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The Driver: Array Behavioral Care recently raised $25 million in its series C round. The round was led by CVS Health with participation from existing investors Wells Fargo Strategic Capital, Harbour Point Capital, Health Velocity Capital, HLM Venture Partners, OSF Healthcare, and OCA Ventures. Array Behavioral Care provides therapy and telepsychiatry-based virtual care for patients with behavioral health concerns and mental health issues. This new series of funding will help to scale their brand and platform as well as grow their team and improve their tech. This will help to expand their services overall into brand new markets and help to reach Americans suffering and in need of mental health services and overall high-quality behavioral health care. Key Takeaways: There are over 6,300 areas in America that lack access to mental health provider care with those areas covering over 15O M Americans (VMG Health) The number of Americans stating that they use telehealth services for mental healthcare rose 10%, to 59% between 2020 and 2021 (Cross River Therapy) Approximately, 50% of Americans will be diagnosed with a mental illness at some point in their life and 1 in 25 Americans are currently living with a mental illness (CDC) Close to 25 percent of respondents reported they are not able to receive the treatment they need for their mental health conditions due to lack of services, shortages in psychiatrists, and lack of mental health workers (Mental Health America) The Story: Array Behavioral Care was founded in 1999 in New Jersey by chief medical officer and co-founder Dr. James Varrell. As noted on the company’s website, Dr. Varrell was an early advocate for telepsychiatry and began writing the business plan for the predecessor to Array, InSight Telepsychiatry while working as a psychiatrist, with the help of his friend Geoffrey Boyce (current CEO and co-founder of Array) who wrote the business plan. In 2019 Insight TelePsychiatry joined forces with Regroup Telehealth another telepsychiatry provider in the Chicago, IL area. Together they became the largest telepsychiatry service clinician organization in the country. In January 2021 the companies relaunched under the name Array Behavioral Care. Varrell's vision was to modify and provide better access to telehealth psychiatry care. He also wanted to focus on better access for patients living in underserved communities as well as remote areas around the country. He believes in order to help counter the provider shortage and increasing mental health crisis in the population, his company is necessary because of its focus on providing quality telebehavioral care. The Differentiator: Array Behavioral Care one of the early providers of telemental health and telepsychiatry has been in the business for over 20 years. In fact, according to the company, their first telepsychiatry encounter dates back to 1999 with a rural hospital. Array’s goal is to collaborate with healthcare systems, hospitals, community-based medical care organizations, and insurers. As such, they are able to offer their services across a range of different settings to help reach people in a variety of care settings including hospitals, community health centers, nursing facilities, and substance-use medical centers, among others. The company’s focus it to provide high-standard behavioral health services through increased services, access, and better patient results all through the range of partnerships. Array also provides administrative, operational, and technical support while attempting to take away that burden from doctors so they can focus on patient care and provide telepsychiatry services across all 50 states. The Big Picture: With the rise in social isolation, ongoing changes in societies and economics due to the Pandemic as well as the ongoing threat of endemic COVID itself, mental health conditions such as anxiety, depression, and substance abuse have come into even more focus. Due to these pressures, mental illness has surged in America since COVID began. With the increased mental health crisis there is an increased recognition of the need for mental health resources, psychological help, and additional therapeutic treatment options. According to the Pew Research Center, 41% of adults have reported feeling increased levels of mental health anguish and despair since the outbreak of COVID. In addition, 58% of young adults have also experienced feeling mental health despair and distress in the period from March 2020 to September 2022. In addition, 22% of adults reported not feeling optimistic about the future at all or only on rare occasions. Given the breadth of services, from counseling to telepsychiatry as well as the broad population that they serve (available in all 50 states) Array seeks to be the care option for those individuals who are suffering from mental illness. By partnering with organizations such as CVS and Humana, Array hopes to expand access to its network of over 40,000 doctors, nurse practitioners, pharmacists, and more. Through such partnerships, Array states that it has the ability to provide access to 90 M people across its network. Given the increased incidence in mental illness and the chronic shortage of providers, solutions like Array are required to close this gap. Array Behavioral Care announces $25M funding round led by CVS Health; Array Behavioral Care raises $25M to expand its telepsychiatry business

Our Take: The 3D modeling and bioprinting industry is emerging as a unique and multifaceted solution towards medical training, planning & executing complex surgeries, and creating biologically necessary, personalized tissues and organs for patients. Innovations in this industry are yielding encouraging results in making diagnoses more accurate, improving clinician knowledge, and giving patients better health outcomes because this technology gives care providers easier access to the resources they need to improve care, albeit at prices that are restrictive to most organizations. Additionally, 3D bioprinting is far from the panacea it is purported to be as it is yet impossible to fully print complex, vascularized structures such as fully functioning human organs, limiting care providers to the creation of basic tissue and biomimetic structures that are designed to temporarily fix a patient’s issues while they wait for organ transplants or other treatment. Ethical concerns exist as well, as many people are uncomfortable with the idea of “playing God” so to speak and using pluripotent human stem cells to create any type of organic structure. Regardless, innovation is expected to continue along with market growth and given a few decades, 3D modeling and bioprinting will likely become more common in the healthcare industry. Key Takeaways: 3D bioprinters can cost up to $65,000, with software costing up to $15,000 and high hourly fees to capture and obtain CT scans from a healthcare provider (Frontiers in Pediatrics) 3D modeling provides a number of advantages for training medical students and clinicians and allows for proficiency-based training in a variety of contexts Information technology training of 3D models generated from medical imaging allows for the creation of easily shareable design blueprints, and machine learning has been used to create training databases and digital twins These technologies give rise to ethical concerns around quality, safety, and human enhancement, as well as technical concerns about the lack of suitable biomaterials and the complexity of the biostructures being printed (Journal of Biomedical Imaging and Bioengineering) The Problem: Healthcare providers are always searching for novel solutions to solve problems that arise when coordinating and delivering care. Technological innovations drive new changes in the market and introduce new ways to diagnose and treat the issues that patients face, and in the context of medical imaging, there is ample room for improvement. Doctors across the globe currently rely on 2D scans derived from computed tomography (CT) and magnetic resonance imaging (MRI) scans, which essentially translate 3D data into 2D scans which leaves more uncertainty and room for interpretation as radiologists convey the information they gather to clinicians who lack their background and experience. Applying these advancements in 3D modeling empowers advancements in fields such as tissue engineering and regenerative medicine. These technologies which aim to artificially create functional tissues constructs, aim to integrate these new methods and to analyze data, build and edit human tissues, and benefit even more from ongoing advancements in medical imaging, Using 3D modeling in conjunction with organ bioprinting technology that relies on these models have the potential to yield large returns for the healthcare industry and could result in significant changes. The Backdrop: 3D bioprinting is the layer-by-layer printing process of functional 3D tissue constructs using a unique type of bio ink known as tissue spheroids. These spheroids lack biological scaffolds and can easily adapt to the correct geometric shape required to bond with other cells. This in turn causes greater cell-cell interaction, cell growth, cell differentiation, and resistance to environmental factors due to high cell density achieved through bioprinting efforts according to a study from the International Journal of Bioprinting. These biological advancements are accompanied by advancements in 3D digital imaging as well, which allows the data collected to be transformed into the 3D images necessary to print tissue in the first place. Information technology transferring of 3D models generated from medical imaging allows for the creation of design blueprints that let other clinicians replicate similar results given they possess the appropriate technology. In addition, as noted by Procedia Engineering, computer-assisted design software including predictive simulations are utilized in both the printing and post-printing process to assist in optimizing the printability of bio inks and can reduce the number of experimental trials required to bioprint tissues. Computer-aided design (CAD) data is combined with computer numerical control, specialized mechanical technology and material science in order to print biomimetic and complex tissue structures using the traditional 3D printing technique of layered overlay, allowing clinicians to replicate anatomical structures with relative biomechanical accuracy considering the fledgling nature of this technology. As noted in the Journal of Advanced Science, training programs deploy sensors and real-time feedback systems to provide more comprehensive feedback to guide instruction and help to better delineate the typical workflow. In tandem with the sensors and real-time feedback, machine learning is being leveraged to create training databases from large datasets and even digital twins which can be used to assist in the planning and execution phases of complicated surgeries according to the International Journal of Bioprinting. At present, 3D bioprinting is primarily used by the pharmaceutical industry to design in vitro models to test new drugs on animals. This assists in making the experimentation process quicker while minimizing mistakes and maximizing cost savings given animal models are generally considered accurate and reliable tools to determine toxicity and model disease but can be expensive and have ethical issues. This technology can also provide patients with personalized organic tissue and organs designed and created from their own cellular material, significantly lowering the risk of organ rejection. As noted by AAPS PharmSciTech, the growth in demand for human treatment using 3D printed tissues are driven by the medical demands of aging Americans, rising demand for organ donors, ethical concerns around animal testing, clinical wound care, and joint repair and replacement procedures. This growth is significant with an expected compound annual growth rate of 15.8% from 2022 to 2030 per Grand View Research. The applications of the 3D imaging and modeling technologies that enable bioprinting hold great promise in and of themselves. For example, 3D imaging can enable clinicians to perform a variety of complex treatments more easily than before. Using CT and MRI scans, radiologists can create 3D reference models that help surgeons better prepare for their job and visualize new solutions that may be harder to deduce from 2D scans. During one procedure in 2016, Dr. Michael Eames used 3D imaging to recreate a digital twin of a child’s arm, who was suffering injuries from unhealed bones that prevented the rotation of his arm and caused intense pain. Once the orthopedic team created the digital twin of the arm, they could see that it was only necessary to reshape the child’s bones, which was an insight that ended up decreasing the procedure time from 4 hours to 30 minutes and returning 90% arm-range movement to the patient only 4 weeks after his surgery. Compared to similar surgeries not conducted using 3D modeling methods, self-reported postoperative pain and scarring were much lower, ultimately leading to lower costs for both hospital and patient, a shorter recovery time, and greater patient satisfaction according to a press release from Axial3D. Training outcomes for medical students is another important application of this technology, allowing for proficiency-based training in a variety of surgical contexts as an increasing number of training curricula are beginning to adopt simulation as a part of their programs. Basic simulators which help new students hone their surgical skills are available as teaching tools, and some simulators meant for skilled surgeons to perfect their strategy before entering the operating room, are able to fully simulate entire procedures such as joint replacements and fixating fractures, according to an article published in the Journal of Future Medicine. Using 3D simulators ultimately changes the nature of learning and gives students a more individual approach towards their coursework as their hands-on experience will no longer be limited to unwieldy manuals, predetermined lab times, and doctor shadowing. 