Google-backed One Medical is acquiring Medicare-focused primary healthcare chain Iora Health for $2.1 billion in an all-stock trade deal, the companies announced Monday.
The buy will give One Medical presence in 28 markets, covering about 40% of the U.S. population and is expected to generateannual revenue at $350 million by 2025. The deal will add about $700 billion in total addressable market, according to an investor presentation.
Under the terms of the deal, which is expected to close in the late third quarter or fourth quarter of this year, Iora stockholders will own about 27% of the combined company. One person from Iora will join One Medical’s board and Iora co-founder and CEO Rushika Fernandopulle will become One Medical’s chief innovation officer.
The acquisition aligns two key players in part of the value-based care movement that eschews traditional payer-provider arrangements in favor of a concierge membership model. Iora’s concentration in the Medicare population and related participation in CMS’ direct contracting model could be key reasons for coming under One Medical’s sights.
Jefferies analysts said they viewed the transaction as positive, particularly considering both companies’ tech and data capabilities. “Given tech orientation and emphasis on outcomes, we expect substantial derivative value from combining data and developing better treatment programs with superior outcomes across [longitudinal] care. We see this as a clear clinical and applied advantage,” they wrote.
Both companies base their business on value-based models, which some in the industry worry have suffered during the COVID-19 pandemic as cash-strapped providers avoid the risk of models not based on fee-for-service. The Biden administration’s director at the Center for Medicare and Medicaid Innovation said recently the movement is at “a critical juncture” and that more mandatory models are likely forthcoming.
And on the Q1 call with investors, executives highlighted a membership increase of 31% year over year.
One Medical, founded in 2007, lead the pack of recent healthcare IPOs, going public in January 2020.
The company touts its direct-to-consumer model buts also contracts directly with employers and partners with several health systems. CFO Bjorn Thaler told Healthcare Dive at the time of the IPO its pitch to investors focused on highlighting a differentiated model.
“[W]e provide the member with a very, very valuable service. They don’t have to wait 29 days to get care. They can get care oftentimes in an instant, digitally,” he said.
Boston-based Iora, which was founded in 2011, has raised nearly $350 million over seven funding rounds, according to Crunchbase. It has contracts with major payers including UnitedHealthcare, Cigna and Humana.
The deal extends One Medical into full-risk Medicare reimbursement. Iora began the direct contracting model in April across all its markets. The program ties reimbursement to spending and quality for all Medicare fee-for-service beneficiaries across a geographic region.
About 60% of Iora’s members are in the fast-growing Medicare Advantage program, which has now reached about 40% of the Medicare population.
Iora had expected revenue this year to reach nearly $300 million and as of the first quarter had 38,000 members, compared to nearly 600,000 members at One Medical, according to the investor presentation.
One Medical stock was trending slightly down in early morning trading Monday.
We spoke this week with a medical group president looking to deploy a more consistent consumer experience across his health system’s physician practices, beginning with primary care.
The discussion quickly turned to two large primary care practices, acquired several years ago, whose doctors are extremely resistant to change. “These guys have built a fee-for-service model that has been extremely lucrative,” the executive shared. “It was a battle getting them on centralized scheduling a few years ago, and now they’re pushing back against telemedicine.”
With ancillary income included, many of these “entrepreneurial” primary care doctors are making over $700K annually, while the rest of the system’s full-time primary care physicians average around $250K.
The situation raises several questions. Standardized access and consistent experience are foundational to consumer strategy; in the words of one CEO, if our system’s name is on the door, any of our care sites should feel like they are part of the same system, from the patient’s perspective.
But how can we get physicians on board with “systemization” if they think it puts their income at risk? Should the system guarantee income to “keep them whole”, and for how long? And is it possible to create consensus across a group of doctors with a three-fold disparity in income, and widely divergent interests? While there are no easy answers, putting patients and consumers first must be the guiding goal of the system.
Throughout the COVID-19 pandemic, experts have been warning of the dangers of postponed health care services. In January, the American Cancer Society, the National Comprehensive Cancer Network, and 73 other organizations, including many major health care systems, issued a statement stressing the urgency of preventive care. “We urge people across the country to talk with their health care provider to resume regular primary care checkups, recommended cancer screening, and evidence-based cancer treatment (PDF) to lessen the negative impact the pandemic is having on identifying and treating people with cancer,” the groups said.
