Favorites: Are Employer Plans Dying?, Startups Disappoint Patients, Drs & Race-The HSB Blog 12/29/20
This week we present a review of our favorite posts of the year. "Our Take" and our regular updates will return next week.
Slipping Away: Does the Employer-Sponsored Health Care System Have an Expiration Date?
Event: On November 3rd, Benefits Pro released an article stating that the employer-sponsored health care system may come to an end if employers don’t move more quickly to improve the system. According to former Florida Governor Jeb Bush’ “for those who believe in markets, choice and patient responsibility haven’t been offering creative 21st-century suggestions...there has been very little discussion about alternatives” to expanding Medicare.
Description: The article noted that unless the Employer-sponsored insurance (ESI) industry can deliver on much needed reforms, its day’s might be numbered. It added, that “while there is still time to step in with solutions that ease the pain”, by some estimates, “if the health care system can’t be righted within the next five years, we’ll be looking at a full government takeover”. It is also clear that existing healthcare industry participants are resisting change and that the current system is “riddled with throwing technology on top of broken processes” instead of fixing “the process and then [applying] the technology”. As a result many are looking to big names like Amazon (and its Haven health care venture), Google, Apple, and Microsoft to bring health care costs under control and improve outcomes.
Implications: ”Our country is creeping--in some cases jogging and even sprinting--toward a government dominated healthcare system” as pointed out by former Florida Governor Jeb Bush, but employer resistance to innovation and true improvement risks crippling the system. While COVID has laid bare the shortcomings of the system it has also dramatically accelerated the pace of change. Taking advantage of this opportunity now is especially important as Millennials, the largest generation in history who are expected to make up 75% of the workforce by 2025, are starting to get to the point where they interact with the healthcare system and demand more. Smart employers can take advantage of the opportunity to design a curated, more modern ESI healthcare plan or risk a permanent move toward a government-run healthcare system.
What Startups are Missing When They Talk About the ‘Consumer’ Experience &
To Boost Inclusivity, Words Matter in the Healthcare World
Event: Two recent reports in Mobihealthnews focus on the importance of including a health equity agenda and acknowledging the importance of langage to improve consumer experience and inclusivity in digital health tools. Digital health need to make sure they “have delivery systems that communities can trust and want to access” especially for groups of people who have been historically marginalized such as those in LGBTQ+ community and communities of color.
Description: Two recent panels shed insights on lessons that could be learned from the dual crises of COVID and racial injustice which have had a disproportionate impact on underserved communities and communities of color. Participants noted that when designing digital solutions for marginalized communities, it is important to take a broad look at health care needs and meet communities where they are. Words and language used by clinicians have impact and can either boost inclusivity or cause exclusion. When designing healthcare solutions, people need to consider – does this work for marginalized communities and what does management and board teams look like from a diversity, equity and inclusiveness standpoint.
Implications: Panelists noted that one of the challenges Silicon Valley has in changing health care at scale is that too often entrepreneurs are reflecting their own experiences onto the challenges of healthcare today. One solution would be to tailor efforts towards a specific population served rather than roll out a one-size-fits-all program. In addition, start-ups need to guard against the “Silicon Valley-ization of Healthcare” that focuses on transactions as opposed to relationships and driving outcomes.
Patient Experience Better When Patients Visit Docs of Same Race
Event: On November 11th, PatientEngagementHIT released a study conducted by the Perelman School of Medicine at the University of Pennsylvania, addressing the correlation between patient experience scores and the race of both patient and doctor. In addition, the study looked at the need for health systems to address racial implicit bias in medical settings. The study concluded that patient experience scores tend to be at their highest when a patient sees a physician of the same race and that health systems must do a better job at addressing implicit racial bias in medical settings.
Description: The researchers looked at approximately 120,000 patient experience scores for an urban academic medical center, focusing on the “likelihood to recommend” domain. The study found that patients who saw physicians of their own race or ethnicity were more likely to rate their physicians higher on patient experience surveys than those who saw physicians of a different race or ethnicity. Although the differences in rating seems small, with black patient’s rating white physicians 0.03 points lower on “likelihood to recommend” than their rating for black physicians, that 0.03 points difference could lower a physicians mean score on Press Gainey ratings from the 100th percentile to the 70th percentile.