3D models allow for interactive manipulation, a better understanding of spatial relationships, and the utilization of novel methods of visualization for learning anatomy that trainees have been reported to enjoy more. However, despite the plethora of benefits of this technology, price is a limiting factor if educational institutions wish to print these 3D models. For example, an article in the Journal of the American College of Radiology found that each 3D model cost approximately $3,000 per procedure with an operating cost of over$200,000 per year to run the 3D printing service. Skilled technicians and talented 3D designers are also needed to properly utilize specialized software that can interpret and reimagine 2-dimensional CT and MRI scans in great 3-dimensional detail according to an article published in the Annals of 3D Printed Medicine. Implications: As technological innovation rapidly advances, the 3D bioprinting industry will continue to leverage advanced imaging and modeling techniques in attempts to create exact replications of anatomical structures. The use of 3D modeling in viewing anatomical images makes the process of understanding medical imaging more intuitive, leading to more accurate diagnoses, better surgical planning, better patient and care provider education, and improved health outcomes according to an article from Jump Simulation. Innovations in this field are also leading to greater integration of organisms with technology, such as the creation of extremely complex microphysiological devices that integrate sensors within soft tissue structures, created by the Wyss Institute at Harvard University. This technology can be further adapted to create other vascularized tissues that researchers can use to investigate the effects of certain regenerative medicine and drug testing, with biosensors able to yield more accurate and localized results than with previous technologies, according to the Wyss Institute. Additionally, 3D models created using these new methods of medical imagery can easily be shared with other medical practitioners with access to 3D bioprinting technology to benefit in a similar way. However, this raises questions about privacy and the legality of sharing detailed anatomical models of patients’ organs which will require explicit informed consent. Despite these initial promising indications for 3D bioprinting technology, there are a number of challenges that the technology will need to overcome before broader adoption. Although it has a bright future in the healthcare industry, current technology is simply not enough yet to meet the demands of the modern patient and the price to use it is often unattainably high. In addition, a variety of technical challenges exist, including the need to increase the resolution and speed of bioprinter technology, the inability to recreate the organic cellular density of certain tissues and organs, the lack of suitable biomaterials needed to replicate this technology on a much larger scale as pluripotent stem cells are difficult to come by, and of course the complexity of the biostructures being printed, particularly vascularized tissue that must be properly constructed to avoid necrosis as per an article published in the Journal of Biomedical Imaging and Bioengineering. There are also ethical issues that raise a number of concerns such as equality, safety, and human enhancement as outlined by a study from the International Journal of Scientific & Technology Research. Will patients have equal opportunities to access 3D bioprinting technology regardless of socioeconomic status, and how do insurers plan on covering payment for such services, if at all? Is this new technology safe for humans in the long term, and will medical staff receive sufficient training to use it? Finally, will this technology be ultimately used to build better people and improve their bodies by replacing organs with brand new ones, not to mention the inevitable integration of man and machine that is already being assessed in a variety of clinical contexts? These issues must be addressed by care providers, federal regulators, and the patients that will benefit from 3D bioprinting to assuage concerns and give legitimacy to a promising new technology with the potential to revolutionize tissue engineering, regenerative medicine, and clinical training. Related Readings: 3D Bioprinting of Living Tissues 3D Bioprinting Strategies, Challenges, and Opportunities to Model the Lung Tissue Microenvironment and Its Function 3D Printing Helps Surgeon Restore Child’s Sporting Ambitions and Reduce Surgery Time from 4 hours to Under 30 minutes Application of Machine Learning in 3D Bioprinting: Focus on Development of Big Data and Digital Twin Role of Three-Dimensional Visualization Modalities in Medical Education Should Society Encourage The Development Of 3D Printing, Particularly 3D Bioprinting Of Tissues And Organs?

The Driver: Enthea, one of the first of its kind to offer psychedelic healthcare insurance plans, recently raised $2 million in its seed round. The round was led by Tabula Rasa Ventures with participation from Mystic Ventures and Mike Cotton, former Meridian Capital group executive. The funding will be used to help expand and launch Enthea’s services into 40 cities across America by the end of 2023. In addition, part of the funding will be used to help patients access and acquire psychedelic health care since it is not currently covered by standard employer-based insurance and thus is only available through self-pay. The funding is expected to expand the market as well as the patient base. It will also help to increase education and health benefits for many who are suffering from various mental health disorders, allowing (alternative and possibly more effective) treatments for many who would normally be unable to afford them. Key Takeaways: 50 million adult Americans are suffering from a mental health illness (~ 20% of the population) with 5% of American adults experiencing a severe mental health illness (Mental Health America) Ketamine is currently approved for off-label use in treatment-resistant depression, major depressive disorder, bipolar disorder, PTSD, and substance use disorder, among others (Axios) 46% of psychologists reported seeing more adolescents from the ages of 13-17 since the COVID pandemic (American Psychology Association) 11.4 million Americans or approximately 5% of adults experienced suicidal thoughts in 2022 and Suicidal thoughts have been on a steady increase each year since 2011-2012 (Mental Health America) The Story: Enthea was founded by CEO and co-founder Sherry Rais, along with co-founders Joshua Barber, Dan Rome, and Keith Lietzke. According to founder Sherry Rais, Enthea’s mission is to help millions of people obtain expansive, easy, and inexpensive access to psychedelic-assisted therapy (PAT) for issues including treatment-resistant depression, anxiety, and post-traumatic stress disorder (PTSD), a novel approach highlighted by emerging research as an effective and evidence-based alternative therapy.., Enthea’s mission it to be “all in'' to provide a service that represents what they refer to as their JEDI values - which stand for Justice, Equity, Inclusion, and Diversity. Initially founded as a not-for-profit company in 2022, Enthea experienced financial difficulties and decided to rebrand as an employer benefit company based on the growing interest from employers for this innovative therapy. Since the rebranding, the company has been able to get the financial backing needed to meet employer demand, as evidenced by the recent fundraising. The Differentiator: Enthea is a pioneer as the first health insurance provider to offer benefits for psychedelic healthcare. They gained notoriety after Dr. Bronner’s, a natural soap brand became among the first U.S. based employers to offer coverage of psychedelic treatments. Dr. Bronner’s decided to add to their mental healthcare insurance plan and offer ketamine-assisted psychotherapy for its employees to help promote mental health awareness and access. According to the company, Enthea provides a turn-key operation that makes it easy for employers to include treatments as part of their health care coverage to employees and their families. Its plans currently cover ketamine-assisted therapy [and the company plans to add]; MDMA- and psilocybin-assisted therapies…as they become FDA-approved in the next several years.” As noted by Forbes, since access to psychedelic-assisted therapy (PAT) is not covered by traditional employer-based insurance plans, treatments have largely been reserved for patients with the financial resources to pay for it out of pocket. Enthea makes these treatments more affordable and accessible by offering standardized, evidence-based care available through specialty providers in its network. As noted by the company, Enthea has developed several core competencies that include: Evidence-based medical policies for psychedelic therapies that are regularly updated based on clinical developments and FDA approvals. Standards of care and credentials across the Enthea Provider Network to assure quality, positive patient experiences, and positive treatment outcomes. Easy treatment authorization and reimbursements to providers, while shielding employers from Protected Health Information. A range of customizable options based on the company's business and personnel needs. Starting at the beginning of 2023, Enthea will offer services in New York City, Austin, Texas, and the Bay Area in California and plans to have services within 20 markets by mid-2023 with a goal of having 40 markets up and running by year-end 2023. The Big Picture: With almost 20% of the adults in the U.S. experiencing a mental illness, equivalent to nearly 50 million Americans and approximately 5% of U.S adults experiencing severe mental illness, it is clear there is a need for additional sources of affordable, convenient mental health treatments across the country. For example, the incidence of adult mental illness ranges from a high of approximately 27% in New Jersey to a low of 16% in Utah. Psychedelic treatments and Enthea, are providing an additional treatment option for the large population of Americans who require mental health services, a great number of whom have not found success with traditional therapies. Adding ketamine-based psychotherapy to employers' health-based insurance plans for patients is an important way to provide evidence-based, affordable treatment to employees. In addition, Enthea may increase the likelihood of attracting the younger generation who are more likely to look for employers that are providing extensive and innovative benefit packages. With emerging research and approvals, psychedelic treatment will just be one more option that can address the mental health crisis in America and reduce the 50% non-treatment rate. Insurance Provider Enthea Offering Psychedelic Therapy Coverage As An Employee Benefit, Dr. Bronner's Offering Its Workers Psychedelic Therapy Coverage