That was sound advice not everyone could follow, as ProPublica’s Duaa Eldeib reported last week in a tragic story about Teresa Ruvalcaba. The 48-year-old single mother of three worked for 22 years at a candy factory on Chicago’s West Side. During the pandemic, disaster struck. “For more than six months, the 48-year-old factory worker had tried to ignore the pain and inflammation in her chest. She was afraid of visiting a doctor during the pandemic, afraid of missing work, afraid of losing her job, her home, her ability to take care of her three children,” Eldeib reported.
“Even though her chest felt as if it was on fire, she kept working. She didn’t want to get COVID-19 at a doctor’s office or the emergency room, and she was so busy she didn’t have much time to think about her symptoms,” Eldeib wrote.
Ruvalcaba’s pandemic fears were typical of patients across the nation, surveys revealed. A 2020 CHCF poll of 2,249 California adults revealed that even when people wanted to see a doctor for an urgent health problem, one-third did not receive care. Nearly half of those surveyed didn’t receive care for their nonurgent health problems.
Nationally, more than one in three people delayed or skipped care because they were worried about exposure to Covid-19, or because their doctor limited services, according to an Urban Institute analysis of a September 2020 survey.
The toll of this disruption in care — the forgone cancer screening, the chest pain that isn’t reported — will devastate some patients and families. Ruvalcaba had to face a diagnosis with a terrible prognosis, inflammatory breast cancer. “If she would have come six months earlier, it could have been just surgery, chemo and done,” Ruvalcaba’s doctor told Eldeib. “Now she’s incurable.”
“Unfortunately, we know we’re going to see some tragedies related to the delays,” Wiley Fowler, an oncologist at Dignity Health in Sacramento, told Ibarra.
Consequences of Delayed Care
Public health messages early in the pandemic urged people to avoid public places, including doctor’s offices. In April, as Hayley Smith noted in a Los Angeles Times story, the US Centers for Disease Control and Prevention (CDC) and the Centers for Medicare & Medicaid Services “both published guidelines recommending the postponement of elective and nonurgent procedures, including ‘low-risk cancer’ screenings, amid the first wave of the pandemic.”
Patients and doctors listened. Appointments were canceled. “Nonurgent” procedures encompassing a wide array of treatments and operations, including cancer surgeries, were delayed.
Preventive cancer screenings dropped 94% over the first four months of 2020, Eldeib reported. The National Cancer Institute expects to see 10,000 preventable deaths over the next decade because of pandemic-related delays in diagnosis and treatment of breast and colorectal cancer. Screenings for these cancers, which account for about one in six cancer deaths, are routine features of preventive care.
I know I should get another check soon, but the anxiety of COVID feels like more of a priority than the anxiety of cervical cancer.
—Molly Codner, a Southern Californian who received an abnormal Pap smear last summer
In California, cancer deaths have remained roughly the same as prepandemic rates, but that stability is not expected to last. Based on the National Cancer Institute data, Ibarra calculates that an additional 1,200 Californians will die from breast and colon cancer. The National Cancer Institute estimate is conservative “because it only accounts for a six-month delay in care, and people are postponing care longer than that,” Ibarra reported.
Nationally, death rates from cancer are expected to increase in a year or two. Slow-growing cancers will remain treatable despite a delayed diagnosis, Norman Sharpless, MD, director of the National Cancer Institute, told Eldeib. Yet for conditions like Ruvalcaba’s inflammatory breast cancer, delayed care can be disastrous.
Women, People of Color Disproportionately Affected
For women across Southern California, appointments have been delayed, exams canceled, and screenings postponed during the pandemic, Smith reported in the Los Angeles Times. “Some are voluntarily opting out for fear of encountering the virus,” Smith wrote, “while others have had their appointments canceled by health care providers rerouting resources to COVID-19 patients.”
Before Pap smears became part of routine American health care, cervical cancer was one of the deadliest cancers for women. Today, as many as 93% of cervical cancer cases are preventable, according to the CDC, and screenings are a crucial component of preventive care. Yet during the first phase of California’s stay-at-home orders, cervical cancer screenings dropped 80% among the 1.5 million women in Kaiser Permanente’s regional network, Smith wrote.
The effects of the pandemic shutdown extended beyond delayed Pap smears. Women who spoke to Smith said that “mammograms, fertility treatments and even pain prevention procedures have been waylaid by the pandemic.”
Sometimes, obstacles other than the pandemic are continuing to interfere with access to care. One woman had an appointment delayed and then lost her job and her health insurance, Smith reported.
