Switching from non-profit to for-profit may affect how clinical laboratories operate in the new healthcare system
Shifting away from fee-for-service payment models and towards value-based healthcare is the goal of many non-profit hospital systems. One such transformation is underway at Summa Health, one of the largest integrated delivery networks (IDNs) in Ohio. On January 17, venture capital firm General Catalyst announced that its subsidiary—Health Assurance Transformation Corporation (HATCo)—had entered into an agreement to purchase Summa Health.
“HATCo’s investment into Summa Health will drive not only near-term benefit to the organization and the patients it serves but also sustainable, long-term transformation through a true shift to value-based care and access to new revenue streams, resources, innovations, and technologies,” states a General Catalyst news release penned by Marc Harrison, MD, CEO of HATCo.
Harrison was formerly President and CEO of Intermountain Healthcare, a 33 hospital not-for-profit IDN in Salt Lake City, Utah. This is a noteworthy fact because Intermountain Health has a national reputation as an innovative multi-hospital health system. Some observers believe that Harrison’s involvement signals that General Catalyst believes it has a care model that can deliver better patient care in a profitable manner.
“Under its new structure, Summa will become a for-profit organization, and General Catalyst says it will introduce new tech-enabled solutions that aim to make care more accessible and affordable,” CNBCreported.
“This is the first time that anybody has done anything quite like this,” Harrison told CNBC. “There are many digital health solutions that are out there as point solutions. This is the first holistic transformation of a health system to a thoughtful combination of digital and in-person care.”
“Our intent is to build on and augment the system’s considerable strengths. First and foremost, we share Summa Health’s commitment to serving all members of the community,” wrote HATCo CEO Marc Harrison, MD (above), in a news release. “The Summa Health team also shares our belief that achieving healthcare transformation will require a shift to value-based care … Together, we intend to demonstrate that a model that is better for patients can also be good for business, creating a blueprint for other health systems to effectively serve all people in their communities.” How this shift will affect Summa’s clinical laboratories remains to be seen. (Photo copyright: General Catalyst.)
Betting on Healthcare
In 2023, General Catalyst, an American venture capital firm headquartered in Cambridge, Mass., unveiled its Health Assurance Transformation Corporation (HATCo) and began shopping for a health system to buy.
HATCo has 20 healthcare systems in a network that spans 43 states and four countries, according to Healthcare Dive. The company’s news release states it has been focused on three areas since its start-up:
Helping its partners on their “transformation journeys.”
Planning to “acquire and operate a health system for the long-term.”
“The goal of the purchase is for the health system to act as a proving ground for General Catalyst to test ways to improve hospital operations and patient care, without risk aversion or cash shortfalls, management said,” Healthcare Dive reported.
Thus, the firm’s announcement to purchase a health system last October “sent shockwaves through the healthcare industry” according to Healthcare Dive.
“At its core, General Catalyst’s long-term Health Assurance thesis is that value-based care not only is good for patients, but also can be a successful business model if deployed with innovative technology at meaningful scale. Its rationale for buying a health system is a belief that it can improve on the traditional model of not-for-profit health system governance and management by embedding new incentives,” wrote Christopher Kerns, CEO and co-founder of Washington, D.C-based research firm Union Healthcare Insight, in a blog post analysis.
General Catalyst’s HATCo may offer up “a profit motive, a longer time horizon, and a channel for dozens of innovative companies to demonstrate value,” he noted.
“The single biggest barrier to promising young healthcare companies is an inability to scale. Many of their innovations—in digital health, patient engagement, revenue cycle workflow, etc.—require willing health system partners who are famously conservative in their investments and service providers, and rarely take risks on newbies. The addition of Summa provides an open laboratory for those innovations,” Kerns added.
Is the Summa Health Deal Good for Healthcare?
Some in the industry were taken aback by General Catalyst’s announcement.
