Susan Ladika

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s health insurers and retailers focus on meeting patients’ demands to have access to healthcare when they want it, how they want it, telehealth acquisitions and expansions are going strong.

Among the deals announced this spring were Cigna’s acquisition of MDLive, Bright Health’s acquisition of Zipnosis and Walmart’s announcement that it was planning to purchase MeMD. Meanwhile, Amazon, which has been offering telehealth services to some of its own employees, said it would start to offer virtual care nationwide and signed its first deal this spring to provide its Amazon Care telehealth app to another company.

The dealmaking is just one of the business-related symptoms of the surge of telehealth usage that started with the COVID-19 pandemic last year and has continued at a pace not seen in prior years. Telehealth “needed a jolt. The jolt was the pandemic to really get adherence and adoption,” says Nick Donkar, U.S. health services deals sector leader at the consultancy PwC.

COVID-19 “changed the industry. People realize telehealth is a better solution,” adds Pouria Sanae, founder and CEO of ixlayer, a San Francisco-based company that helps providers offer diagnostic testing virtually.

People have grown accustomed to getting online when they have a medical problem, notes Sanae. In the past, if an individual had symptoms of an illness, “their first reaction was to go see a doctor,” he says. Today, “their first reaction is to go to Dr. Google,” and then they may search out an online healthcare provider.

Because of COVID-19, telehealth usage soared by 154% during the last week of March 2020, as the pandemic was just beginning to take hold, compared to the same period in 2019, according to data compiled by the Centers for Disease Control and Prevention.

FAIR Health, a nonprofit healthcare data analytics company, found that telehealth “claims lines” — the individual services or procedures listed on insurance claims — soared throughout 2020 for those covered by private insurance. Comparing December 2019 with December 2020, telehealth claims lines soared more than 2,800%. They represented just 0.22% of all medical claims lines in December 2019 compared with 6.51% in December 2020. Medicare and Medicaid claims are not included in the statistics.

Behavioral healthcare was the top reason for consumers to seek telehealth care, followed by seeking treatment because of possible exposure to “communicable diseases,” which FAIR Health says likely reflects possible exposure to COVID-19.

Telehealth usage has dipped this year, according to FAIR Health’s data. From February to March, the most recent month for which statistics are available, telehealth claim lines dipped 5.1%, but they still represent 5.6% of all claims.

“A lot of people want hybrid care,” with a blend of in-person and virtual healthcare, says Sari Kaganoff, general manager of consulting at Rock Health, a venture fund that focuses on digital health. Telehealth “isn’t a niche anymore. Everyone knows it’s the future,” she adds, which makes it very appealing to investors as well as consumers.

Last year, Cigna created a new brand called Evernorth for its health services portfolio. Before the pandemic, 97% of Cigna’s behavioral healthcare customers had never had a virtual visit with a provider, said Eric Herbek, Evernorth’s vice president of virtual care, via email. He also noted that since the pandemic began, 60% of behavioral health patients say they have continued using virtual care.

As the healthcare system adjusted care delivery, there has been “a tremendous amount of deal activity in the health services space,” Donkar says, and much of that activity involves virtual care. The activity has been driven by healthcare companies’ abilities to leverage artificial intelligence, improve care and reduce costs using telehealth, he says.

Cigna’s Evernorth brand completed its acquisition of MDLive in April. Cigna had previously been a major investor in the telehealth company, which is based in Miramar, Florida. Terms of the deal were not disclosed.

Bright Health acquired Zipnosis, also in April. Both companies are based in Minneapolis. Zipnosis’ telehealth platform is used to power the virtual visits of almost 60 large health systems across the country. Details of the transaction were not disclosed. In May, Bright Health filed preliminary paperwork for its own initial public offering.

Walmart in May announced it had reached an agreement to acquire MeMD, a telehealth provider based in Phoenix. With the acquisition, Walmart Health will be able to provide primary care, urgent care and behavioral healthcare — with the goal of “complementing our in-person Walmart health centers,” the retailer said in a recent press release.

Investors plowed $21.6 billion into digital health companies last year, according to Mercom Capital Group in Austin, Texas. The money came in as venture capital, debt and public market financing. Along with major companies such as insurers and retailers, “there’s a lot of money flowing into healthcare right now” from sources such as venture capital companies, Kaganoff says. Investment is “on a wave that’s rising,” she says. “It hasn’t crested yet.”

Other companies are taking different approaches to telehealth. Many eyes are on Amazon and its maneuvers. Amazon created Amazon Care in 2019 to provide virtual care to the online retailers’ employees and their families in Washington state and also offered in-person care at their employees’ homes with medical professionals doing such things as drawing blood or listening to a patient’s lungs. This spring, Amazon announced it was planning to expand its virtual care to Amazon employees around the country, as well as to other companies. It also is planning to expand its in-person care to cities such as Washington, D.C., and Baltimore.

