HFMA Policy Director Shawn Stack and HFMA Senior Editor Nick Hut follow up their March webinar on healthcare disruption with an episode-length Beyond the News segment about the latest innovative ventures.
Shawn Stack: Mental health services at a mobile barbershop? I mean, who can’t applaud that? That’s pretty creative and pretty genius.
Erika Grotto: Important disruptors in healthcare, today on HFMA’s Voices in Healthcare Finance podcast.
Hello, and welcome to the podcast. I’m your host, Erika Grotto. Today’s episode is an extended version of our Beyond the News segment with HFMA Senior Editor Nick Hut and HFMA Policy Director Shawn Stack. They’ll be following up and expanding on their March webinar about disruption, diving into things they didn’t have time for and answering a few lingering attendee questions. If you didn’t attend the webinar, and you’d like to watch it, we’ll post a link in the show notes, but it’s definitely not a prerequisite for this episode. Later on, we’ll hear from HFMA’s Todd Nelson about the Association’s partnership with Boise State to bring about a unique educational offering. For now, here’s Nick and Shawn.
Nick Hut: Hello, everybody. We are taking the Beyond the News segment up a notch today. Erika has basically allowed us to take over the entire episode, which I can only hope won’t end up being to her everlasting regret, but in late March, we actually did an hour-long webinar on disruption in healthcare. If you want to listen to it on demand, the link should be in the show notes. Just because it’s such an intriguing and wide-ranging topic, we had a bunch of stuff that we thought was relevant but weren’t able to get to, so here we are. Something I think we should just reiterate from the webinar, just to set the table, Shawn, is the stakes involved, and we’re really talking about financial stakes. What is drawing in all these new entrants to or disrupting healthcare?
Stack: Well, what draws everyone to everything, Nick? It’s money.
Stack: As everyone knows, healthcare in the U.S. is a very lucrative business at times, for some folks, I guess you could say. So healthcare consumes 18% of the GDP in the U.S., so around $3.6 trillion a year. So much, much, much higher than other rich countries where healthcare hovers right around 10% of the GDP. So, you know, scientific advances in field such as gene sequencing, artificial intelligence make new modes of care possible and safer, and those are surging in the U.S. Venture capitalists continue to focus on sectors that is usually ripe for disruption. Disruptors are focusing on targeting patients directly in the U.S., meeting them where they are and letting them choose how they want care delivered, trying to get in on a piece of that revenue. And then, you know, earlier this year, JP Morgan Chase Healthcare Jamboree was flooded with entrepreneurs and investors taking on topics like AI and digital diagnostics and telehealth. So just a lot up for grabs in this area of the market. That’s where there’s such a great attraction to healthcare right now by outside investors and all these startup companies.
Hut: Absolutely, yeah, great perspective. It’s a big pie, and pieces are there for the taking. Slices, I guess you would say are there for the taking.
Hut: We also talked during the webinar about how disruptors are striving to keep people healthy in more cost-effective ways. By and large, that’s happening outside the fee-for-service payment structure, and there are a lot of noteworthy examples that aren’t grabbing headlines like Amazon or Walmart tend to do just by virtue of their brand. Some of these are really more like niche providers that focus on caring for a very specific subset of the population. A good example, I think, is a provider called ChenMed. It’s devoted to caring for moderate- to low-income seniors who have complex chronic diseases. They hire clinicians and health coaches who are enthusiastic about caring for that specific population. They give them very focused training and they give them, relatively speaking, a very small patient count. So they’re providing primary care, but a very specialized focused form of it. And at least according to their data, it pays off in terms of outcomes like ED visits and hospital admissions and in tandem with that, you get lower costs. And Shawn, I know you had some examples along those lines, or just in terms of entities that are able to provide healthcare in new and better ways.