“A lot of people feel like a PE (private equity) or venture capital company owning a hospital is kind of like asking Freddy Krueger to come babysit your kids. It just makes people a little nervous, and it doesn’t feel quite aligned with this concept of healthcare being a human right,” John Bass, CEO of Hashed Health, a Nashville, Tenn.-based healthcare venture studio, told CNBC.
Nevertheless, it’s a moot point. HATCo is moving forward with its purchase of Summa Health.
“For this bet to work, Summa will have to be a solid proving ground for [General Catalyst’s] portfolio companies. And that means either Summa itself will have to grow, or it will have to act as a force multiplier for its other value-based portfolio companies to justify the considerable capital expended. I have to say, that’s a tall order, but not an insane one,” said Kerns in the Union Healthcare Insight blog post.
Healthcare managers may find it interesting to follow HATCo and Summa Health on their planned journey. The results may speak for themselves. Either way, clinical laboratories and anatomic pathology group practices in HATCo’s health system may be in for some interesting changes.
Loss could indicate an industrywide slowdown in digital health adoption and suggests medical laboratories will want to continue developing a virtual care strategy
Only two years after Teladoc Health (NYSE:TDOC) completed acquisition of Livongo, a data-based health coaching company, the virtual healthcare provider reported a 2022 net loss of $13.7 billion, a company press release announced.
The loss, which has been described as “historic,” is “mostly from a write-off related to the plummeting value of its Livongo acquisition. … By comparison, in 2021 [just a year earlier], Teladoc posted a net loss of $429 million,” Fierce Healthcare reported.
However, during Teladoc’s fourth quarter earnings call, CEO Jason Gorevic said, “We are pleased with the strong fourth quarter and full-year operating results. Despite a challenging macro environment, we were able to expand our product offerings and enhance the level of care delivered across our integrated whole-person platform.” Teladoc Health’s 2022 revenue was $2,406,840 compared to $2,032,707 in 2021. That’s an 18% increase over last year’s revenue, according to the earnings report. Nevertheless, a month before the earnings call Teladoc laid off 300 non-clinician employees, Fierce Healthcare noted.
“Teladoc Health has been at the forefront of the adoption curve, and we believe that our scale, breadth of product offering, and proven outcomes will enable us to maintain and expand our position in the market,” said Teladoc Health CEO Jason Gorevic during February’s earnings call. Clinical laboratory leaders may view the company’s $13B loss as indication that adoption in telehealth by physicians, healthcare providers, and patients of digital-based health services is not happening as swiftly has been predicted. (Photo copyright: The Business Journals.)
Predictions in Telehealth Adoption Fall Short
Teladoc Health, based in Purchase, New York, acquired Livongo of Mountain View, California, in October 2020 for $18.5 billion.
A news release at that time declared that the merger was “a transformational opportunity to improve the delivery, access, and experience of healthcare for consumers around the world.
“The highly complementary organizations,” the release stated, “will combine to create substantial value across the healthcare ecosystem, enabling clients everywhere to offer high quality, personalized, technology-enabled longitudinal care that improves outcomes and lowers costs across the full spectrum of health.”
The deal was hailed as advancing telemedicine and digital health services. As it turned out, though, the demand for those types of services fell far short of the Teladoc’s expectations. One way to interpret the cause of the multi-billion dollar write-down is that adoption of digital health services by physicians, healthcare providers, and consumers is not happening as fast as Teladoc projected.
It may also be that companies allocated too much money to deals during the COVID-19 pandemic, an unstable period of time for making major business decisions.
Teladoc to Reduce Costs while Pursuing Increased Adoption of Virtual Care
Gorevic told analysts during the earnings call that the company needs to reduce costs and reach a market that is “in the early innings.” Year-over-year growth of 6% to 11% is expected in 2023, he said.