Our Take: Virtual reality (VR) and augmented reality (AR) have emerged from the Pandemic as practical, digital solutions to help providers and patients solve pressing issues uncovered by COVID including the need to scale the delivery of care, improving care for chronic conditions as patients age-in-place and advancing treatment modalities for the mentally ill. Although virtual reality (VR) technology has been mostly associated with the entertainment industry, its success has become evident in the healthcare industry with promising results for not only diagnosing and treating a variety of illnesses but for ushering in the future of truly transformative techniques in medicine. However, challenges remain around existing infrastructure to support VR, software standardization, rapid technological innovation, and the lack of evidence-based VR programs. Consequently, it would be a disservice for the healthcare industry to overlook the promising results to date in the face of these challenges. Key Takeaways: The virtual reality market has a projected compound annual growth rate of over 30% between 2020 and 2025 (PWC) Some major trends in healthcare VR applications include neurological and developmental therapy, pain reduction through distractions, exposure therapy for phobias, and psychological applications (JMIR Biomedical Engineering) VR training improved physicians’ surgical performance by 230% compared to traditional training programs (Harvard Business Review) Barriers to adoption of VR therapy in clinical settings include the lack of evidence-based VR programs, infrastructure to collect and analyze VR data, software standardization, and technological obsolescence. The Problem: The rise in chronic illness seen across the developed world, a shortage of care providers, and the need to provide better care at lower cost all necessitate new, more cutting-edge treatments that improve the experience of the patients receiving care, also improve population health and deliver care more efficiently. In this environment, care providers are increasingly turning towards new technologies such as AR and VR to enable new types of training, remote care, and mental health treatments. As a result, the applications of AR and VR in healthcare and healthcare’s overall movement into the metaverse are growing. The Backdrop: The “Metaverse is a catch-all term that refers to the entire digital and virtual world and is a convergence of physical, augmented, and virtual reality in a shared online space" according to “Overview: Technology Roadmap of the Future Trend of Metaverse based on IoT, Blockchain, AI Technique, and Medical Domain Metaverse Activity”. As defined in the same article, VR is a technology that substitutes one’s vision of the physical world with a digitally produced scene using software and headgear devices [while] AR is a technology that combines the digital and physical worlds. It uses computer vision techniques such as object recognition, plane detection, facial recognition, and movement tracking to recognize real-world surfaces and objects. The term ‘mixed reality’ refers to a combination of augmented and virtual reality.” Virtual reality in the healthcare market has a projected compound annual growth rate of approximately 37% between 2022 and 2028 according to a report by GlobeNewswire. A variety of medical professions are beginning to adopt VR technology in a growing number of ways. Some major trends in healthcare VR applications include but are not limited to; neurological and developmental therapy, pain reduction through distractions, exposure therapy for phobias, and psychological applications, according to JMIR Biomedical Engineering. VR therapy has also seen extensive use in the assessment of clinical outcomes for social functioning, cognition, symptomatology, and general mental health research, and is well suited to identify illnesses and offer consistent, low-cost, and accessible care. While most consumers are familiar with VR in the context of gaming and entertainment, applications like these are increasingly finding their way into the healthcare industry for use by both patients and care providers. For example,”using VR, AR, and MR technology, doctors can create smart digital operation theatres where they can perform virtual live patient operations allowing others to watch and participate for training. In addition, by combining AR and VR technology with artificial intelligence, doctors can face simulated conditions and complications based on their own individual responses. VR has been utilized effectively to increase surgical efficiency and assist in training. As noted in a recent article in the Harvard Business Review, VR training improved participants’ overall surgical performance by 230% compared to traditional training programs. Similarly, the U Conn Health system has been using VR training programs for their orthopedic surgery residents, saving time and money, and partially eliminating the need for comparatively more expensive, one-time use cadavers. VR data can also be used to create detailed virtual models of a patients’ anatomy, allowing physicians to easily view and manipulate these 3D models from different angles. Additionally, it currently plays a significant role to help diagnose and treat physical trauma and other fractures and has been applied in cardiology and neurology to monitor and assist patients which improve patient health outcomes according to a study from the Journal of Clinical Epidemiology and Global Health. During the Pandemic, VR was used successfully to teach emergency medicine by using 360 degree video. New visualization techniques offered by VR technology can help trainees gain a greater understanding of the human body and the operating procedures they will need to know, increasing confidenceand skills before they enter the operating room with actual patients. VR technology has also been used to help promote clinicians’ empathy for patients. According to an article in the Journal of the Medical Library Association, through VR simulations, certain mental health conditions and age-related health problems can be recreated, helping students better understand the illnesses they are treating and increasing empathy with the people they treat. In addition to helping train, a variety of clinicians, AR/VR technology is also found to be very effective in the treatment of conditions that impact the mind and mental health. For example, a systematic review from the Journal of Aging Psychiatry found that VR therapy is effective in both diagnosing and treating psychiatric disorders such as anxiety, phobias, and PTSD, as well as illnesses such as dementia, schizophrenia, and autism. The U.S. military has conducted extensive research into treating veterans’ mental health using VR and the results show positive clinical outcomes observed in preventing, identifying, and treating combat-related PTSD as noted in the Journal of Clinical Psychology in Medical Settings. VR’s potential to assist in mental health treatment is well-established in the healthcare industry. For example, VR exposure therapy is shown to reduce patients’ fear of heights by 68% according to an article in The Lancet Psychiatry. The same holds true for PTSD where an early study on VR and PTSD found that of 20 service members who enrolled in and completed the study treatment protocol, 75% had experienced at least a 50% reduction in PTSD symptoms and no longer met DSM-IV criteria for PTSD at post-treatment. In the study average, PTSD scores decreased by approximately 50%, depression scores by 47%, and anxiety scores by 36%. In the near term, it is clear that AR/VR technology can make complex and often expensive training procedures easier and can also successfully be applied to certain mental health conditions. Longer-term the technology could be utilized for more remote procedures, like using robotic technology to utilize the skills of more experienced clinicians stationed at major medical centers which can act as technology hubs. Implications: The technological capabilities of VR are advancing at an astonishing rate and new models of VR headsets are being released so quickly that most consumers may be surprised by their latest capabilities. For example, graphical fidelity has improved to the point that it is able to reproduce real-world settings and phenomena to such an extent that a study in the Journal of Environmental Psychology indicated that both the real and the virtually recreated outdoor exposures led to physiological arousal, showed benefits to mood levels, and had the same restorative impact. Already, several VR companies have introduced products that are starting to gain a foothold in the industry. In November 2021, AppliedVR received FDA de novo approval for its EaseVRx product to treat chronic lower back pain thus becoming the first VR provider to receive FDA de novo approval for a pain indication. In September 2022, XRHealth, an Israeli-based company, introduced VR-based NeuroRehab designed for individuals who suffer from the consequences of strokes and brain injuries, where patients are guided through activities aimed to help regain functionality. However, since VR is still a relatively new technology it faces several challenges. These include the lack of commercially available evidence-based VR programs, and rapid innovation in the industry coupled with proprietary issues leading to rapid technology obsolescence. Currently, there are interoperability issues as well as a lack of current infrastructure to support the technology. In addition, many VR programs are still largely therapy-oriented and lack methods to collect and record suitable data for research purposes. The novelty of VR in healthcare means the resources to support it aren’t quite there yet, and care providers need to make the proper investments to best utilize the data they collect. Given the rapid projected rate of growth of the industry, we expect stakeholders will likely be motivated to solve these issues quickly and efficiently as the demand for VR solutions grows. Related Readings: Immersive Virtual Reality in Health Care: Systematic Review of Technology and Disease States How Virtual Reality Is Transforming Healthcare | U.S. Chamber of Commerce Can Simulated Nature Support Mental Health? Comparing Short, Single-Doses of 360-Degree Nature Videos in Virtual Reality With the Outdoors Research: How Virtual Reality Can Help Train Surgeons Nursing students’ views of using virtual reality in healthcare: A qualitative study - Saab - 2022 Virtual Reality Goes to War: A Brief Review of the Future of Military Behavioral Healthcare Using virtual reality in medical education to teach empathy

Our Take: Healthcare providers are in an everlasting quest to increase profit margins and find new sources of funding to ensure financial solvency while providing the highest quality of care possible. Over the last several years, private equity (PE) firms have increasingly been investing in healthcare to help fill the funding gap. Yet this has not been without controversy and to varying effect. While the investment from these firms has helped many deal with the financial strains brought on by COVID and declining reimbursement, addressing many of these strictly from a business standpoint can have less favorable outcomes on patient care. For example, while PE firms are often a resource for the business acumen needed to transform organizations, capital and technology, many opponents argue that the tools they use to help increase efficiency or productivity may hurt health outcomes. In the face of this debate are calls for Federal and State regulators like CMS and HHS, to increase regulatory oversight and hold PE firms accountable for business practices that may adversely impact the care of patients. Key Takeaways: ● 46% of health system & physician group finance leaders reported their organizations were behind their 2022 revenue goals (R1 RCM survey) ● Healthcare providers are increasingly turning to investment from private equity firms to fund their value-based care services, creating an informal industry ● Anywhere from 53% to 68% of the nation’s hospitals will end 2022 with their operations in the red versus the 34% reported in 2019 (Kaufman Hall) ● Private equity investment has grown dramatically over the past decade from $41.5 billion in 2010 to $119.9 billion in 2019 (American Antitrust Institute) The Problem: Since as early as the late 1970’s the rising cost of healthcare has forced the government and others to look at methods to control spending. Following the expansion of care through Medicare and Medicaid in the late 1960’s healthcare costs rose rapidly, due in part to increasing demand due to the expansion of care. Ever since the sustained double-digit increases in healthcare costs of 1967-1984 (when they ranged from 10.2%-15.9% per year) the cost of healthcare and it’s impact on the Federal budget has been a national issue and cost-saving has been a significant concern of the healthcare