“Molly Codner, 30, has needed a checkup ever since she received an abnormal Pap smear last summer,” Smith wrote, “but like many Southern Californians, the trauma of the last year still weighs heavily on her mind: Nearly a dozen people she knows have had COVID-19.” Codner told Smith that “I know I should get another check soon, but the anxiety of COVID feels like more of a priority than the anxiety of cervical cancer.”
People who face disparities in treatment and care are most likely to be hard hit by pandemic delays. That includes Black people, who were already more likely to die from cancer than any other racial group. Cancer also is the leading cause of death among Latinx people. Breast cancer is the most common cancer diagnosis for Latinx women. Overall, more Americans die of heart disease.
Black adults are more likely than White or Latinx adults to delay or forgo care, according to researchers from the Urban Institute.
Telehealth Solved Access Issues for Some, Not All
Telehealth was a boon for patients during the pandemic year. Yet, as Ibarra notes, “there’s only so much that doctors and nurses can do through a screen.” Dental visits, mammograms, and annual wellness checks were also put on hold by the pandemic.
Latinx, Asian, and Black respondents did not use telehealth as often as White respondents. USC researchers attribute these differences to “disparities in income, education and access to any kind of health care.”
Researchers at the Urban Institute report similar findings: “Black and Latinx adults were more likely than White adults to report having wanted a telehealth visit but not receiving one since the pandemic began, and that difficulties getting a telehealth visit were also more common among adults who were in poorer health or had chronic health conditions.”
After controlling for socioeconomic factors and health status, patients with limited English were half as likely to use telehealth compared to fluent English-speaking patients, the Urban Institute said. “Much work remains to ensure all patients have equitable access to remote care during and after the pandemic,” the researchers wrote.
Whether telehealth is conducted by video or phone may be crucial to ensuring access to care. A study of telehealth use at Federally Qualified Health Centers in California in 2020 found that “more primary care visits among health centers in the study occurred via audio-only visits (49%) than in-person (48%) or via video (3%). Audio-only visits comprised more than 90% of all telemedicine visits.”
Public health efforts might need to focus on two goals at the same time as the US recovers from the pandemic: increasing vaccine uptake to keep COVID-19 in check and proactively managing the fallout from delayed care.
“As we focus on recovery, we have to ensure that we get vaccinated,” Efrain Talamantes, a primary care physician in East Los Angeles, told Ibarra. “But also that we have a concerted effort to manage the chronic diseases that haven’t received the attention required to avoid complications.”
Late last week, retail giant Walmart announced its plan to acquire national telemedicine provider MeMD, for an undisclosed sum. According to Dr. Cheryl Pegus, Walmart’s executive vice president for health, the acquisition “complements our brick-and-mortar Walmart Health locations”, allowing the company to “expand access and reach consumers where they are”.
MeMD, founded in 2010, provides primary care and mental health services to five million patients nationally. The acquisition extends Walmart’s health delivery capabilities beyond the handful of in-store and store-adjacent clinics it runs, and follows the launch of its own Medicare Advantage-focused broker business, and partnership with Medicare Advantage start-up Clover Health to offer a co-branded insurance product.
Walmart has been climbing the healthcare learning curve for several years, building on its sizeable retail pharmacy business, and seems to have hit on a successful formula in its latest in-person clinic model, which includes primary care, behavioral health, vision, and dental services. The retailer plans to add 22 new clinic locations by the end of this year, and its new telemedicine offering will allow it to expand its virtual reach even further.
The MeMD acquisition alsorepresents a new front in Walmart’s head-to-head competition with Amazon, which launched its own national telemedicine service earlier this year. That service, Amazon Care, is targeted at the employer market, and right on cue, Amazon announced its first customer sale last week—to Precor, a fitness equipment company.
Both retail giants are slowly circling the $3.6T healthcare industry, targeting inefficiencies by deploying their expertise in convenience and consumer engagement.Incumbents beware.
Though consumers say they’re increasingly confident in returning to healthcare settings, hospital volume is not returning with the same momentum across the board. Using the most recent data from analytics firm Strata Decision Technology, covering the first quarter of this year, the graphic above shows that observation, inpatient, and emergency department volumes all remain below pre-COVID levels.
Consumers are still most wary about returning to the emergency department, with volume down nearly 20 percent across the past year. Meanwhile, hospital outpatient visits rebounded quickly, and have been growing steadily month over month, finishing March 2021 at 36 percent above the 2019 level.