“You should expect us to balance growth and margin with an increased focus on efficiency going forward. Part of that approach is rightsizing the cost structure to reflect the current growth rates of the business,” Gorevic said. “The more balanced approach does not mean that we will stop relentlessly pursing growth and increased adoption of virtual care across the industry. Virtual care’s role within the healthcare industry remains underpenetrated, and we will continue to invest to expand our leadership position,” he added.
Digital Health Investing Falls Off
However, citing digital health market data in the new CB Insights report, Becker’s Hospital Review(Becker’s) suggested the digital health bubble may have “popped,” and that funding by investors is falling fast from the “Golden Age” of 2021.
The digital health category grew by 79% in 2021 to $57.2 billion, a record high, according to data cited by Becker’s. In the fourth quarter of 2021, there were 13 new digital health companies with valuations of at least $1 billion each. But by the end of 2022, digital health funding dropped to $3.4 billion. That’s “a five-year low,” Becker’s reported.
“The drop in funding in digital health companies I feel is a response to the volatility in healthcare where over 50% of hospitals and healthcare providers have posted losses for 2022 and a bleak outlook for 2023,” Darrell Bodnar, Chief Information Officer at North Country Healthcare in Lancaster, New Hampshire, told Becker’s.
And, in a statement about hospitals’ financial health, Fitch Ratings said providers in 2022 reported “weaker profitability and liquidity” as compared to 2021. For most providers, a “rapid financial recovery” is not expected, Fitch noted.
Labs Need Telehealth Strategies
All of this uncertainty in the telehealth/virtual care markets may ultimately benefit clinical laboratories and lab investors who delayed investing in technology that enables supporting physicians and patients using telemedicine visits. Still, it would be smart for medical laboratory leaders to develop a digital health strategy to meet consumer demand for lab testing services in tandem with virtual care visits with healthcare providers.
Will health monitoring with finger rings become more popular than wrist worn devices? One company hopes the answer is yes!
Personal health monitoring devices continue to grow smaller. Now there is a company selling a smart ring that fits on an individual’s finger. Clinical laboratory managers and pathologists may find this an interesting development, particularly because it shows progress in miniaturizing diagnostic capabilities and putting them into ever-smaller devices.
At the same time, health monitoring devices are becoming increasingly popular with consumers who want to track their overall health and certain medical conditions. However, devices currently on the market generally attach at the wrist like the Apple Watch and Fitbit.
Introduced by Movano, Inc. of Pleasanton, Calif., at the 2022 CES (Consumer Electronic Show) in Las Vegas, the Movano Ring tracks “sleep, heart rate variability, body temperature, and more,” according to the company’s website. Whether clinical laboratories will be involved with this data remains to be seen.
Primarily targeted at women, the Movano Ring offers “superior health-tracking technology and the convenient form,” according to Digital Trends.
The new smart ring device is expected to be released in beta form later this year. It is similar to the Oura Ring, which was launched in 2017 by OURA, located in Oulu, Finland (US office in San Francisco).
The Movano Ring (above) will come in four styles and be available later this year. The monitoring device “measures a user’s heart rate, temperature, SpO2, calories consumed, and steps taken, among other parameters generally tracked by smart wear. However, Movano’s app is the killer feature, as it can give actionable insights to users into their health so that they can make short-term, as well as long-term, changes,” Digital Trends reported. Clinical laboratories may one day be processing data streamed from these devices if the FDA grants class II medical device designation. (Photo copyright: Movano.)
Movano Seeks FDA Clearance
In an interview with MedTech Intelligence, Movano’s CEO John Mastrototaro, PhD, said the company saw a gap in the wearables market. “There was a real lack of solutions designed specifically for women and some of the unique health challenges women face as they age.”
Cuffless blood pressure testing and blood glucose monitoring are “holy grails for wearable tech,” and Movano plans to add them over time and testing of its radio frequency, The Verge reported.
“We’re taking the regulatory side of things very seriously,” Mastrototaro told The Verge.
