Pandemic Saturday...time for S-1 club!

This week's entrant: @PriviaHealth

The prospectus draws some parallels to Oak & Agilon, but I read it more as a look under the hood of a traditional fee-for-service business, with a bit of (apparently successful) VBC layered on top. 1/n Privia dates to 2007, but the real push started in 2014, with a $400M investment round led by a Goldman Sachs vehicle (Brighton Health) and Pamplona Capital. They've since expanded to 6 states and rolled up >2,500 "providers."*

*Defined in S-1 to incl MDs, DOs, NPs & PAs.

A follow-up thread on the Medicare Advantage analysis in the March MedPAC rerport.

There's a lot here which should be useful and interesting to those tracking the wave of MA-focused IPOs and SPACs (Agilon, Oak, Cano, Clover, Alignment, etc).

Start with the top line... 1/n

https://twitter.com/medicarepayment/status/1371539868397015042

MedPAC's headline chart is a reminder that MA is so attractive and profitable (in part) because CMS pays private plans more for each member than it would cost to cover the same person under traditional Medicare.

Not an ideal outcome for taxpayers.

The March MedPAC report is always a gold mine of insight, along with a few narrative violations.

Some of the nuggets that caught my eye, focused here on the patient experience & provider economics. 1/n

(MedPAC's Medicare Advantage discussion may warrant a future thread)

https://twitter.com/medicarepayment/status/1371539868397015042

For starters, MedPAC reminds us just how popular and successful Medicare is, in the eyes of its own beneficiaries.

Good ol' government insurance is, in fact, more popular than private health plans.

A low-profile healthcare IPO on Thursday (@InnovAge) probably deserves a bit more attention, both as a case study in value-based care and given recent research on private equity investment in nursing homes.

Headline: $3.2B market cap, for just 6,600 patients under mgmt. 🧐

1/n InnovAge is a PACE program, a form of capitated care for frail, elderly patients w/ extensive needs. PACE grew out of care models pioneered in San Francisco in the 1970s, and became a CMS program in 1986, but remains a niche model, with just ~55K enrollees nationwide.

Interesting batch of data from Cano Health this morning, for those following the risk-bearing provider segment (or Medicare Advantage in general).

>110K patients under management, with a clear focus on the Hispanic population. And (twist!), the company is highly profitable. Cano might be the clearest example I've seen of a large risk-bearing provider focused on a specific demographic group: elderly Hispanic patients.

In practice, that means that, per Cano, 80% of patients *and staff* come from minority groups, and 85% of employees are bilingual.

Whatever the other merits of this proposal, funneling another ~$30B to hospitals is the antithesis of "targeted relief."

A dozen hospital chains just presented at #JPM21, two weeks ago.

General theme: Financially speaking, hospitals are doing quite well. 1/n

https://twitter.com/rachelcohrs/status/1356263583873720320

We have, for example, Community Health Systems, which operates 89 hospitals in 16 states, many of them in smaller towns / metro areas.

Through the pandemic, CHS's EBITDA margin never even fell into single digits, and profitability actually *increased* in 2020.

Kaiser Permanente's CEO sent a member email this morning which suggests that - even w/ ample supply - KP will not be able to vaccinate all of its adult members until the Spring or Summer of 2022.

At this point, relying on big health systems looks like the definition of insanity. To clarify, KP says it has 9.3M members in California, of whom 75-80% are prob over 16, given CA's population structure.

Administering ~200K doses/week means 70 - 75 weeks to fully vaccinate 7 - 7.5M patients. Not even close to fast enough, even if they hit that pace on Monday.

I've been mulling @Clover_Health's (superficial) investor deck. While I see huge potential in MA & other value-oriented models, my TL;DR take is:

1- Nothing here clearly establishes Clover as a differentiated MA plan

2- The Direct Contracting pivot is *very* interesting 1/n

https://twitter.com/chamath/status/1313461164890677249

Caveat to all this is the startling lack of meat in the investor presentation. It is >100 pages, but most look something like this 👇, and cite only "internal company analysis."

I'm late to this, but the @OakStreetHealth S-1 is well worth a tour.

Lots of fascinating detail on the economics of capitated primary care, building a business that straddles fee-for-service & value-based care, and even some tidbits on #COVID19's (mild) financial impact. 1/n Big picture:

- 85K patients as of March 2020, of which about two thirds are capitated and at-risk

- $556M in 2019 revenue

- Very rapid growth - revenue up 75% YoY in FY 2019 and 72% in the first quarter of 2020

- Lost ~$100M last year

The @Accolade S-1 made for an interesting weekend read.

Not just as #coronavirus distraction, but for the window into a health tech solution that *could* be more aligned with the fundamental cost problem for employers and patients with private coverage (ahem...prices).

1/n

https://twitter.com/Rock_Health/status/1233549602047057923

Prior digital health IPOs have seen firms pitching employers on savings through lower utilization, either via chronic disease mgmt (@Livongo) or convenient services that might reduce ER visits (@Teladoc, perhaps @OneMedical).

But for employers, price is the problem, not volume.

I've shared concerns about @onemedical and their commercial strategy before; new data illustrates the issue.

TL;DR:
- In SF, some ONEM visit prices run 350 - 400% of Medicare
- Employers should be cautious. Proactive primary care can cut costs, but this is not the way.

1/n Two points for context:

1) Evidence suggests that high-performing PCPs can save $$, even in the commercial population.

E.g. @Mass_HPC, finds risk-adjusted cost deltas up to $1,500 PMPY across medical groups, via referral patterns (i.e. secondary care prices) and low-value care

I'm inclined to share a few thoughts on this (rather nauseating) news, having worked at Practice Fusion for a couple of yrs, though not when this episode occurred.

As @chrissyfarr notes, PF has become a bit of a cautionary tale. Perhaps there are useful lessons in that tale. 1/n

https://twitter.com/chrissyfarr/status/1221949163434233857

As full disclosure, this is partly speculative. I was at the company in the 2013 - 2015 time frame, and did not work on the pharma/life sciences business at any point.

From what I can glean via purely public info, the opioid episode seems to have happened in late 2016 and 2017.

I am a huge fan of @afrakt, but I think this article inadvertently misstates the evidence on hospital reimbursement cuts and quality in a subtle but important way. 1/n

nytimes.com/2019/10/07/ups… The @UpshotNYT article asserts:

"...studies show that when hospitals are paid less, quality can degrade, even leading to higher mortality rates."

If I'm not mistaken, however, all of the studies which showed lower quality examined *Medicare* payment reductions.

Let's tackle this. Ms. Ryan - a lobbyist for a $30B hospital chain - is dead wrong here, and she's not the only one.

Research finds that surprise billing has nothing to do w/ narrow networks, and any legislation to curb out-of-network payments will also cut insurer profits. 1/n

https://twitter.com/katieryan/status/1167498844277370880

First, multiple studies have found little difference in the incidence of surprise billing across plan types.

For example, @cjrhgarmon & Ben Chartrock found that a 10th of hospital stays & 1 in 5 ER visits results in an OON bill, with no major differences by plan type (PPO etc).

Medicaid is only one of the glaring omissions in this @washingtonpost article.

The other is a misleading portrait of a "struggling rural hospital." It is simply incorrect to present this hospital (Poplar Bluff) as an example of the challenges facing rural facilities.

1/n

https://twitter.com/ddiamond/status/1163094978450591744

Start with a reality check on hospital closures. In recent years, we've seen 15-25 hospitals close each year (18 in 2017, 15 in 2018), and 5 - 15 new hospitals open each year.

Which is to say, the number of American hospitals declines, on net, by about 0.2 - 0.3% each year.