Implications: The results of the study reiterate the association between race/ethnicity and patient-physician interaction/ outcomes and the implicit racial bias black patients have experienced in healthcare. This ultimately impacts healthcare delivery, health disparities, and morbidity and mortality rates amongst African Americans. The results serve as a warning for healthcare organizations, especially those that may rely heavily on patient experience scores for compensating physicians, and that addressing the needs of their patients from a culturally diverse perspective is crucial. The study reinforces the belief that cultural competency and efforts to address implicit bias in healthcare is essential as is the need to understand/pay attention to non-verbal social cues.
The Mismatch of Telehealth and Fee-for-Service Payment
Event: Due to the COVID-19 pandemic, telehealth enabled patients to connect to their providers and avoid in-person facilities for regular office visits. Telehealth is now a core element of care delivery. However, payment for telehealth under fee-for-service is not structured well. Telehealth services are treated differently from their in-person counterparts. Although Medicare has enacted several temporary waivers to incentivize telehealth during the pandemic. The current structure of telehealth billing is not sustainable and needs to adjust to the realities of a post-COVID world.
Description: Medicare pays for almost 250 telehealth services. About half of the current Medicare billing codes for telehealth services were added as temporary measures during the public health emergency (PHE) to help providers deal with the impact of the pandemic. However, their popularity will make it difficult to abandon them wholesale as telehealth and digital tools have cemented themselves in the healthcare delivery system. Also, some common telehealth services were covered by Medicare at a rate too low to be viable for providers and had their reimbursement greatly increased to supplement expanded coverage. For example, the standard Medicare rate for a 5-10 minute phone call, equivalent to a virtual check-in, is $15, which doesn’t even cover the cost of providing the service and submitting the claim, estimated to be $20.49. Practices were also obliged to collect the $3 coinsurance from the patient on that $15. As a result, only about 12,000 codes for check-ins were billed in 2019, totaling less than $200,000 in revenue. The temporary pandemic increase in reimbursement for this code brought it up to $46. This policy of “overpaying” makes sense when it is a measure to aid providers facing constraints during the pandemic. However, if Medicare does not continue to “overpay” for or even cover these services, providers, and patients may suffer as flexibility and access to additional options for care is lost. Telehealth billing codes are not specific and concise enough for fee schedules to be effective, cataloging several characteristics that are not reflective of clinical distinctions.
Implications: Use of the existing Medicare fee for service payment structure for all telehealth codes at current rates will increase administrative burden and cost. A different approach is necessary to ensure providers can continue to use telehealth to reach patients outside of providers and physicians in-person facilities. One solution is to pay providers lump-sum amounts for primary care telehealth services. These would be compatible with the monthly per capita payments for primary care under Medicare’s new optional reimbursement program, the Primary Care First model.
Hims, A Direct-to-Consumer Health Company, is Going Public via SPAC
Event: On October 1st, 2020 Hims. Inc., a direct to consumer digital healthcare company, agreed to merge with a Special Purpose Acquisition Company (SPAC) formed by Oaktree Capital Management to go public. As a result of the transaction, Hims may raise up to $280M in cash, be valued at $1.6B and trade on the NYSE under the symbol HIMS.
Description: Hims, Inc., is a direct to consumer company that sells health products targeted at Millennials. for both men’s and women’s health brands. Their focusing is on a variety of everyday issues and products such as skincare, hair-loss, sexual health and more recently primary care. Hims is fairly unique in that most of its products are sold via a monthly subscription and a high percentage (approximately 90% according to the company) is recurring. The transaction is expected to close by the end of 2020. Hims is the second digital health company to go public via a SPAC according to Fierce Healthcare, following acute care telemedicine company SOC Telemed’s July deal announced with Healthcare Merger Corp. Oaktree Acquisition Corp, is a SPAC formed by Oaktree Capital Management that went public in July with the intent of using the proceeds to make one or more acquisitions. A SPAC is a “blank-check” company that has the intention of buying or merging with one or more companies with the caveat that if the capital raised from investors is not invested within two years it must be returned to them. SPACs are also seen as an easier way for private companies to go public more rapidly and have less regulatory paperwork than the typical initial public offering (IPO) process.