In a news release, Movano announced completion of a study it conducted with University of California San Francisco “to assess the accuracy of the Movano Ring’s blood oxygen saturation (SpO2) and heart rate data.
“With results that exceeded the requirements of the industry standard used by FDA for evaluating SpO2 devices, this successful study is a promising step toward the company’s goal to provide medically-validated data to consumers and healthcare professionals,” the news release stated.
Seven participants wearing Movano Ring prototypes participated in the study to test the device’s accuracy during mild, moderate, and severe hypoxia, as well as heart rate changes while they were deprived of oxygen.
Comparing data to other reference devices, the researchers found the Movano Ring resulted in a 2% margin of error, which was well below the FDA’s 4% margin of error requirement for blood oxygen saturation, the news release stated.
Ring Works with Sensors, App
Sensors embedded in the Movano Ring collect data which is available to wearers through a smartphone application.
“Data from sensors that are embedded within the ring revolve around heart rate, heart rate variability, sleep respiration rate, temperature, blood oxygen, steps, calories, and other women-centric features. We want to have the app experience where all that sensor data is going to the app,” Mastrototaro explained in an interview with Medical Device and Diagnostic Industry.
“One of our goals is to translate those measures into what it means about your overall health. We don’t want to bombard people with data … we want to distill it all down to insights for people that help them understand how activities of daily living and their lifestyle affect their overall health,” he said.
Another Smart Ring
Meanwhile, wearable health device developer OURA recently released a third-generation ring model of its Oura Ring, which Engadget called a “technical marvel.”
“Taking the sensors from a smartwatch or fitness tracker and shrinking them into a ring is worthy of enormous praise … There’s much more tech crammed in this time around … including continuous heart rate tracking, temperature monitoring, blood oxygenation, and (menstrual) period prediction,” Engadget said.
OURA developed a new SpO2 feature to help ring wearers uncover problems in breathing while sleeping. In a blog post, scientists explained: “Typically, SpO2 is measured by placing a pulse oximeter on the tip of the finger … the Oura Ring measures light reflected back from the tissue. Fingertips provide good optical characteristics for this noninvasive measurement as blood vessels have thinner walls and are more diffused.”
The Oura Ring Generation 3 costs $299 and comes in silver, black, stealth, and gold finishes. There is a $5.99 monthly membership fee, and the app is compatible with Android and Apple iOS operating systems.
Wearable Health Monitoring Device Trend on the Rise
Over the years, Dark Daily and our sister publication The Dark Report have regularly covered the growing trend of consumers using wearable technologies to monitor their own health and the health of loved ones.
It should be clear to clinical laboratory leaders that popularity of wearable monitoring devices and digital healthcare is expanding among consumers. The data collected may soon find its way into new treatments for chronic illnesses and early warnings for diagnosticians.
All-of-Us program is free to participants and provides data to more than 800 research studies for cancer, COVID-19, Alzheimer’s, and other diseases; findings will lead to new biomarkers for clinical laboratory tests
It is hard to say no to free. At least that is what the National Institutes of Health (NIH) is counting on to help increase the size and diversity of its database of genetic sequences. The NIH’s All-of-Us Research Program is offering free genetic testing for all participants in the program, as well as free wearable Fitbits for those selected to provide lifestyle and behavior data.
Many pathologists and clinical laboratory managers know that this group of researchers hope to build a database of more than one million genetic sequences to better understand “how certain genetic traits affect underrepresented communities, which could greatly affect the future of customized healthcare,” CBS affiliate 8 News Now reported.
“Customized healthcare” is a euphemism for precision medicine, and genetic sequencing is increasingly playing a key role in the development of personalized diagnostics and therapeutics for cancer and other deadly diseases.
In “VA’s ‘Million Veterans Program’ Research Study Receives Its 100,000th Human Genome Sequence,” Dark Daily described how the NIH’s All-of-Us program was launched in 2018 to aid research into health outcomes influenced by genetics, environments, and lifestyle. At that time, the program had biological samples from more than 270,000 people with a goal of one million participants.