Stack: Yeah, so one of the hottest topics right now in D.C. with the federal government because of the midterm elections is, of course, mental health, specifically among young adults and substance abuse disorder that really come to light during the pandemic, much like health equity, which a lot of these disruptors are looking at, how to balance those health inequities in healthcare. Mental health startups are just going through the roof right now. There’s a lot of folks getting into this area, so much that mental health startups in the U.S. maintain their spot as the top money raisers in 2021. They brought in $5.1 billion and $3.3 billion more than any other clinical indication in 2021. They nearly doubled 2020’s funding total of $2.7 billion, according to a Rock Health report that I was reading a few weeks ago. But two companies that are getting into the space that are very interesting and I’m really following closely now are mental health startups Brightline, and Brightline is a Silicon Valley-based company that provides virtual behavioral healthcare to children, adolescents and families. They just secured a $105 million series seed funding at the end, I think it was right around in March, and they’re currently valued at $705 million. They’re focusing on national high-quality, accessible, affordable behavioral healthcare through employing their own pediatric-trained coaches, therapists, psychiatrists and speech language pathologists. The CDC released information a few weeks ago showing data that 1 in 5 teens have considered suicide in the last year, and 75% of the counties across the U.S. don’t have adolescent psychiatrists in their communities. So Brightline is creating engagement with youths in really interesting ways that I’ve been pretty impressed by. One of their engaging acts is they’ve set up a mobile barber shop where they provide free haircuts to adolescents and they provide behavioral health awareness education during that haircut while that adolescent is getting that free haircut. So it’s kind of a captive audience while they’re on this haircut bus in these areas that are hit hard by mental health issues. So very creative ideas to watch for some of these startups. One of the other mental health startups is called Brightside Health, and their latest funding round pushed them to $750 million in value, Bloomberg just reported last month. And they launched in 2019. They were formerly Emilio Healthcare, that I had not heard of was their name before this. They developed a technology-enabled behavioral health home for children and their families. The company’s growth has come at a time when rates, like I said, of behavioral health conditions are skyrocketing across the country having a disproportionate impact on working families. One in 5 caregivers report having quit their jobs in the past year, and that’s what Brightline is focusing on with their digital, on-demand support, coaching programs, and extensive clinical services to support families struggling with anxiety, cyber-bullying, ADHD and depression. They plan on using their new investments to expand access to care by exploring coordination with different partners for specialized care, so they are really tailoring some great services for teens, folks on the autism spectrum and then LGBTQ and BIPOC individuals in the community, some folks that really have seen surges in mental health issues over the last several years. So a lot to follow there, and they’re actually founded, I can’t remember. I think they are founded by a university, maybe Stanford University has a hand in setting up Brightline. So it’s very interesting to see where they go and what happens there.
Hut: Yeah, like you said, just a ton of stuff to follow and a ton of developments to follow in the area of behavioral healthcare and how that whole service line stands to be disrupted. Making mental health services available in conjunction with giving a haircut is innovative to say the least.
Stack: And Nick, now that we see the Feds really pushing for healthcare, for mental health parity, I think these companies are seeing this and they’re seeing that, you know, it’s possible that you can offer these services without taking a loss like hospitals have been doing for so many years. So they’re willing to take a chance and get in there and try to crack some of these issues that we’ve been having, literally for 10 or 15 years.
Hut: No doubt, no doubt. And you know, mental health of course is a service line that really lends itself to virtual care and efforts to meet patients where they are. We’ve seen that during the pandemic. That sort of ties into the next area I think we wanted to discuss, which is aspects of disruption involving telehealth, hospital at home. What are some latest developments that people should be following there?
Stack: Well, I’ll tell you one of the latest developments that I’m seeing more and more pop up in new rules, new regulations, new guidance out of MACPAC and MedPAC are requests and advisement to CMS to really start ratcheting up physician and facility reporting on telehealth services, just to make sure that everything’s on the up-and-up that’s getting billed. So I think we’re going to see—I don’t think we’re going to see any disruption to telehealth services or cutbacks, but I think we’re going to see some more checks and balances be put into place for telehealth services, making sure that those providing it are providing the appropriate care at the appropriate time. So I think that’s one thing that we need to start looking at. And I’m sorry, what else were you asking me, Nick? Got off on a tangent there.
Hut: The other area was hospital at home.
Hut: Is there any major developments as far as disruptive entities who are merging in that space?
Stack: I’m not hearing any disruption to the acute care. I think you’re talking about acute care hospital at home…
Stack: …program. I’m not hearing a lot of disruption there yet. What I am hearing is, hospitals are still gaining their footing on acute care at home and how to fiscally budget that into their organizations. I think for the most part, those programs have been very successful, maybe a little bit more successful, believe it or not, on the managed care side rather than the Medicare side because I think managed care plans have been able to see the benefit of the acute care at home program and the significant long-term savings from those programs. So I think those capitated or those per-diem payments that hospitals and providers are negotiating with those managed care plans are a little bit more making the ends meet for that program. So I do expect to see those programs take off, and I’m very certain that we’re going to see folks, especially in disruption areas, try to get into that space because there’s just so many business partners and outside care entities that need to go out to the home to service those patients. So I could definitely see some contract services going on there and some telehealth services with acute care at home as well as outpatient hospital care at home. That is something that, of course, we’re seeing more and more disruption get into, Amazon sending—Nick had talked earlier on our webinar about Amazon, you know, extending to 22 more U.S. cities, and part of that program in those cities is having nurse and clinicians go to the home for lab draws and for some care for chronic conditions. I think we’re going to see more and more folks get into that venue. Would you agree, Nick?