According to several media reports, Amazon Care had signed up its first virtual care client, Precor, a fitness equipment company based in suburban Seattle, in May. Precor was acquired by Peloton in the spring.

Meanwhile, Walmart said in a press release that the acquisition of MeMD “reinforces Walmart’s commitment to integrated, omnichannel health delivery that leverages data and technology to improve engagement, health equity and outcomes.”

Kaganoff says the blend of online and in-person care should serve the retailer well. “Walmart has a really nice opportunity because of its physical footprint.”

Although telehealth has primarily been associated with urgent care delivery in the past, Cigna is convinced “virtual care can be used effectively to treat much more than strep throat or an ear infection,” Herbek wrote via email. “We see a future where (patients with diabetes) and others with chronic and complex care needs can access comprehensive care online and where their providers are part of a connected network of care.”

Herbek added that care provided through MDLive is intended to complement, rather than replace, consumers’ interactions with their current providers, with the goal of improving access to care and health outcomes.

Cigna plans to achieve that through earlier identification and diagnosis of critical care needs, improved medication management and increased affordability through referrals to high-quality providers, guidance to appropriate and affordable sites of care, and easier connections to affordable prescriptions, Herbek wrote.

Donkar says he expects to see a “continued interest in all things virtual” in the future.

Herbek agrees: “We see virtual care as an area of rapid innovation in the industry, pushing into new aspects of care and becoming a more essential ingredient in health plan benefit design.”

Susan Ladika is an independent journalist in Tampa, Florida, who covers business and healthcare.

Articles

Insurers make acquisitions as pandemic adoption of virtual care delivery becomes the norm.

The Busy Signal: Telehealth Deals Surge as Usage Stays High  

ith their heavy reliance on technology and consumer-friendly focus, newer health insurance companies such as Oscar Health and Bright Healthcare are striving to upend traditional health insurers, attracting billions in investment funding in the process.

“They have a much more well-developed digital platform compared to existing insurers,” says Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation. With it, she adds, they are “trying to improve the game.”

The relatively new players in the health insurance market offer “a retaillike experience for members” and primarily operate in the individual and Medicare Advantage markets, says Tom Cassels, president of Rock Health, a venture fund focused on digital health. Their websites are slick, airy and appealing, he says. “They are very different from the mainline incumbents,” such as UnitedHealthcare (UHC) or Anthem, Cassels says. “They’re the next-generation, consumer-friendly plans.”

Boris Kheyn-Kheyfets, senior manager at the consultancy Deloitte, says the companies “have invested significantly in creating a superior customer experience” and strive to steer consumers to the appropriate site of care — whether that care is delivered in person or remotely. That has left some traditional insurers “asking if they can replicate some of these capabilities or license some of these capabilities,” Kheyn-Kheyfets says.

Oscar has teamed up with Cigna to offer insurance for small businesses in an attempt to unite Cigna’s extensive provider networks and Oscar’s customer-service focus. Those small group plans are available in parts or all of four states: California, Connecticut, Georgia and Tennessee.

In April, Oscar announced it was launching +Oscar as a way to sell its full-stack technology platform to other payers and providers. The move opens the possibility of Oscar becoming as much a technology vendor as a health insurer. The pitch from Oscar is that +Oscar will deliver “end-to-end health plan services with the administrative efficiency of far larger health plans” and let smaller provider-sponsored and regional health plans “overcome scale disadvantages and lower administrative spend, driving improved profitability.”

Oscar, Bright Health and some of the other newcomers are bringing some sparkle to what remains a rather staid part of the healthcare sector. Their shiny new thingness can lead to some loss of perspective. The UHCs, Aetnas and Cignas have millions of members and billions in revenues. Oscar and Bright Health, which are the largest of the new entrants, have about a half-million members each.

Oscar, which has gotten the most buzz, was launched in 2012. One of its co-founders is Joshua Kushner, the younger brother of Jared Kushner, the son-in-law and former senior adviser of former President Donald J. Trump.

“Oscar came out of the gate with a different business model,” appealing directly to consumers, Hempstead says. And its customers came to “look to their insurance company as a source of information,” which can be appealing to younger consumers, who tend to be more tech savvy.

The New York-based payer has focused most of its attention on selling individual plans both on and off the ACA exchanges, but more recently has also been active in the Medicare Advantage market. Its individual plans are now available in almost 300 counties in 18 states, including New York, California and Texas. Nearly 530,000 consumers have signed up for coverage this year.

Oscar tends to offer plans in urban areas when it enters a state, expanding to suburban and then more rural regions as it builds its network of providers, says Alessa Quane, the company’s executive vice president and chief insurance officer.