Meanwhile, a recent report from the Commonwealth Fund shows that no ambulatory specialty fully made up for the COVID volume hit by the end of last year. But some areas, including rheumatology, urology, and adult primary care, have bounced back faster than others.
With continued success in rolling out vaccines and reducing COVID cases, we’d expect a continued recovery of most hospital visit volume. It may be, however, that some areas, such as the emergency department, will never fully recover to pre-COVID levels. To the extent those visits are now being replaced by more appropriate telemedicine and urgent care utilization, that’s welcome news.
But the continued lag of inpatient admissions indicates that some of the loss of emergency volume is more worrisome—warranting continued efforts on the part of providers to reassure patients it’s safe to use healthcare services. Stay tuned as our team continues to dig into this data.
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A new study out this week revived an old argument about whether telehealth visits spur more downstream care utilization compared to in-person visits, potentially raising the total cost of care. Researchers evaluated three years of claims data from Blue Cross Blue Shield of Michigan to compare patients treated for an acute upper respiratory infection via telemedicine versus an in-person visit, finding that patients who used telemedicine were almost twice as likely to have a related downstream visit (10.3 percent vs. 5.9 percent, respectively).
They concluded that these increased rates of follow-up likely negate any cost savings from replacing an in-person encounter with a less costly telemedicine visit.
Our take: so what?The study failed to address the question of whether a telemedicine visit was easier to access, or more timely than an in-person visit. Further, it evaluated data from 2016-2019, so the results should be caveated as pertaining to the “pre-COVID era”, before last year’s explosion in virtual care. Moreover, it’s unsurprising that patients who have a telemedicine visit may need more follow-up care (or that providers who deliver care virtually may be more aggressive about suggesting follow-up if symptoms change).
This focus on increased downstream care as a prima facie failure also ignores the fact that telemedicine services likely tap into pent-up, unmet demand for access to care. More access is a good thing for patients—and policymakers should consider that limiting reimbursement for virtual access to primary care (which accounts for less than 6 percent of total health spending) is unlikely to deliver the system-wide reduction in healthcare spending we need.
Now that we’ve entered a new phase of the vaccine rollout, with supply beginning to outstrip demand and all adults eligible to get vaccinated, we’re hearing from a number of health systems that their strategy is shifting from a centralized, scheduled approach to a more distributed, access-driven model. They’re recognizing that, in order to get the vaccine to harder-to-reach populations, and to convince reticent individuals to get vaccinated, they’ll need to lean more heavily on walk-in clinics, community settings, and yes—primary care physicians.
For some time, the primary care community has been complaining they’ve been overlooked in the national vaccination strategy, with health systems, pharmacy chains, and mass vaccination sites getting the lion’s share of doses. But now that we’re moving beyond the “if you build it, they will come” phase, and into the “please come get a shot” phase, we’ll need to lean much more heavily on primary care doctors, and the trusted relationships they have with their patients.
As one chief clinical officer told us this week, that means not just solving the logistical challenges of distributing vaccines to physician offices (which would be greatly aided by single-dose vials of vaccine, among other things), but planning for patient outreach. Simply advertising vaccine availability won’t suffice—now the playbook will have to include reaching out to patients to encourage them to sign up.
There will be workflow challenges as well, particularly while we await those single-dose shots—primary care clinics will likely need to schedule blocks of appointments, setting aside specific times of day or days of the week for vaccinations. The more distributed the vaccine rollout, the more operationally complex it will become. Health systems won’t be able to “get out of the vaccine business”, as one health system executive told us, because many have spent the past decade or more buying up primary care practices and rolling out urgent care locations. Now those assets must be enlisted in the service of vaccination rollout.
Health systems will have to orchestrate a “pull” strategy for vaccines, rather than the vaccination “push” they’ve been conducting for the past several months. To put it in military terms,the vaccination “air war” is over—now it’s time for what’s likely to be a protracted and difficult “ground campaign”.
President Biden promised on the campaign trail to expand the Affordable Care Act to cover more of the roughly 29 million nonelderly Americans (about 11 percent of that population) who remain uninsured. He also said he’d strengthen the law by, for instance, providing an accessible and affordable public option and increasing tax credits to make it easier for people who buy insurance on their own to afford monthly premiums. Once in office, Biden immediately moved to reopen the period when people could enroll in the ACA marketplaces.
Unfortunately, the administration is paying little heed to a problem that is in many ways just as insidious as lack of insurance: underinsurance. That’s when people get too little from the insurance plans that they do have.