industry. For example, during that period healthcare costs went from 6% of GDP to 10% of GDP. Beginning in the late 1980’s and early 1990’s a number of efforts were made in both the public and private sectors to rein in healthcare costs. In the early 1990’s health insurance companies tried to control costs through the use of health maintenance organizations, however due to the lack of fully integrated provider networks and the lack of patient choice, led to the failure of HMOs. In 2007, the Institute for Healthcare Improvement (IHI) launched what has come to be known as “the Triple Aim” which as noted by the Commonwealth Fund “was designed to help health care organizations improve the health of a population patients’ experience of care (including quality, access, and reliability) while lowering—or at least reducing the rate of increase in—the per capita cost of care.” Given the unsustainable rate of increase in healthcare costs, the Triple Aim, along with the passage of the Affordable Care Act under President Obama, helped institutionalize the idea of cost containment in healthcare. As a result of these changes (and others) hospitals have been under increasing pressure in terms of reimbursement and revenues. These pressures have been particularly acute on the revenue side, as both public and private insurers have tried to decrease utilization of expensive inpatient hospital resources. As noted in the American Hospital Association Trendwatch Chartbook, from 2007 to 2018, the hospital payment shortfall relative to costs for Medicare has gone from $21.5B to $56.9B in 2018. Similarly, the hospital payment shortfall relative to costs from 2007 to 2018 has gone from $10.4B to $19.7B, despite a number of states expanding Medicaid under the Affordable Care Act. Along those lines, according to a survey of health system and physician group finance leaders by R1 RCM, 46% of respondents reported their organizations were behind their 2022 revenue goals. In addition, as a result of the supply chain shortages and great resignation many providers experienced during the pandemic, rising supply costs and workforce shortages have further squeezed provider profits. Not surprisingly faced with such a difficult environment providers have looked to cut costs, increase revenues, and boost operations. In addition, a number are eagerly welcoming investment from PE firms eager to attempt to take advantage of demographic shifts in population which they expect will increase demand for care. With ample cash to pour into many providers, many PE funds believe they can reduce administrative costs and waste through scale efficiencies. The Backdrop: PE firms have made aggressive forays into the healthcare industry over the past several decades, and investment does not seem to be slowing down. For example, according to a report from the American Antitrust Institute, from 2010 to 2019 PE investments in healthcare increased at a compound annual growth rate of almost 13% from $41.5 billion to $119.9 billion. This raises numerous questions about the future, the role these investors play in the industry and how to weigh and balance both the positive and negative effects. While there have been a number of high profile cases where private equity investments have led to negative consequences, the answer is actually a little bit more nuanced than that and not all investments or investors can be lumped together. For example, as noted in a January 2019 article in JAMA, “these investments may also benefit patients and bring more efficiency to a system burdened with waste. More research, and likely thoughtful regulation, are needed to preserve the positive effects of private equity in health care while mitigating the negative ones.” There have been successes as well as failures that both sides can point to. The financial windfall provided by PE firms can greatly assist in expanding the acquired hospital’s operations. In May 2021 Health Affairs published a study entitled “Private Equity Investments In Health Care: An Overview Of Hospital And Health System Leveraged Buyouts, 2003–17” which found that hospitals that were acquired by PE firms had larger bed sizes, more patient discharges, and a greater number of medical staff positions and higher operating margins. In addition, PE investment can help providers become more profitable through acquisition, and give them greater access to more resources to invest in resources like IT to succeed in value-based care. According to an article published by the Kenan Institute of Private Enterprise, many PE firms bring increased visibility and analytical tools to their acquired care providers that help them grow. This includes business consulting, systems development, increased supply chain management capabilities, and assistance with mergers and other acquisitions. As the industry consolidates and non-traditional players like Amazon and Walmart enter care delivery, resources from PE can help build provider networks and increase market share. On the other hand, critics point out that PE’s business model is, at its core, fundamentally incompatible with the mission of the healthcare industry. They note that PE companies typically try to deliver at least a 20% to 30% return in profits over a three to seven year investment horizon according to an article by America’s Health Insurance Plans. In contrast, healthcare providers often point to the moral imperative as the driving force of their efforts and not profitability. They note that providers operate with the intention of preventing or treating poor health throughout a patient’s life, sometimes without regard to a patient’s ability to pay for such services. Critics point out that health outcomes are often poorer under privately owned care providers. They argue that you have to look no further than the senior care industry, which the PE industry heavily invested in. According to a study from the National Bureau of Economic Research, they saw a 10% increase in mortality among Medicare patients privately owned nursing homes along with other declines in other measures of patient wellbeing including lower patient mobility, higher prescription of antipsychotic medication, and increased reported pain intensity. In addition to the issue of quality of care, a number of academic journals have raised the issue of increased consolidation and market power in healthcare resulting from PE investment. For example, a study from the Journal of Medical Economics posits that PE investment increases market consolidation, places pressure on hospitals to increase revenues through overutilization of services and upcoding, and puts greater scrutiny on doctors to ensure financially viable decision making while exposing them to certain policies like gag orders and noncompete agreements that may harm their future career prospects. Many argue that the focus on short-term revenue and market consolidation effectively undermines competition in the healthcare industry, destabilizing markets in the pursuit of financial arbitrage. Through overutilization of care and upcoding, patients are subject to unnecessary treatments and higher than expected medical bills as they are charged for services they did not use or didn’t need to begin with. PE investors point to the dire financial straits of many providers and that patients would receive no care at all if they did not step in. For example, as noted in a September 2022 article in Fierce Healthcare, “anywhere from 53% to 68% of the nation’s hospitals will end 2022 with their operations in the red versus the 34% reported in 2019, according to new industry projections released Thursday by Kaufman Hall on behalf of the American Hospital Association (AHA).” In addition, a recent article in the Journal of Healthcare Management Science noted that on average, “21 hospitals [have closed] annually between 2010 and 2015, with 47 closures in 2019 alone. [This] trend of closures has accelerated as hospitals have experienced financial hardship during the COVID-19 pandemic, and it is likely that even more hospitals will close in the near future.” In addition to a number of other effects, they found “when faced with increased demand due to such closure, remaining hospitals in the market tend to respond by a ‘speed-up’ behavior: they increase their service speed and spend less time per patient (on average), instead of accommodating the additional demand by reducing their bed idle times. Speed-up behavior can harm care quality, as it entails cutting some necessary and value-added care steps.” Clearly, if the alternative to taking PE money to sustain operations is closure, those consequences are not ideal either. Given these choices, in some cases it has been up to the government to step in to ensure that, intentional or not, care and pricing are not adversely affected. For example in 2020 the No Surprises Act was passed which provided legal protections against surprise medical bills for patients who get emergency care from out-of-network providers and curbed predatory billing practices. These protections included the establishment of an independent dispute resolution process to negotiate out-of-network payment costs, an appeal process patients can use to fight against certain decisions on the behalf of their health plans, and mandating good faith estimates of medical services for uninsured patients (some of which are the subject of continuing litigation). Although this is an important step to curbing excessive billing that privately owned care providers engage in, critics continue to argue that more needs to be done to fight against what they view as predatory business practices. Implications: While clearly the implications of PE investment in healthcare are the subject of raging debate, there can be no doubt that in an industry which routinely estimates the cost of waste in healthcare that “[ranges} from $760 billion to $935 billion, accounting for approximately 25% of total US health care spending,” increased efficiency is warranted. While many studies have indicated the connection between poor health outcomes and care providers that are owned by PE firms, given the unsustainable pace of healthcare spending, healthcare needs to be operated more like a business going forward. With various new business models and an increasing number of non-traditional new players entering the field, care delivery has got to get more consumer friendly and effective. Moreover, medical staff at successful PE health centers may not agree with these assessments as PE has been shown to help increase charge-to-cost ratios and operating margins, leading to higher pay and job security that comes with profitability as noted in an article from JAMA. During a time when revenues are low following the pandemic for most hospital systems, PE can provide an essential lifeline for struggling healthcare organizations in need of stimulus, introduce new, potentially effective operating practices, and prevent employees from losing their jobs. In addition, clearly the government must play a more active role in setting the guard rails. While the authors were referring strictly to hospital closures, in their study, their recommendation that "close monitoring of market competition can also mitigate the adverse effects…for the rest of the delivery system. This is especially important in light of recent increases in vertical integration, and other similar activities that might negatively impact the healthcare sector.” This is important in terms of PE investment as well as their caution that “policymakers should be aware of the complex nature of these policies, and note that enacting them may also result in unintended consequences such as hospitals being incentivized to reduce the system capacity.” While many critics have pointed to consolidation of the industry and market power, this is happening among both payers and providers as well as naturally, hence PE firms may be enabling those in less robust financial conditions to secure their place in a consolidating market. Moreover, as noted in “Private Investments in Healthcare: What CFOs Need to Know”, hospitals or other healthcare organizations have to be willing to sell. They note that “top factors for an organization being willing to sell are: 1) a health system is struggling financially overall; 2) it has an innovative product or service but needs financial assistance to boost it; 3) the health system has a difficult time meeting compliance requirements; 4) or the practice owner or partner is retiring.” Hence without PE funding they would need to seek other means to address these issues, not all of which would be attractive either. When you add to this the additional investment in technology required to support AI and data analytics required for effective value-based care, this situation only intensifies. Regardless of the source of capital, healthcare will become more of a business and have to become more efficient and responsive in order to rein in unsustainable cost growth and meet the demands of modern consumers. Related Reading: Association of Private Equity Acquisition of Physician Practices With Changes in Health Care Spending and Utilization Does Private Equity Investment In Healthcare Benefit Patients? Evidence From Nursing Homes Healthcare Revenue Falling Short of 2022 Goals for Many Providers Private Equity in Healthcare: What the Experts Want You to Know Private Equity Investments In Health Care: An Overview Of Hospital And Health System Leveraged Buyouts, 2003–17 Private Investments in Healthcare: What CFOs Need to Know