Starting this year, the insurer is also offering virtual primary care with $0 copays. “In a year when people didn’t go out very much, there’s certainly something to be said for having that option,” Quane says. The virtual primary care is offered by both English-speaking and Spanish-speaking providers, and almost 40% of patient utilization came from Spanish speakers. The payer has found members with chronic conditions have been more likely to use virtual primary care. Adherence to recommended care has been high, with consumers filling 80% of prescriptions and providers having received a member satisfaction score of 99%.

Another new company entering the individual insurance market is Friday Health Plans, founded in Denver in 2015. It is small compared with Oscar and Bright Health, having only 70,000 members. Most of Friday Health’s plans offer primary care visits, mental health counseling, telehealth visits and generic drugs at no cost to members. Friday Health acquired Colorado Choice, a local health plan, to test its concept, says its CEO, Sal Gentile. 

Since its initial success, Friday has expanded into three other Western states, offering plans in the small group as well as the individual market. Like many smaller businesses in sectors dominated by larger companies, Friday Health prides itself on offering, in Gentile’s words, “high-touch customer service,” and the company says it picked its name because it wants to be “the Friday of health insurance — consistent, dependable and a breath of fresh air.” Gentile says the company works to solve its members’ problems in just one phone call.

Although the major insurers have reentered or expanded their presence in the individual market in 2021 after previously pulling out or reducing their efforts, Gentile says he thinks Friday’s focus on that niche gives them an advantage.

Bright Health, which also sells coverage in both the individual market and Medicare Advantage, was co-founded in 2016 by the former CEO of UHC, Bob Sheehy. He told CNBC in 2018 that after UHC pulled out of most of the individual market, he “started the company with a vision to catalyze the individual marketplace. “

Bright Health is now selling plans in 50 markets in 13 states. The Minneapolis-based payer also owns about 40 primary care clinics and says it provided care to more than 220,000 patients either in person or virtually last year.

This year, Bright Health has gone on a bit of an acquisition spree. In January, it announced it was planning to acquire Central Health Plan of California, which serves 110,000 Medicare Advantage members. In April, it acquired Zipnosis, a telehealth platform provider. Financial terms of the deal were not disclosed.

Investors are showing some confidence in these new insurers. In April, Friday Health announced it had signed an agreement to receive $100 million in equity investment and $60 million in debt financing. Friday Health’s membership grew by more than 400% from 2020 to 2021, and the insurer will use the additional funding to expand to new markets, Gentile says, with plans to expand to three to five states each year.

Google’s parent company, Alphabet, invested $375 million in Oscar in 2018. When it went public in March, Oscar priced its shares at $39 and the price had dropped to $34.80 when the market closed. The market hasn’t been too kind to Oscar since. The share price has been on a downward trajectory so far, falling into the $20-$25 range. Still, its market capitalization is north of $4 billion. But again, a dose of perspective: That is about 1% of UnitedHealth Group’s market capitalization.

Bright Health is preparing for its own IPO. According to the company’s June 15 Securities and Exchange Commission filing, it plans to sell 60 million shares at $23 per share, which would raise about $1.3 billion.

“I’m kind of glad they’re doing IPOs,” Hempstead says of Oscar and Bright. “It’s easy to imagine them being acquired” by a traditional insurer otherwise. IPOs “are better for competition,” she says. “I think it’s better for the market.”

Susan Ladika is an independent journalist in Tampa, Florida, who writes about business and healthcare.

Oscar and Bright Health, with their retail orientation, are attracting investment, adding members, entering partnerships and making acquisitions. 

Still the New Kids. But Growing Up Fast. 

Climbing the Career Ladder: Third of 10 profiles of healthcare executives and their careers.

Angela Celestin proves you don’t have to come up through the healthcare industry to be successful in the field. The skills learned in other industries can be transferable for those ready to make the switch to healthcare.

Celestin, who is now executive vice president and chief human resources officer for CareFirst BlueCross BlueShield, based in Baltimore and Washington, D.C., had HR roles in the food and beverage, publishing and financial services industries before making the jump to the health insurer two years ago.

Moving from industry to industry, Celestin has seen that “people are people. Employees are employees.”

The New York native grew up in public housing in Brooklyn and went to Cornell University, where she planned to be a lawyer. But PepsiCo recruited her for a minority internship program during her sophomore year of college. “That began my career in HR,” says Celestin.

She graduated with a degree in industrial and labor relations and joined PepsiCo full time. The food and beverage giant “gave young people a lot of responsibility at a very early age,” says Celestin, who was involved in contract negotiations and ran training courses on topics such as sexual harassment and workforce discrimination. PepsiCo embraced the need for employee diversity and even in the early 1990s, the company “had diverse hiring goals way before that was a thing,” Celestin says. Her career with PepsiCo took her to small towns in the Midwest, and that continued when she took an HR job with the printing company, R.R. Donnelley & Sons. Those experiences outside the big city “really grew me as a person,” she says. One of her responsibilities at R.R. Donnelly was leading diversity training courses for the company, which had few minority employees at the time.