Implications: SPACs are an increasingly popular way for companies, typically those that may be earlier in their lifecycle, to come public with approximately 115 SPACs raising approximately $43B through October according to Bloomberg. SPACs also have the advantage of allowing companies coming public to make financial forecasts and raise greater amounts of capital. This can be especially attractive for competitive and financial purposes in an emerging industry such as digital health. As a result, SPACs could provide an avenue for some smaller and less mature digital health companies to go public and keep pace with many of the larger players in the space who came public via IPOs. (ex: Teladoc, Amwell, Oak Street Health, One Medical, etc). [As we were going to publication Clover Heatlh agreed to go public via a SPAC in $3.7B merger with Social Capital's Hedosophia Holdings III per Bloomberg].
High-Tech Aids for Aging in Place
Event: On September 23rd, Kiplinger.com released an update on this year's technology to assist older users and their caregivers who cannot afford the high cost of assisted living/senior care.. Kiplinger’s highlighted six products across a range of devices not all of which are marketed direct-to-consumer. Two we are highlighting here are Smart Sole and Envoy at Home.
Description: SmartSole provides a smart insole to fit into shoes with a built-in GPS. This is used to keep track of a loved one with dementia who may wander off and get lost. The device pinpoints the person’s whereabouts on a map, supplying addresses and outdoor locations to within 15 feet every five minutes. Envoy at Home is a remote caregiving service for older adults who live alone and can't afford a health aide. Using sensors, caregivers can monitor the person's wellness and safety, such as how long or frequent the patient's bathroom visits are, periods of inactivity, and whether they are taking prescribed exercise or rest. The caregiver can then receive reports and alerts on the patient.
Implications: During COVID, many caregivers are socially distancing from their older loved ones and cannot be present to care for them as they are accustomed to or would like. SmartSole and Envoy at Home provide solutions to remotely care for older people living on their own. These solutions and devices like them, help older adults live independently at home longer and provide more flexibility for caregivers by allowing them to care for elderly parents from a safe distance.
Targeted Cyberattacks on Telehealth Vendors Skyrocketed Along with Adoption, Report Finds & Fewer than Half of Healthcare Institutions Met National Cybersecurity Standards Last Year
Event: According to two recent reports, not only has the number of cyberattacks targeting popular telehealth applications risen 30% since the pandemic began, but healthcare institutions are slightly less prepared to deal with them in 2019 than they were in 2018 or 2017. First, based on the “Listening to Patient Data Security: Healthcare Industry & Telehealth Cybersecurity Risks” report by Security Scorecard and Dark Owl, there has been a dramatic increase in attacks on telehealth which saw the increase in security alerts noted above compared to the healthcare industry in general which saw an overall 77% decrease in security alerts. In addition, the CynergisTek 2020 Annual Report noted declines in four of five core security functions outlined in that National Institute of Standards and Technology’s cybersecurity framework with assisted living facilities scoring highest (96%) and physician groups scoring lowest (20%).
Description: Security Scorecard and DarkOwl compared security alerts sent to IT staff at 148 of the most popular telehealth applications for the period March through April of 2020 compared to the pre-COVID period of September 2019-February 2020. They found a 65% increase in patching cadence findings, a primary secret security approach to protect data and a parallel 56% increase in endpoint security attacks. They also found security issues were reported due to increased FTP attacks (which rose 42%) and RDP attacks (which rose 27%) both of which target increases in remote and virtual workers. The CynergisTek report showed that healthcare institutions compliance with IT security policies were sliding, scoring 44% in 2019, vs. 47% in 2018 and 45% in 2017. This included a decline in four of five core functions.
Implications: With the growth in remote work and the explosion of digital health due to the pandemic, the number of “digital endpoints” exposing healthcare institution’s to cyber risk has increased significantly. As a result healthcare institutions need to be even more vigilant and conscious of the risks to patient data and IT system integrity/security. Healthcare companies must work on greatly improving and patching their critical security tools enhancing endpoint protection, improving identity access management, and data loss prevention.