The Driver: PayZen, a healthcare fintech startup, raised $220 million in a debt and equity financing just one year after raising $15 million in series A funding. PayZen will receive $200 million in a credit facility and $20 million in equity. PayZen brands itself as a get care now, pay later service that enables patients to pay their out-of-pocket medical bills over time with convenience and transparency. This round's $20 million equity constituent was made in part by 7wire Ventures while the credit facility is funded through Viola Credit. This credit will help focus on expanding growth in the market. This new funding will provide PayZen the opportunity to continue to expand and grow while providing their no-cost, inexpensive, pay-over-time service to many Americans allowing them the opportunity to focus on health and less on how to pay for medical billing and service all at one time. Key Takeaways: 70% of providers stated it takes over 30 days to collect a bill over $1,000, while almost one-half of medical practice leaders said that days in A/R increased in the most recent year according to the 2021 Instamed Trends in Healthcare Payments Annual Report Approximately 40% of adults reported that they experienced problems paying off medical bills or they are paying off medical debt that contributed to long-term financial issues like lower credit rating, credit card debt, or depleting their savings according to the Commonwealth Fund 2022 Biennial Health Insurance Survey 41% of adults reported that they have debts from outstanding medical or dental bills due to healthcare expenses according to the KFF Health Care Debt Survey 65% of Hispanics, 60% of Blacks, and 39% of white adults state that on the KFF Health Care Debt survey it is hard to afford medical care costs, especially for the Black and Hispanic populations with lower financial income The Story: PayZen was founded in 2019 by three fintech entrepreneurs, who are veterans who held various roles at fintech startups Beyond Finance and Prosper: Ariel Rosenthal, Itzik Cohen, and Tobias Mezger. The company uses its artificial intelligence (AI) based model to underwrite patients debt and allow them to buy medical care now and pay later. According to CEO Cohen, “because we watched what ‘buy now, pay later’ could do for e-commerce” they realized its potential in healthcare where “medical providers [were] having a hard time, because they [needed] to collect more and more of the bill from the patient.” For example, according to the West Health-Gallup Healthcare Affordability Index, “an estimated 44% of American adults are struggling to pay for healthcare.” In addition, according to a KFF Health Care Debt survey, 35% of adults have delayed dental services, 25% of vision health services, 24% of medical care services, and 18% of hospital services due to increasing and rising costs. PayZen’s goal is to allow patients the opportunity to have medical procedures done without having to worry about cost. The company believes it is providing an affordable choice by using the patient's data to create a payment plan where one bill can be paid over as many as 5 years. This model allows patients to attain health equity without having to make any livelihood sacrifices. This helps many in underserved communities attain health access right now when society is still living in the shadow of a pandemic while attempting to stay healthy overall. PayZen is providing an outlet for Americans that need options. The Differentiator: As noted in Crunchbase, PayZen’s “business model relies on medical providers to pay for the PayZen platform and integrate it into [the providers] own internal systems. The return on the provider’s investment comes by allowing hospitals and doctors to increase payment adherence, and receipt of a larger share of payments while at the same time increasing patient access to care. By using its AI-based platform and a provider's own data on the patient, PayZen is able to custom underwrite a payment plan for patients thereby making it easier for many to afford care now that they don’t have to pay for that entire bill all at once. This is particularly important given the post-COVID challenges of today’s economy, where 8% of Americans are considered “cost-desperate” defined as experiencing three key healthcare financial challenges (unable to pay for needed medical treatment over the prior three months; skipped prescribed medication due to cost over the prior three months and were, unable to afford quality care if it was needed today). PayZen offers a debit card that allows patients to pay for their healthcare bill right before their appointment or for pharmacy costs while transferring the balance into a custom payment plan-based selection that has no secret rates or hidden fees, just zero interest and zero fees. According to the company, PayZen’s model works as they are able to increase collections on the patient’s portion of the balance by 50% from its current rate of less than 20%. The Big Picture: According to the Commonwealth Fund 2022 Biennial Health Insurance Survey, approximately 40% of adults reported that they experienced problems paying off medical bills or they are paying off medical debt that contributed to long-term financial issues like lower credit rating, credit card debt or depleting their savings. This is particularly important for women, low-income Americans, and minority groups who are often underserved and where affordability of healthcare can be an issue. The introduction of innovative payment methods like PayZen makes it easier for many to afford care now that they don’t have to pay for that entire bill all at once or incur additional debt. Patients can spread out medical bills, which can typically be large, in payments over years and be able to attain health equity without having to make any livelihood sacrifices. For providers, using a system like PayZen helps accelerate payments and increase the amount they collect. For example, 70% of providers stated it takes over 30 days to collect a bill over $1,000, while almost one-half of medical practice leaders said that days in A/R increased in the most recent year according to the 2021 Instamed Trends in Healthcare Payments Annual Report. Clearly, finding more effective and affordable methods of payment could benefit both patients and providers. PayZen secures $15M Series A for ‘care now, pay later’ healthcare platform, PayZen Raises $200 Million in Credit, $20 Million in Equity

The Driver: Oxford Medical Simulation, a UK-based startup, recently raised $2.4 million for its virtual reality (VR) based healthcare training company. Oxford uses VR simulation based on hundreds of AI-controlled patient scenarios for training. The funding round was led by ACF investors and private investor Dr.Nicolaus Henke, the former chairman and former CEO of McKinsey’s global healthcare practice. This additional funding will help to grow and expand their services across the world so many more healthcare professionals may be trained on their equipment. The funding will help to provide realistic training using simulation to medical professionals like nurses and doctors, to help better patients' health and well-being. Key Takeaways: According to the Association for Talent Development, healthcare workers spend 34% less time on training a year than other industries. Nurse shortages are predicted to hit 1.1 million by the end of 2022, per the American Hospital Association The elderly population is expected to grow from 54M in 2019 to about 80M in 2050 with a commensurate demand for increased healthcare services, putting further strain on the healthcare system according to HHS The healthcare system is expected to need 445K home health aides, 29K nurse practitioners, 95K certified nursing assistants, and over 98K medical/lab technologists and technicians by 2025 based on data from Mercer. The Story: Oxford Medical Simulation was founded in the U.K, in 2017 by Michael Wallace and Jack Cotton. Their simulation software uses a VR model simulation mixed with artificially intelligent patients in order to train practitioners on different scenarios. Not only does this allow clinicians to see different conditions, but It also allows healthcare workers to train in various situations like emergencies, procedural, patient management, and mandatory exercises. The company is using its training to help address the growing shortage of healthcare workers on a global basis while simultaneously decreasing the time it takes to train newly hired staff. This is increasingly necessary as we seek to address the workforce shortage brought on by an aging healthcare workforce, increased demand from an aging population combined with an increase in chronic diseases among this older population. Oxford’s mission is to offer productive, streamlined training for incoming healthcare professionals to improve the result of interventions and the quality of outcomes. In addition, according to an article in explorebit, studies by the NHS have shown “that pressures resulting from these [workforce] shortages will also compromise the competency of newly trained staff, worsening the situation”. The Differentiator: Not only does Oxford’s product offer more realistic training scenarios, but it can also deliver them at a faster rate and more cost-effectively than traditional training. For example, according to the company, overhead is significantly higher for mannequin-based simulation which can cost approximately $400 just to deliver a single simulation. Using the company’s technology, students can access libraries of medical emergencies that allow them to simulate the management of conditions such as sepsis, heart attacks, diabetic emergencies, seizures, and anaphylaxis. In addition to being cost-effective, immersive VR is instantly scalable, allowing institutions to deliver more simulation experiences to their learners more efficiently. For example, while conventional training centers deliver 200 simulations per month, Oxford’s VR-based training can deliver up to 6,000 per month. Because VR simulation is repeatable and can be used without faculty supervision –engaging clinical experiences can be provided using fewer valuable resources. The Bigger Picture: Oxford Medical Simulation's intention is to help medical and healthcare hospitals, centers, and companies deliver exceptional care with the help of their platform which uses simulation to transform the way we look at training in healthcare. By speeding up the process through AI services, new healthcare staff members are able to utilize and learn through non-invasive and simulated methods where there is no danger to patient safety or life. This enables clinicians who normally would be required to be taken away from patient care to remain focused on patients while enabling students to learn or relearn certain techniques without the direct supervision of a clinician. Tools like OMS will be sorely needed to help address the workforce shortage in healthcare. For example, according to an article from the Keck School of Medicine at USC, 34 % of nurses reported saying that they would be leaving their jobs by the end of 2022 and 44% of nurses stated that burnout and stress were the reasons behind their choices. With the help of Oxford, they can help provide some relief and ease burnout by alleviating some of the stress of additional hours required to train new staff while burned out and understaffed. The need for new staff to be properly trained is more urgent now than ever and will only worsen in the near future as healthcare continues to lose staff. Oxford Medical Simulation secures €2.4 million to tackle the healthcare staff crisis with better training; Staff Shortages Choking U.S. Health Care System; A Public Health Crisis: Staffing Shortages in Health Care