Matthew Thombs, Senior Project Manager of Digital Health Technology at Scripps Research in La Jolla, Calif., joined the All-of-Us program after losing a family member “to a condition I believe could have been managed with changes to their lifestyle,” he told 8 News Now.
“What we are building will empower researchers with the information needed to make such conclusions (about possible need to change lifestyles) and forever alter how diseases are treated,” he added. “I hope that what we are doing here will help my son grow up in a world where healthcare is more of a priority, and many of the ailments we see today are things of the past.”
Such genetic testing could discover biomarkers for future personalized clinical laboratory diagnostics and drug therapies, a key aspect of precision medicine.
The photo above shows an All-of-Us participant being prepped to provide a biological sample for genetic testing. According to Matthew Thombs, Senior Project Manager of Digital Health Technology at Scripps Research, “participants can provide as much or as little information as they like, every single data point matters.” The collected data is shared anonymously with more than 800 research studies for COVID-19, Alzheimer’s, cancer, and other diseases, 8 News Now reported. (Photo copyright: KLAS-TV.)
Scripps Research Integrates Mobile Health Technology into All-of-Us Program
A critical aspect of the NIH’s research is determining how people’s behavior combined with their genetics may predispose them to certain diseases. Nonprofit research institution Scripps Research is working with the NIH’s All of Us Research Program to enroll and collect biological samples from one million US residents.
In addition, Scripps is fitting study participants with wearable mobile health devices to capture data on their habits and lifestyles.
“Until now, the treatment and prevention of disease has been based on a ‘one-size-fits-all’ approach, with most therapeutics tailored for the ‘average patient’. However, advances in genomic sequencing, mobile health technologies, and increasingly sophisticated informatics are ushering in a new era of precision medicine. This new approach takes into account differences in people’s genes, environment, and lifestyles giving medical professionals resources to design targeted treatments and prevention strategies for the individual,” Scripps states on its website.
Can wearable fitness devices and related data contribute to research on genetics and healthcare outcomes? Scripps aims to find out. It has fitted 10,000 people in the All-of-Us program with Fitbit devices (Fitbit Charge 4 tracker or Fitbit Versa 3 smartwatch) at no cost. Since February, Scripps has distributed 10,000 Fitbit wearable devices through the All-of-Us program.
“By sharing information about their health, habits, and environment, participants will help researchers understand why people get sick or stay healthy,” the Scripps website adds.
The Scripps researchers plan to analyze how the people use the wearable devices. They are also accumulating data about participants’ physical activity, heart rate, sleep, and other health metrics and outcomes “as part of the broader All of Us program,” a Scripps news release explained.
“This is the first time All of Us is distributing devices to participants. Our goal is to better understand how participants engage during research studies in order to continually improve user experience and participation. We also expect to learn more about how wearable data may inform the personalization of healthcare,” said Julia Moore Vogel, PhD, Director of The Participant Center at the All of Us Research Program at Scripps Research, in the news release.
All-of-Us Program Records ‘Significant Progress in Participant Diversity’
As of June, the NIH has enrolled 386,000 participants into the All-of-Us program, with 278,000 consenting to all of the program’s steps. Eighty percent of biological samples in the collection are from people in communities that have been under-represented in previous biomedical research an NIH new release noted. According to the NIH, that gives the All-of-Us research program “the most diverse dataset.”
What will all this research ultimately bring to clinical laboratories? Who knows? Nevertheless, if federal institutions like the NIH and non-profit research companies like Scripps believe precision medicine is worth investing in, then the All-of-Us program is worth watching.
A diverse database of a million genetic sequences combined with lifestyle and behavioral data may lead to new and improved personalized diagnostics and drug therapies.
