cohorts can determine at-risk patients that would benefit from earlier intervention.

To achieve this, the detailed quantification profiles provided by Cleerly need to be fed back into the EMR or an enterprise data warehouse (EDW). Once in the EMR/EDW, vendors specialising in risk stratification such as Innovaccer, Health Catalyst and Arcadia would be able to utilise the data in their own algorithms to identify and guide the management of these specific patient cohorts. In this way, patients within the EMR, who may have never had any cardiac symptoms or any related condition, could be identified as a high risk and have their health proactively managed.

Action from a Distance

There are currently barriers to such an approach. Some of these are centred around technical challenges or issues to do with implementation. For instance, there needs to be closer integration of radiology data into the EMR/EDW, with the results of Cleerly’s quantification being not only collected in the radiologist’s report, but also imported into a structured data field within the EMR/EDW. For EMR/EDW vendors to focus on such a feature there needs to be demand from customers, and cardiac plaque scores to be collected widely enough to be worth the developmental cost. The lack of established cardiac screening programmes makes this even more challenging. The same is true for the risk stratification specialists, which will only start considering scores from the likes of Cleerly when they are proven enough to have meaningful impact. Although, of course, having an impact is one of the factors that will drive adoption.

Other factors are financial. In the key US market, without adoption of value-based care payment models, providers could face lost revenue if such tools reduce volumes of lucrative interventional procedures. These value-based care payments are increasing in prevalence, accounting for 41% share in 2020, up from just 23% in 2015, but there is still some way to go. Cleerly may also argue that such adoption of its tool could offset loss of revenue from valuable interventions and prescriptions for providers. It could, for instance, highlight that its tool may identify greater numbers of patients that require lower cost treatments, as well as some that may still benefit from surgical or pharmaceutical intervention. Cleerly might also explain that many lucrative procedures would ultimately be delayed rather than completely averted.

Benefit and Burden

These, however, are questions for the future. In the near term there is clearly enough value for providers to consider the adoption of the company’s solutions, this will be especially true if its solution receives reimbursement. For investors, this clinical value is a good indicator of an AI vendor that is worth funding. This, in combination with other longer-term opportunities such as adoption in a comprehensive population health management programme, and the vendor’s involvement in large-scale international, long-term clinical studies of cardiovascular disease mean the vendor is ensuring it harbours significant revenue-generating potential in the future.

There are challenges. Both from within, if it fails to maintain its pace of development, for example, and externally. These outward challenges include increased competition with comparable solutions from the burgeoning range of AI specialists focused on heart health such as HeartFlow, Keya Medical, Artrya, and Caristo Diagnostics, as well as the barriers that, at present, prevent Cleerly’s tool maximising its utility in population health management deployments. Another, more nuanced concern is related to the valuation of the company conferred on it by such an enormous funding round. HeartFlow failed in its attempt to list publicly, in part because of disagreements over the company’s true worth. Securing such sizable funding could be necessary for Cleerly to grow, while other factors such as the extensive international clinical study Cleerly is funding could prove to be a veritable goldmine in years to come, but in the near to mid-term, when revenues and especially profits will be slender, such significant funding at such an early stage could quickly become a burden.

Cleerly’s ascent has been remarkable. The speed at which it has travelled from an unknown developer in stealth-mode to join the ranks of the best-funded AI companies in the industry has been unprecedented. That makes sense if the vendor one day can, as it hopes, make heart attacks a thing of the past. Until then, it highlights what more the vendor has to prove.

About Signify Premium Insights

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 ResearchTo view other recent Premium Insights that are part of the service please click here