Our Take: The remote patient monitoring (RPM) industry is growing rapidly with significant implications for healthcare as a whole. RPM has been proven to help lower hospital readmission rates, and unnecessary care utilization, and decrease overall costs for a variety of chronic illnesses. As a result, providers are increasingly looking for ways to deploy RPM technologies and take advantage of a number of new reimbursement schemes that have been put into place. While RPM devices such as blood pressure cuffs and glucose monitors have been around for a number of years, many of these new devices are incorporating new technologies such as artificial intelligence, and touchless sensor systems and integrating seamlessly with mobile devices like cell phones, tablets, and laptops already in the home. As a result, RPM is becoming an increasingly attractive option for patients and care providers looking to save time and money on routine follow-up care which can easily be moved to an outpatient setting through the deployment of continuous, accurate, instant physiologic measurements. Key Takeaways: Chronic disease accounts for 40% of all deaths in America according to the Journal of the American Medical Association (JAMA), with heart disease, cancer, stroke, COPD, and diabetes representing the top five contributors to mortality For heart failure and COPD patients in particular, RPM saved almost $3K per patient according to an article published in the Journal of Digital Medicine. Remote patient monitoring has significantly helped lower hospital readmission rates and mortality for a variety of chronic illnesses, including diabetes, hypertension, cancer, COPD, and congestive heart failure. Advanced medical devices have proven successful in predicting upcoming episodes of illness for both COPD and heart failure patients according to articles published in the Journal of Respiratory Medicine Case Reports and the Journal of Current Cardiology Reports, respectively. The Problem: There is a growing need for technology that enables the monitoring of patients in an efficient, convenient and effective way, particularly for lower-income individuals who may not be physically close to or able to obtain care easily. Chronic diseases are both prevalent and costly, with nearly 45% of all Americans suffering from at least one chronic disease according to a study published in the International Journal of Environmental Research and Public Health. Moreover, chronic disease can have a high clinical toll, accounting for 40% of all deaths in America according to the Journal of the American Medical Association (JAMA), with heart disease, cancer, stroke, COPD, and diabetes representing the top five contributors to mortality. As an increasing number of Americans are forced to deal with chronic conditions in their everyday lives and the impact of rising medical costs become an even greater burden on patients’ minds, there is a renewed focus on developing resources and services that are both affordable and effective to monitor health. The Backdrop: To help facilitate this, the Centers for Medicare, and Medicaid Services (CMS) issued new guidelines and regulations in the aftermath of the Pandemic that helped eliminate some barriers to coverage of RPM services and loosened reimbursement eligibility, providing greater access for patients who could benefit, according to a report published by the Association of American Medical Colleges. Along these lines, RPM services have shown great promise in reducing hospital readmission rates and mortality for numerous chronic illnesses. For example, according to a study published in the Journal of Telemedicine and e-Health, diabetes patients with greater levels of RPM participation were found to have lower blood sugar levels at the conclusion of the program. In addition, 81% of hypertension patients enrolled in RPM programs achieved their blood pressure goal by 7 weeks on average as noted in a study from the Journal of Clinical Cardiology. Similarly, a study published in the Journal of the American Society of Clinical Oncology found cancer patients enrolled in home monitoring programs were 58% less likely to be admitted for unplanned medical emergencies than those not enrolled in these programs. Finally, advanced medical devices have proven successful in predicting upcoming episodes of illness for both COPD and heart failure patients according to articles published in both the Journal of Respiratory Medicine Case Reports and the Journal of Current Cardiology Reports, respectively. Remote patient monitoring has also proven to be a very cost-efficient method for follow-up care and to improve the cost-effectiveness of checkups for recovering patients. For example, for every 500 high-risk Medicare patients suffering from multiple chronic conditions, health systems can save an estimated $5.2 million annually using RPM devices and software according to an article published in HealthcareITNews. A literature review published in the Journal of Value in Health had similar conclusions, finding that a review of 34 economic evaluations of RPM programs for chronic disease saved significant amounts of money in hypertension, heart failure, and COPD treatment. In fact, for heart failure and COPD patients in particular, RPM saved almost $3K per patient according to an article published in the Journal of Digital Medicine. As reimbursement eligibility for these services expands and new technologies such as artificial intelligence are combined with smaller and faster processors the applications and effectiveness of RPM are bound to increase. Implications: As care continues to move out of facilities driven by the need to bend the cost curve, competition, and the increasing desire of seniors to age in place, it is clear that there is growth potential in the RPM market. As the number of elderly Americans increases, especially those with chronic disease conditions that necessitate frequent monitoring, the demand for both medical devices and RPM software will continue to multiply. Moreover, as both consumers and providers become more comfortable and accustomed to the data these solutions provide, additional proof points will be developed. Many high-tech medical devices combine several of the functions that traditional vital sign or patient monitors fulfill in the hospital, because of technologies and features borne from competition that frequently yields new innovations. New software allows patients to easily access their health information and send it to their care providers. AI technology can then be applied to these newly created data sets to do population health and predictive analytics leading to improved health outcomes. For example, Cadence Health uses AI and machine learning to predict future exacerbating health events using real-time data collected from medical sensors and devices according to an article published in Athena Health Marketplace. Of course, CMS’ guidelines and regulations also play a substantial role in the speed of this adoption, and should CMS decide that more patients should be reimbursed for their RPM medical devices and software enrollment by relaxing eligibility for reimbursement, RPM could even more dramatically impact the process of delivering follow-up and outpatient care. Moreover, while there has been some debate over the difference between consumer-grade and medical-grade devices, a study from the Journal of General Internal Medicine found that home-based measurements collected with such devices as blood pressure monitors have been found to be more reliable and accurate than measurements recorded at medical clinics and kiosks. If the demand persists and the clinical data support their effectiveness, the market competition and innovation will continue and ultimately lead to huge benefits for patients and the hospitals they are treated in alike. Related Reading: 2021 Medicare Coverage of Remote Physiologic Monitoring (RPM) An Empirical Study of Chronic Diseases in the United States: A Visual Analytics Approach to Public Health Clinic, Home, and Kiosk Blood Pressure Measurements for Diagnosing Hypertension: a Randomized Diagnostic Study Economic Evaluations of Remote Patient Monitoring for Chronic Disease: A Systematic Review How remote patient monitoring improves care, saves money for chronic care | Healthcare IT News Impact of remote patient monitoring on clinical outcomes: an updated meta-analysis of randomized controlled trials

The Driver: Index Health, a Miami-based startup focused on personalized health data analysis, recently raised $6M in a seed round. Index Health’s seed funding was co-led by LAUNCHub Ventures and Inovo Venture partners. The company uses precision medicine to focus on “root cause” analysis to help identify disease. The new seed funding will help with the hiring of new medical staff and professional engineering talent. Index Health is to expand the services across the country in order to reach 1 million members in three years and bring their personalized medicine to a larger population. Key Takeaways: Index Health states that they collect 1,000+ data points using advanced lab tests, to make the most precise overview of why a disease is occurring in an individual’s body 91% of patients say that it has become easier for them to manage prescriptions and visit their specialists regularly thanks to telehealth-based services (Medical Economics) According to Index Health, their first cohort of test patients registered an 80% improvement via the root-cause method compared to what was tried before with chronic disease treatment Index Health claims that its data-driven approach is close to three times cheaper than prescription-based treatment of chronic diseases, saving $4,000 per year for its customers. The Story: Index Health was founded in December 2020 by CEO Luka Ivicevic and Gabriel Holbach. Ivicevic wanted to spotlight functional medicine/root cause medicine after having seen his mother fall ill and have to endure many trips to the doctor with no cure for her illness. It was not until she saw a functional medicine doctor who used personalized care after evaluating her whole medical background from childhood to adulthood that she was able to find some relief. After seeing his mom get better in a year’s time, he thought to himself why was this not a regular type of medical care that was offered to all? At that moment, Index Health became a reality. The company’s goal is to offer its patients a more in-depth look at their illnesses by offering a more complete, patient-centered type of approach. This approach includes advanced lab testing that collects over 1,000 data points on patients, personalized care plans, nutritionist appointments, and more. The company’s approach assesses a patient’s full medical history to help identify the root cause of a chronic illness. According to the company, Index health doesn’t just want to identify and treat the illness, they want to make sure you stay healthy by creating an individualized plan that will address all the key factors in your life such as nutrition, physical health, and mental and emotional stress. They believe prevention is key and will help the patient stay healthy long-term. The Differentiator: Index Health’s care team is comprised of a multi-disciplinary group of nutritionists, doctors, and care managers. As noted in a recent article in TechCrunch, the company’s “main focus is on cardiovascular disease, diabetes, hormones, and auto-immune conditions, where its members regularly speak to their physician and nutritionist”. The startup says it collects over 1,000+ data points per single lab test and session. Index health members sign up for a 12-month membership that costs $179.00 and includes 5 doctor visits, 3 nutrition visits, access to lab testing, a personalized treatment plan, and unlimited messaging. According to the company, a member’s visit will include a one-hour session to go over their health background as well as their health plan with Index going forward. The company was originally founded in Miami, Florida but has since expanded to Virginia and New Hampshire. With this funding, the company plans to expand services nationally, accept insurance and offer services direct to consumers. According to the company, their precision medicine approach is reported to be at least three times more cost-effective versus prescription based-treatment that focuses on patients’ chronic treatments. The Big Picture: Index Health's goal is to use its precision medicine approach to get to the root cause of a patient's illness and to better understand and more effectively treat them. Index’s plan is to a hybrid approach of in-person and virtual care to treat chronic disease. By focusing on the use of lab work to uncover medical issues and by working with a patient’s full history, they expect this approach to be the most useful. For example, according to Insider Intelligence 71% of patients preferred to use telehealth visits to discuss lab/test results, 72% used it to review medication options, and overall, 94% of patients said they would use telehealth because of its ease and satisfaction. In addition, given Index dedicates an hour to meet with patients, using a hybrid approach will likely be more cost-effective and convenient. With the advancements made in diagnosing and treating disease with precision medicine, such advances hold great potential. Post-pandemic, Telemedicine startups are evolving — this one just raised $6M for its hybrid approach, Miami-based Index Health secures $6M seed round