Hut: Yeah, it definitely seems to be sort of the next—one of the next horizons in which disruption could really emerge, and I think like you said, as legacy providers sort of find their footing in that space and the hospital at home space, we’ll see, you know, if any outside organizations find maybe a different model, a different way of approaching it that allows them to really become a major player in that area.
Stack: It just seems to be very much a consumer-based focused world and meeting that consumer and in this case, we’re talking about patients. But meeting that consumer where they are and making it as convenient as possible for that patient to seek that care in the setting that they want to seek. I can tell you a same example in a different industry is, in the last two years, we have engaged and hired an at-home vet service. It’s a vet here in my hometown that comes out and does all the veterinary services at your house, and it’s so much easier. Now, true to form, that veterinarian does not do surgeries because she does not have an office, she only has a mobile office. So she needs to refer all of those patients that she sees, you know, to a surgical office, so she collaborates with hospitals, with veterinary hospitals to do those services. So it’s a very similar setup, but it’s a convenience factor of not going into a vet’s office and waiting two hours to be seen, which is what I was doing before and taking off work to do that. Now there’s someone who is very good that we trust that comes out to the house, and she’s busier than ever. So that’s a very similar market, just different type of care, just different patients, right?
Hut: Yes, indeed. A little bit of a difference in patients, but you know, it points to the fact that in terms of opportunities to collaborate between legacy providers and disruptors, just like the person who comes out and provides veterinary services to you guys at your home, contracts with veterinary hospitals, no doubt similar opportunities should arise in treating people.
Stack: Right. Right, Nick. I mean, you and I have talked to many of our members and some of our larger hospitals as well are beginning to have talks. And I have been in talks with Walmart and Amazon about the services in their communities and contracting with them on those services that they can’t offer, right? And getting referrals out of the system that way.
Hut: Absolutely. So many, many chances to establish partnerships that will be to the benefit of not only hospitals and their operations and their finances but certainly to consumers in terms of higher quality outcomes and experiences. We also talked about efforts at disruption that didn’t necessarily pan out, and lessons to be gained from those efforts. And one I touched on briefly was Google Health, which over the previous few years have been a spinoff from Google, but after encountering various obstacles, it’s now reintegrated back into the larger company. They’ve got an audience of really billions of people who use Google search and YouTube and other products. Subsequent to our webinar, I had a chance to speak with Karen DiSalvo, who’s their chief health officer, which is basically the company’s lead role. She’s had a long and distinguished career in public health and in Washington, D.C. policymaking. As people who have listened to us know, I’m all about the shameless plug, so—you know, it’s a good thing I don’t have a pending book deal or our poor listeners might never hear the end of it—but you can hear my interview with Karen in the May issue of hfm magazine and more to the point, she’ll be speaking at HFMA’s Annual Conference in late June in Denver. But anyway, she said Google Health is mainly interested in collaborating—again, there’s that word, collaboration—with consumers, with providers. A big thing with consumers is to make it as easy and seamless as possible to access healthcare in connection with, like so many of us do, you start your initial healthcare query with a Google search. So they want you to be able to find a provider without having to navigate across platforms. As you think about their provider services, they’ve got a product that enhances the ability to find clinical information within the EHR. Also, something that’s in the discussion stage, Karen said, is a tool that would offer insights into social determinants of health as applicable to any specific patient whom you’re looking up in the EHR. So it just goes to show again that disruptive innovations may happen through partnerships, not just through unfettered competition.
Stack: Right, I agree with you Nick, and that’s one of the things I think I mentioned in the webinar. Google really has, in the very beginning, tended to be a disruptor or a leader that has wanted to collaborate and made the foray into the market through collaboration rather than just replacement or trying to get into the market on their own. They wanted to make the existing healthcare—not that everyone else doesn’t either—but it’s been prevalent from Google that they want to make the system better by adding or enhancing what’s already happening there in the market, so they’re really reaching out heavily to collaborate with what we’re calling now, I guess, legacy providers. So that’s really cool to see, and that’s really cool to hear that they’re continuing some of those programs.