After passage of the ACA, the number of Americans lacking any insurance fell by 20 million, dropping to 26.7 million in 2016 — a historic low as a percentage of population. The figure began to creep up again during the Trump administration, reaching 28.9 million in 2019. That’s the problem that the current administration wants to address, and it certainly needs attention.
But according to research by the Commonwealth Fund, a foundation focused on health care, 21.3 percent of Americans have insurance so skimpy that they count as underinsured: Their out-of-pocket health-care expenses, excluding premiums, amount to at least 5 to 10 percent of household income. The limits in coverage mean their plans might provide little financial protection in a health-care crisis.
High-deductible plans offered by employers are one part of the problem. Among people covered by the companies they work for, enrollment in high-deductible health plans rose from 4 percent in 2006 to 30 percent in 2019, according to a report from the Kaiser Family Foundation. The average annual deductibles in such plans are $2,583 for an individual and $5,335 for families.
In theory, high-deductible plans, which make people spend lots of their own money before insurance kicks in, turn people into careful consumers. But research finds that people covered by such plans skip care, both unnecessary (elective cosmetic surgery, for instance) and necessary (cancer screenings and treatment, and prescriptions).Black Americans in these plans disproportionately avoid treatment, widening racial health inequities.
Health savings accountsare designed to blunt the harmful effects of high-deductible plans: Contributions by employers, and pretax contributions by individuals, help to cover costs until the deductible is reached. But not all high-deductible health plans offer such accounts, and many people in lower-wage jobs don’t have them. In the rare cases that they do, they often don’t have extra money to deposit in them.
In a November 2020 article in the journal Health Affairs, scholars affiliated with Brown University and Boston University found that enrollment in high-deductible plans had increased across all racial, ethnic and income groups from 2007 to 2018; they also found that low-income, Black and Hispanic enrollees were significantly less likely than other groups to have a health savings account — and the disparities had grown over time.
The short-term health-care plans — a.k.a. “junk” plans — that the Trump administration expanded also contribute to the problem of underinsurance. They often have low premiums but do not cover preexisting conditions or basic services like emergency health care.
Fortunately, proposals like Biden’s that make health care more accessible also tend to address the problem of underinsurance, at least in part. For example, to make individual-market insurance more affordable, Biden proposes expanding the tax credits established under the ACA. His plan calls for removing the cap on financial assistance, now set at 400 percent of the federal poverty level, in the insurance marketplaces and lowering the statutory limit on premiums to 8.5 percent of income (from nearly 10 percent).
The president also proposes to peg the size of the tax credits that subsidize premiums to the best plans on the marketplaces, the “gold” plans, rather than “silver” plans. This would increase the size of these credits, thereby making it easier for Americans to afford more-generous plans with lower deductibles.
The most ambitious Biden proposal is a public option, which would create a Medicare-like offering on marketplaces, available to anyone.Pairing this with allowing any American to opt out of their employer plan if they found a better deal on HealthCare.gov or their state marketplace — which they can’t now — would help some people escape high-deductible plans. The public option would also eliminate premiums and involve minimal to no cost-sharing for low-income enrollees — especially helpful for uninsured (and underinsured) people in states yet to expand Medicaid.
Given political realities, however, this policy may not see the light of day. So it would be best to target underinsurance directly. Most people with high-deductible plans get them through an employer. Yet unlike in the marketplace plans, the degree of cost sharing in these employer plans is the same for low-income as well as high-income employees. To deal with that problem, the government could offer incentives for employers to expand the scope of health services they cover — even in high-deductible plans. Already, many such plans exempt from the deductible some primary-care visits and generic-drug prescriptions. The list could grow to include follow-up visits and certain specialist care.
Instead of encouraging health savings accounts, the government could offer greater pretax incentives that encourage employers to absorb some of the costs that they have shifted onto their lower-income employees; that would help to prevent the insurance equity gap from widening further. The government could compensate employers that cover co-pays or other costs for their low-income employees. It could also subsidize employers that move away from high-deductible plans, at least for lower-income people.
Health insurance is complicated: More-affordable premiums are good only if they don’t bring stingy coverage. Greater investment in well-trained (and racially diverse) “navigators” — the people who help Americans enroll in plans on the federal marketplace, for example — would make it less likely that consumers would choose high-deductible plans without grasping their downsides. But it’s also important that people have options beyond risky high-deductible coverage.
The ACA expanded coverage dramatically — but the government needs to make sure that coverage amounts to more than an unused insurance card.