Our Take: As providers look for ways to more actively connect with the communities they serve, particularly those in underserved communities, they need to move away from passive, reactive approaches like surveys to more active, participatory methods that broaden their involvement in the communities themselves. Through outreach to community groups, religious organizations, social and commercial groups, providers need to form broad cross-sector partnerships to begin to develop an understanding of the needs, workings and resources available within their populations. By working with multiple stakeholders in the community and finding atypical ways to assess the resources and services needs of their catchment areas and engaging in effective community outreach, providers can build trust and create productive relationships for both the community and their providers. This benefit can take the forms of better, more appropriate culturally competent care and a more sustainable financial position. Key Takeaways: “You must have diverse teams to do SDOH”, underserved communities “don’t want to be saved and not by some 22-year-old white girl” Each additional standard deviation improvement score that hospitals received in cultural competency, translated into an increase of 0.9% in nurse communication and 1.3% in staff responsiveness on patient satisfaction surveys. Providers need to note factors such as their organizations own preconceptions and attitudes within the organization and a community’s history of being ignored and sense of powerlessness when trying to engage with local leaders. Development of social capital in low-income communities should be prioritized to build partnerships between hospitals and populations. The Problem: Addressing the improvement of health outcomes requires approaching the issue both by targeting current and historic problems within that community which contributes to poor health for its residents, and cataloging available resources to determine resource gaps within the community. In addition, while providers in low-income communities often lack appropriate healthcare resources, such as available clinicians and facilities to treat the community, they also often lack access to the elements of the social determinants of health such as affordable housing, an ample supply of healthcare with enough hospitals and clinics to meet that need, and supermarkets offering nutritious, quality food. For example, according to the Association of American Medical Colleges and the USDA, 54 million people are food insecure and 23.5 million live in food deserts, meaning that 1 in 6 Americans struggles to eat daily. In addition to connecting people directly to resources, there is also an economic benefit. As noted in a 2011 study, “research on community engagement initiatives suggests that these partnerships generate benefits at both the individual and community levels”. For providers themselves these efforts can connect them directly to additional reimbursement streams since culturally competent care has been shown to help them with quality and engagement measures with patients. For example, a study in the Journal of Med Care found that each additional standard deviation improvement in the score that hospitals received in cultural competency, translated into an increase of 0.9% in nurse communication and 1.3% in staff responsiveness on patient satisfaction surveys. Hospitals should commit to reinvestment into their communities, with dedicated teams charged with going into the community helping to inventory resources, talk with businesses and community leaders, and holding town halls within the communities. In addition, senior leaders of the organizations need to be brought into the process, not just for the cameras, but for meaningful, ongoing dialogue with members of the community for what will be a long and detailed planning process. In doing so, providers should resist the urge to solve the problem and actively listen to the community so they can take their feedback into account. The Backdrop: The presence or lack of key resources is one of the first things a hospital should assess when attempting to determine the needs of their community by cataloging the extent of any issues. Affordable housing is one of the most important factors for improving health outcomes as stable housing has been shown to be a key to improving pediatric health outcomes. As noted in a March 2019 article in the AMA Journal of Ethics, this is for 3 reasons: “1) housing plays a documented role in the health of children, 2) outreach efforts [often make] clear that housing [is] a neighborhood priority, 3) because of instability in housing, children were moving too frequently to make school-based or neighborhood-based programs effective’” In addition, care utilization at local primary care providers and clinics should be assessed using annual community health assessments to determine the status of individuals’ needs and make recommendations for future interventions. Communities also need access to healthy and nutritious foods to improve their overall health. Not surprisingly, as noted in a study published in Health Affairs, among SNAP recipients, the opening of new federally funded supermarkets in poor neighborhoods found improved food security and dietary quality for these recipients. Additionally, of note in the study, participants in those neighborhoods “also experienced relative declines in the percentage of daily calories from solid fats, alcoholic beverages, and added sugars” all of which contribute to better health outcomes like reduced incidence of obesity and diabetes. Community outreach and connecting with communities is arguably the most important step as it involves direct action with the patients that hospitals intend to treat, and has the potential for the greatest influence. Hospitals must realize that their goals to improve health outcomes may not always be in line with the desires of the community, like advocating for the closing of liquor stores. Doing so in the short term would cost the community jobs and deprive some people other non-health-related benefits. This plays into addressing disparities between communities such as the much higher density of vice stores (fast food restaurants, liquor stores, smoke shops, etc.) prevalent in low-income communities in New York and in other major cities across the country according to an article published in the Journal of Applied Geography. There also needs to be a push to include community members in the strategic planning process, particularly leaders such as pastors, business owners, local government representatives and more. Such individuals often have the best understanding of the problems their communities face and may have valuable insight. However, properly identifying these people is a potential hurdle for many hospitals so hospitals may instead blindly send out large quantities of Press Ganey and HCAHPS surveys hoping people will answer them. One of the best ways to identify people that might have important feedback to share would be to walk around the neighborhood, talk to people, and ask questions. In addition, it is important to recognize potential obstacles to community participation in the process. As highlighted in the Community Tool Box from the Center for Community Health and Development at the University of Kansas, it is important to take note of factors such as: 1) preconceptions and attitudes within your organization; 2) inadequate community communication about opportunities people to get involved in, in the community; 3) a history of being ignored and sense of powerlessness; 4) a lack of resources for community members to get involved such as time off work, lack of child care, lack of transportation, etc. Evidence-based decision making should also be employed in the surveying process to identify people who might have valuable feedback. Questions need to be informed and descriptive, asking about demographic information, feedback on available or previous healthcare services delivered to the patient, opinions on community deficits and needs, and much more. Often, it is necessary to make efforts to consult with neighborhood locals who are familiar with the community and its biggest players, which literally may require the difficult work of walking the neighborhoods and knocking on doors. However, these efforts will reap rewards as community members see the genuine concern and commitment of organization leaders. Alternatively, if leaders and administrators don’t take the time to go into their communities and meet the people who live and work there daily then they may never truly understand what it means to be part of the community. Cultural competence is important here as well, as it makes employees more culturally aware and familiar with people from different backgrounds, it prepares employees to face situations they may not have had to deal with in their personal lives, and it also increases health outcomes when the patient can connect with their doctor, and they feel confident to discuss their health status. Diversity among the community workers and hospital staff is important here as well. As a community activist once so forthrightly put it to us, “[underserved populations] don’t want to be saved and not by some 22-year-old white girl, you must have diverse teams to do SDOH”. This applies to when patients from the community are taken in for treatment as well, as they want to deal with someone who looks like them and can speak their language. Additionally, a multilingual staff can help create and translate resources in a multitude of languages and communicate ideas to a wide variety of cultures with ease. Offering training sessions on cultural competency to hospital staff should be a bare minimum for modern organizations adapting to changing workforce standards, and can pay off immensely with the potential for increased patient satisfaction, health outcomes, communication skills, and more. For as noted in a 2017 Harvard Medical School Blog article “we know that our own subconscious prejudices, also called implicit bias, can affect the way we treat patients”. Implications: Creating connections between hospitals and communities will not occur quickly or easily and will require significant facetime and financial investment on stakeholders’ behalf to build. A study published in the Journal of Social Science & Medicine - Population Health found that neighborhoods with higher social capital are more likely to see partnerships between hospitals and other agencies jointly running population health outreach programs. Collaborative efforts with communities may be made easier through the opportunities presented by high social capital and the networking that can occur, getting people in touch with each other. By investing into their neighborhoods and taking the time to form the right connections, stakeholders can form cross-sector partnerships that are critical for improving overall health outcomes of populations. Moreover, by doing a deeper dive than just surveys you can get to a more robust and sustainable solution. As pointed out by the Community Tool Box at the University of Kansas involving people affected by the problem, and helping solve the problem empowers your organization to 1) have a better understanding of the causes of the problem and the barriers to managing or preventing the problem, and 2) it empowers the people experiencing the problem to tackle the problems they confront. As highlighted by a recent article in HealthLeaders, SDOH initiatives like community health workers can have an ROI but it will take time and “health systems must set clear priorities and know their role”. Related Reading: Can Hospital Cultural Competency Reduce Disparities in Patient Experiences with Care? Population health partnerships and social capital: Facilitating hospital-community partnerships Fast food and liquor store density, co-tenancy, and turnover: Vice store operations in Chicago, 1995–2008 How Should Health Care Organizations and Communities Work Together to Improve Neighborhood Conditions? Can Hospital Cultural Competency Reduce Disparities in Patient Experiences with Care?