Her next move was into financial services, working in HR executive roles for Citibank in Chicago and New York. She then moved to OneMain Financial and Money Mart Financial Services, where she served as executive vice president and chief human resources officer.

Celestin says she was attracted to CareFirst because she knew “healthcare was going through some major changes, and I wanted to be part of that change.” From her work in the financial services industry, she often dealt with customers “in their time of need. I saw a correlation” between finance and healthcare, she says. Celestin also sees similarities in dealing with consumers in healthcare and at companies such as Money Mart, where disparities exist. “Healthcare is still inequitable for many Americans. The type of healthcare you receive depends on where you grew up, your neighborhood, your race.”

One big difference between financial services and healthcare was that “the lack of embrace of technology (in healthcare) was surprising to me. Technology has changed banking so much,” Celestin says.

With technology in banking “the focus is on the customer. The focus is on the ease of the transaction.” Healthcare, on the other hand, has been slow to “meet customers where they are,” Celestin says.

But she sees that changing because of the COVID-19 pandemic, as healthcare organizations and consumers made an abrupt shift to virtual care.

As the pandemic has fueled the adoption of telehealth, Celestin hopes it will help “make healthcare accessible to all.”

Angela Celestin, executive vice president and chief human resources officer for CareFirst BlueCross BlueShield, had a career outside of healthcare before working at CareFirst. “Healthcare was going through some major changes, and I wanted to be part of that change,” she says.

Angela Celestin, CareFirst BlueCross BlueShield: Changing to Healthcare Because of Change in Healthcare

Climbing the Career Ladder: First of 10 profiles of healthcare executives and their careers.

When Romilla Batra, M.D., MBA, came to the United States from her native India to continue her medical training, she was “beyond amazed,” she recalls.

After working in an emergency room treating pediatric patients in inner-city Delhi, where “simple stuff could make a big difference; dehydration could kill,” Batra came to the University of California, Los Angeles (UCLA), at age 26, to train in internal medicine. There she had access to equipment and technology that are taken for granted in the United States, such as MRIs. In India, “an MRI was like doing a transplant. It was really so rare.” In India she relied on her “hands, ears and eyes” and would assume the role of doctor, surgeon and nurse, all in the span of a single night. At UCLA, Batra says, she learned about treating patients with complex medical needs: “In a way I felt like I knew a lot. In a way I felt like I knew nothing.”

After UCLA, Batra headed to Indiana University School of Medicine, where she served as medical director, and then returned to California to become medical director at University of California, Irvine (UCI). Along the way she got her MBA and she continues to teach at UCI’s medical and business schools.

Batra also learned to work with a broad range of patients with diverse backgrounds, cultures and languages, such as African Americans, Hispanics and Vietnamese. “The dynamics are very different,” says Batra. Batra began to focus on population-based approaches to healthcare and how to scale programs to make them more effective for a wider range of patients.

In 2011 Batra, who is board certified in internal medicine, became vice president and medical director at SCAN Health Plan, a not-for-profit Medicare Advantage plan in Southern California, and held several positions before becoming chief medical officer.

When she joined SCAN, her patients were sad to see her leave full-time clinical practice. Some gently joked that “I went to the dark side of the world,” Batra says.But she was drawn to the payer because “its mission resonated so strongly with me,” she says.

With the move she could take a population health approach to reach SCAN, which now has 220,000 members in
11 counties in California.

She says she works to teach medical and business students “how to think outside the box to improve the experience of the people we serve and how do we do it in a sustained manner.”

American healthcare, she believes, needs to emulate retailers such as Costco and Amazon, which deliver effective, efficient service.

In healthcare, “service is downgraded,” Batra says. Payers and providers need to learn to think about “what does the consumer want” and consider “how do we engage with them, so they are more likely to follow what we want them to follow” when it comes to improving their health. The focus should be on “how do we change their behavior, change their lifestyle,” she says.

At SCAN, Batra says she is “surrounded by an amazing group of people. When you have passion and passion is your job, it just becomes so much fun.”

Romilla Batra, M.D., MBA, chief medical officer of SCAN Health and a professor of medicine at University of California, Irvine, says she was drawn to working for SCAN because “its mission resonated so strongly with me."

Susan Ladika

Articles

The Busy Signal: Telehealth Deals Surge as Usage Stays High

Still the New Kids. But Growing Up Fast.

Angela Celestin, CareFirst BlueCross BlueShield: Changing to Healthcare Because of Change in Healthcare

Romilla Batra, SCAN Health Plan: From Amazement To Aiming To Be More Like Amazon