Hut: No doubt. And you know, Karen explained it like that’s always been their culture as a company—open access, the Android phone is not a closed ecosystem, but they open up their app store for outside developers to come in and innovate and make their presence felt, so definitely they’re one name that bears watching because they’re Google and they have a major impact across industries. But you know, they also have a chance to work in tandem with providers to improve operations and consumer experiences.
Stack: You know, speaking of collaboration, one of the disruptors that I’ve been following since our last webinar that I really had not picked up on before and I just saw in March, was the hims & hers and Carbon Health partnership that just kind of formed and took off. You know, most of us know hims & hers as like, mental health, sexual health, derm, hair loss, dermatology, they’re really, really heavily promoted on popular, by popular websites such as Bloomberg and Men’s Health and GQ and The New York Times really does a lot of hims & hers advertising. But they collaborated because hims & hers wanted to expand into the population of more, friendlier full healthcare experience where they could refer some of their members or patients on their telehealth platform to more specific primary care, urgent care, mental health, women’s health. I think they’re getting into LGBTQ as well. They’re wanting to refer those patients that, you know, they don’t offer more primary care services to. They partnered with Carbon Health to do that, to take on that piece. So here we have two disruptors working together and collaborating together to expand their book of services without going to a legacy provider at this time. So we’re seeing collaboration within a disruption environment too, which is, I think, very interesting to watch and see how this happens.
Hut: Yeah, that really does bear watching. It’s just going to be sort of fascinating to see how two companies can come together and sort of merge their respective strengths and see what comes of that. You know, I wanted to take this opportunity, an attendee at the end of the webinar in March asked about IBM Watson Health, and the question kind of stumped me just because I hadn’t thought to look them up when we were preparing. But, you know, IBM Watson was supposed to open new frontiers in healthcare AI applications, including in oncology care, pharma, research and development, some other areas. But at the beginning of this year, IBM sold off Watson’s data and analytic products for more than $1 billion to a private equity firm. That sounds like a lot of money, but it represented a multi-billion-dollar loss relative to what IBM had put into the venture, largely to buy out Truven and other data companies to support its AI engine. And it just turned out that physicians didn’t think the AI analytics were as universally applicable or insightful as IBM thought they would be. IBM has retained a segment of Watson, which it plans to use to focus, I think, on cloud computing operations rather than frontline healthcare. So I think a key takeaway is that applying AI on a large scale in as complex an industry as healthcare is a challenge, and it’s no surprise to see missteps along the way. Shawn, during the webinar, you talked about Theranos and a couple others. Anything to add as far as maybe lessons from folks who tried out this disruption thing and didn’t necessarily fail but things didn’t quite pan out as they’d been anticipating?
Stack: Yeah, I mean, clearly Theranos truly failed, and, you know, who feels bad about calling her a failure, right? But yeah, some didn’t. I mean, you know, there’s some of those ventures that disbanded but the takeaways were pretty great for those disbanded collaborations. Haven, of course, disbanded. That was Amazon, Berkshire and JP Morgan. They disbanded after three years, but everything they learned they took back to their respective giant companies and implemented and really simplified their employees and bettered their employees processes for obtaining, you know, more affordable prescription drug access and more affordable healthcare. You know, Google, we talked about them in great detail earlier. You know, they kind of backed off the patient data that they were after because of an issue with obtaining that third-party resources. But they’re just focusing and like you said, we’re going to see, I think we’ll see big things come from them. And then of course, you know, Theranos and Elizabeth Holmes being convicted. Yes, that was an epic failure and kind of a disgrace, but the lessons learned coming from that I think that we’ll see hopefully from federal oversight to try and prevent things like that from happening in the future—dishonesty in, you know, not just the blood testing market but in healthcare in general. I mean, I think there are valuable things to take away from that experience that we’ll see come in policy and regulations in the future. So any of these items I think, you know, worth watching, worth learning from. I mean, hey, mental health services at a barber shop, a mobile barber shop? I mean, who can’t applaud that? That’s pretty creative and pretty genius. So I think we need to keep an open mind when we look at these disruptors and these folks that are getting into the healthcare market from a different lens and from a different world than we’ve been working in before, if that makes sense.
Hut: Yeah, it certainly does. So I think that that brings us to the end of the segment. The big themes, the key takeaways for me are opportunities for collaboration between legacy providers and disruptors, again, segmentation is a big opportunity. Behavioral healthcare definitely bears watching as a space that’s ripe for disruption. Shawn, any closing thoughts from you?