The Driver: ZoCalo Health is a virtual primary care startup focusing on culturally appropriate care for Latino patients now starting in California, Texas, and Washington. ZoCalo’s seed funding was led by Animo Ventures, Vamos Ventures, and Virtue Ventures. This round also included support from Able Partners and Necessary Ventures. ZoCalo plans to focus on developing affordable and accessible primary care for the Latino population since culturally appropriate care is not one size fits all. Key Takeaways: While Latinos make up almost 20% of the U.S. population per the U.S. Census, startup funding for Hispanics represents 2 percent of the total startup investments per Business Wire. Almost 30% of Latinos in the U.S. lack health insurance according to The State of Health Among Hispanics in the United States in 2022 report. 44% of Hispanics believe language and cultural differences drive poor health outcomes compared to other races due to their inability to properly navigate the medical system based on data from the Pew Research Center. COVID, heart disease and cancer are the leading causes of death for Latinos in the U.S. according to the State of Health among Hispanics in the United States in 2022 report. The Story: ZoCalo Health was developed by Mariza Hardin and Erik Cardenas former Amazon Care employees who felt that individualized healthcare for Latinos like themselves was not being properly addressed. Hardin had personal experience with this herself, noting how difficult it was for her own parents and grandparents to navigate visits especially when it came to filling out forms during their appointments. As an adult, she later found herself having the same experience while at Amazon Care and wanted to do something to improve the experience. Cardenas saw the development of a large and growing Latino community and envisioned an opportunity to develop customized healthcare fit for Latinos by Latinos that didn’t have to rely on safety net services (ex: free clinics, charity care organizations, public hospitals, community, and migrant health centers). ZoCalo’s mission is to create a virtual primary care service that is cost-effective and accessible for Latinos offering health education, proper resources, and culturally tied medical care while literally and figuratively speaking the language of the community. The Differentiator: ZoCalo Health strives to address the needs of the Latino community by offering traditional healthcare through partnering with a team of dedicated doctors, nurses, community health workers, care navigators, and mental health providers. ZoCalo has annual or monthly membership plans that allows patients to receive their own community health worker (Promotora De Salud) who will be a guide that is there to help patients or their families navigate the healthcare system with any questions or healthcare needs. According to the company, research has demonstrated that community health workers can be crucial to connecting health systems with patients and achieving successful outcomes as the community health workers are able to connect patients to local resources and care. Under ZoCalo’s model patients will also be able to obtain same-day or next-day virtual appointments as well as the aforementioned care coordination services. ZoCalo will provide patients with bilingual personal health guides to help connect patients to resources and allow them to access healthcare professionals that can deliver culturally appropriate care given the impact that culture and lifestyle can have on health history. Originally founded in Seattle ZoCalo is expanding to California, Texas, and Washington. Plans and pricing range from Individual membership plans starting at $40 a month or a discounted annual membership plan starting at $420 paid in advance. Patients will receive 12 visits a year and have access to the community health worker if needed. ZoCalo Health also offers free consultations to demonstrate its model to potential patients and illustrate how it will cater to their needs The Big Picture: ZoCalo Health wants to connect with the Latino population which is over 62 million and counting. The health company's focus was to introduce to Latinos an individualized, customized, and new and improved upon style of care that knows how to serve the population by focusing on what they are familiar with which is a focus on health that reflects culture, trust, and community. This is particularly important as the Hispanic community tends to have poor access and outcomes. For example, according to a Pew Research Center, only 70% of Hispanic adults said they'd seen a doctor or other healthcare provider in the past year, compared to 82% of all U.S. adults. The situation is even worse for immigrants, many of whom may have concerns over status and potential legal difficulties. The study found that for those who had lived in the U.S. for 10 years or less, just over one-half (55%) said they'd seen a provider within the past year. Through services like ZoCalo providers can help overcome this difference in care by getting to know the core needs of their patients and properly helping and connecting them. Through the use of community health workers clinicians are able to establish trust, longevity, and sustainability all of which will improve access, quality and outcome over time. From Amazon Care to Zócalo Health: Improving health care for Latinos, Zócalo Health raises $5M to launch virtual primary care for Latino patients

Our Take: The American healthcare industry is rapidly changing as the traditional fee-for-service payment method, where care providers were incentivized to perform as many procedures as possible, is gradually being replaced by the move to value-based care. While early VBC programs date back as far as the late 1960’s it was not really until the passage of the Affordable Care Act (ACA) in 2013 and the creation of the Center for Medicare and Medicaid Innovation (CMMI) and its mandate to develop and test new payment methodologies that VBC really began to take hold. Beginning with the passage of the Medicare Access and CHIP Reauthorization Act of 2015 or MACRA, CMMI began the process of incentivizing physicians for improved outcomes and quality and designing Alternative Payment Models (APMs). VBC models are designed to incentivize the quality of health outcomes and care as well as patient satisfaction. However, due to the changes in reimbursement and the need to ultimately reduce costs, VBC can exacerbate the already tenuous financial positions of some providers given their high fixed cost structures, dependence on inpatient and elective procedures, and inclination towards FFS procedures. In order to achieve financial sustainability while using value-based payments as a provider network’s primary reimbursement method, providers must properly assess the trends and needs of the healthcare industry, invest in the proper resources and services that allow effective continuity of care & care management, and raise additional revenue by offering outpatient and preventative care thereby taking a proactive instead of reactive approach to care. Key Takeaways: In 2018, the U.S. spent over $11K per capita on healthcare compared to Switzerland, the second-highest spender at $8K per capita. VBC has rapidly gained popularity, with United and Aetna paying out ½ of all reimbursements through VBC models and Anthem paying out 60% of all reimbursements in 2017. The Center for Medicare & Medicaid Innovation (CMMI) is now aiming for all traditional Medicare beneficiaries and the “vast majority” of Medicaid beneficiaries to be treated by a provider in a VBC model by 2030. According to HCP-LAN, less than 40% of total healthcare spending was linked to VBC in 2018. The Problem: The American healthcare system is still largely based on fee-for-service reimbursement. For example, according to Revenue Cycle Intelligence, 48 percent of survey respondents to their Value-Based Care Assessment Report, note that over three-quarters of their organization’s revenue comes from fee-for-service reimbursement, while just over one-half (57%) report using value-based reimbursement models. This continues to lead to waste, inconsistency, and overutilization of healthcare services. As noted in the journal Heart Failure Clinics in 2018, the U.S. spent over $11K per capita on healthcare compared with $8K in Switzerland, the second-highest spender, yet Americans still experience worse health outcomes compared to Switzerland and their counterparts in similarly developed countries. While there are numerous causes, the U.S. has been quick to adopt and order expensive, high-tech medical treatments for patients that often end up raising both hospital operating costs and the financial burden to the patient. In addition, other factors such as defensive medicine, demographics, and increased administrative burden have led to approximately 25 cents of every dollar spent on healthcare in America being wasted as noted in an article published in the American Journal of Medical Quality. While transitioning healthcare to VBC will likely be more incremental than sudden, if providers don’t take the necessary steps to prepare, many could fall short of their financial goals and experience sustainability concerns. As the popularity of VBC rises and reimbursement becomes increasingly linked to value rather than volume, healthcare providers must make the proper organizational changes and pursue investments that improve the quality, efficiency, and effectiveness of their care. As demonstrated during the pandemic, determining which digital technologies to use to modernize the delivery of care and proactively manage patient risk is essential. In addition, providers and clinicians need to look at ways to tap into underutilized revenue streams like annual wellness visits, remote patient monitoring, and risk sharing to replace lost revenues and support long-term sustainability. The Backdrop: Providers are now increasingly pivoting to VBC and its associated APMs in order to prioritize patient health and achieve financial sustainability while taking on different levels of risk in the process. Since the passage of the Affordable Care Act in 2010 which accelerated the development of new APMs value-based care has increased in popularity. For example, according to Benefits Magazine, Anthem paid out 60% of all reimbursements through some type of VBC arrangement while United Healthcare and Aetna now pay out one-half of all reimbursements through similar arrangements, Nevertheless, according to HCP-LAN, less than 40% of total healthcare spending was linked to VBC in 2018 (latest available). One area that holds great potential is digital technology and its ability to connect doctors and patients, facilitate communication and exchange of information, and allow transitions of care/care coordination much more easily than before. Thanks to tools like improved telehealth, interoperability, and data standardization, care providers can now personalize care for larger populations, stratify patient groups for population health or risk analytics, and much more. Moreover by focusing on data and efficiency providers can reduce administrative costs, help eliminate unnecessary overutilization of care and potentially prevent disease in the first place. Moreover, while companies like the Mayo Clinic, Geisinger Intermountain Healthcare, and Kaiser Permanente were among the first to deploy artificial intelligence tools to improve efficiency, predict health outcomes, and leverage machine learning methods to inform clinical decision-making the growth in heatlhtech firms has enabled the use of much of this technology by firms who simply could not have accessed it before. In addition investments in data and information technology can have uses far beyond population health and predictive analytics. Providers must also invest in information technology services to enable improved care coordination, help empower care management and protocol standardization between physicians such that patient care, treatment plans, and outcomes are the same regardless of the physical or virtual delivery mechanism. Over time investments like these will support the delivery of personalized, cost-effective care for every patient served. Finally while providers will increasingly have to share more risk, currently less than 10% of providers are taking full risk, we expect it may take longer for providers to become truly integrated. For example, two of the most successful providers who have health insurance operations, Geisinger and Intermountain Healthcare, have both been involved in that aspect of the business for over 30 years each. Implications: Driven by CMS’s efforts to increase the use of VBC in Medicare, VBC will increasingly take hold as the primary payment system for providers. Despite the fact that this transition is going to be more gradual than first believed, those that realistically look at ways to drive revenue and reduce costs will be best positioned for the future. With the implementation of new rules around data sharing and interoperability and these rules being more strongly enforced, data gleaned from electronic medical records will improve consistency of care and inform decision-making and health outcomes across the board. For example, according to a report from Conversys, performance-related bonus payments have led to large payouts for care providers and significant savings (ex: the average total spending on readmission and ER visits per pacemaker episode can be as high as $3,000 to $4,000). Over time hospitals will have to find ways to accept increased risk to earn larger payouts but they need to ensure they have the proper risk management skills to do so. While providers stand to gain large revenues from providing skilled, quality care at a good value with risk sharing, they need to make sure their information systems will be such that they support such efforts. Given that some will likely not have the size or ability to gain such expertise this could lead to numerous interesting types of partnerships between providers and insurers and others, including alternative sources of capital (private equity and venture capital) that can assist in managing such risk for a fee. Related Reading: The Emerging Value-Based Care Industry: Paving the Road Ahead Adapting to the Reimbursement Landscape: The Future of Value-Based Care CMS Releases Latest Enrollment Figures for Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) Transforming Health Care Through Value-Based Reimbursement (subscription required) Value-based Healthcare: Measuring What Matters—Engaging Surgeons to Make Measures Meaningful and Improve Clinical Practice