Mobile, wearable, mHealth monitoring devices are a key element of many employer fitness programs and clinical laboratories can play an important role in their success
For years Dark Daily has encouraged clinical laboratories to get involved in corporate wellness programs as a way to support their local communities and increase revenues. Now, leveraging the popularity of mobile health (mHealth) wearable devices, UnitedHealthcare (UHC) has found a new way to incentivize employees participating in the insurer’s Motion walking program. UHC is offering free Apple Watches to employees willing to meet or exceed certain fitness goals.
This is the latest wrinkle in a well-established trend of incentivizing
beneficiaries to meet healthcare goals, such as stopping smoking, losing
weight, reducing cholesterol, and lowering blood pressure.
It’s an intriguing gamble by UHC and presents another opportunity for medical laboratories that are equipped to monitor and validate participants’ progress and physical conditions.
How to Get a Free Apple
Watch and FIT at the Same Time
CNBC reported that UHC’s Motion program participants number in the hundreds of thousands. And, according to a UHC news release, they can earn cash rewards up to $1,000 per year. The idea is that participants pay off the cost of their “free” Apple Watch one day at a time by achieving activity goals set in UHC’s FIT tracking method. Those goals include:
Frequency:
500 steps in seven minutes; six times a day, at least one hour apart;
Intensity:
3,000 steps in 30 minutes; and,
Tenacity:
10,000 steps in one day.
“UnitedHealthcare Motion is part of our consumer-focused strategy that is driving toward a simple, integrated, mobile-centric ecosystem that delivers value to consumers,” said Steve Nelson, CEO of UnitedHealthcare, in a news release. “Smartwatches and activity trackers stand alongside transparency in physician selection and medical costs, easy virtual visits with healthcare professionals, and digital coaching and online wellness programs, all of which are designed to support consumers in enhancing their health and improving how they navigate the healthcare system.” Clinical laboratories play a key role in this healthcare strategy. (Graphic copyright: UnitedHealthcare.)
Though hundreds of thousands of beneficiaries are eligible to participate in UHC’s Motion program through their employers, only 45% of those eligible have enrolled in Motion, Fox Business reported.
UHC hopes the offer of a free Apple Watch (which has
applications to track minutes of exercise, a heart rate monitor, and more) will
encourage people to sign up and then progress toward the Motion program’s FIT
goals.
As people meet these goals, they earn $4/day toward the cost
of the Apple Watch. Participants, who do not take enough steps in a six-month period
could be required to repay a percentage of the cost of the smartwatch.
Motion participants who already own an Apple Watch can still
earn up to $1,000 per year in cash rewards for achieving the FIT goals.
“UnitedHealthcare Motion’s success affirms that wearables can play an important role in helping people enhance their well-being and supporting and motivating them to stay engaged in their health,” said Rebecca Madsen, Chief Consumer Officer of UnitedHealthcare, in the UHC news release. (Photo copyright: University of Pennsylvania.)
Impact of mHealth
Programs/Technology Not Clear
Chronic diseases, including diabetes and heart disease, annually cost the US healthcare system $190 billion and employers $126 billion in lost productivity, according to the Centers for Disease Control and Prevention (CDC).
However, some researchers say it’s too early for mHealth
wearables, medication apps, physician virtual engagement, and other digital tools
(many launched within the past five to seven years) to effect key indicators,
such as obesity, life expectancy, and smoking cessation.
“Some of the benefits of these new tools won’t be realized for a long time. It’s really hard to tease out the impact of digital health. Maybe we’re helping people, but we’re not detecting it,” James Murphy, MD, Associate Professor, University of California San Diego Health and radiation oncologist, told CNBC.
Nevertheless, it behooves medical laboratories to develop
procedures for analyzing and reporting data that could impact people who use
wearable mHealth devices to participate in employer wellness programs.
For example, labs could contact insurance companies with
information about biomarkers that provide views into an individual’s progress
toward personal health goals.
Data-driven recommendations from medical laboratories about
tests for chronic conditions such as heart disease and diabetes will likely be
welcomed by payers.