Stack: No, I agree. I think the key takeaway to all of these conversations that we’re having on disruption, and every time I speak on disruption, people really enjoy the conversation that I have at these meetings and these events, but if you’re not having those internal conversations in your organizations about disruptors and about your strategic approach, that should be getting solidified now on how you’re going to handle disruption in your community. Those are conversations that you need to really be having strategically at your facility right now, or your organization right now. And have someone watching this in your community, watching it with your community employers and your, you know, your insurance companies to see who they’re reaching out to and involving. So I think it’s important just to keep your finger on the pulse of this.
Hut: Yeah, definitely. Great, great parting thought there. So thank you all for listening. This topic of disruption is not going away, so we’ll be covering it extensively at hfma.org and during Beyond the News. Who knows—maybe even another webinar is in the offing. So stay tuned, and thanks, everybody.
Grotto: Let’s take a moment now to discuss something exciting happening at HFMA: our partnership with Boise State University. We’ve launched a master’s degree program in population and health systems management. Recently, Beth Brousil sat down to discuss the program with Todd Nelson, HFMA’s director of partner relationships.
Beth Brousil: Todd, thank you so much for joining us today. One of the best things about this program is it’s meant to give students information they can apply right now in the real world. Can you give some examples of the type of learning they’ll be doing?
Todd Nelson: Yeah, so a couple of really cool features about the program are that they have, every week, in addition to the regular faculty, there’s a guest lecturer. So the guest lecturer is someone who currently works in the industry. It could be someone at a health insurance company, could be somebody working at CMMI, leading innovation from a federal perspective, could be somebody that is working on the state perspective, building models. So it’s really someone from all over the place. And what happens is, the students get that real-world experience from the guest lecturers, combined with a deep understanding of the concepts they’re learning in each course and throughout the weeks. And one of the cool projects that they’re doing is, they’re building an actual care transformation model, so each of the students will be looking, researching various value-based care models, and all the different attributes and aspects of that, developing one on their own and presenting that to the faculty and select guest lecturers for feedback, really actually creating a model of transformation.
Brousil: Participation in this program is already paying off for students. We’re already seeing results. Do you have any success stories that you’d like to share?
Nelson: Yeah. You know, the students are doing everything from creating published research papers that are going to be sent out in various research journals, building these value-based care models, which are really quite interesting. Having that exposure to federal, local and state policymakers to be able to articulate those things as well as, we had students that have already received a promotion just part of the way through the program, which is really quite amazing, because of the work that they’ve done and how they’ve started. In fact, one student’s promotion covered the tuition that they’re paying for the entire master’s degree.
Brousil: That’s awesome.
Nelson: Yeah. It’s really amazing. I’m really proud of the faculty that are there, the collaboration with Boise State, but also the students. We learn from them every week.
Brousil: And how can people get more information on this program?
Nelson: Well, we certainly have it out there on social media, but I would say the easiest way to go is out to www.boisestate.edu/phsm, or population health systems management.
Brousil: Great. Thank you so much for joining us today, Todd.
Nelson: Thank you.
Grotto: Voices in Healthcare Finance is a production of the Healthcare Financial Management Association and written and hosted by me, Erika Grotto. Sound editing is by Linda Chandler. Brad Dennison is our director of content strategy. Our president and CEO is Joe Fifer. Registration is open for our Annual Conference. We have some great speakers on the agenda, and we might even be doing a little podcasting on site. Visit hfma.org and register today. If you want to talk with our podcasting team, reach out anytime. You can email us at [email protected].
On this episode of HFMA’s “Voices in Healthcare Finance” podcast, Senior Editor Nick Hut and Policy Director Shawn Stack provided a follow-up to their March webinar about disruption in healthcare. According to Stack, the high healthcare spend in the U.S., coupled with advancements in technology, make healthcare an area ripe for disruption.
“Disruptors are focusing on targeting patients directly in the U.S., meeting them where they are and letting them choose how they want care delivered, trying to get in on a piece of that revenue,” he said.
Mental health is proving a key area for disruption, bringing in $5.1 billion in investment in 2021, Stack said.
“Mental health startups are just going through the roof right now,” he said.
Stack mentioned two companies working to improve mental health, Brightline and Brightside Health. Brightline provides mental and behavioral health services to children and families and has a unique approach to reaching people: Setting up a mobile barbershop in areas where mental health services are hard to find and providing free haircuts and behavioral health awareness education to adolescents.
“It’s kind of a captive audience while they’re on this haircut bus,” Stack said.
Brightside Health, formerly Emilio Healthcare, focuses on digital, on-demand support and coaching as well as clinical services to support families struggling with anxiety, depression and other issues. The company is currently working on providing specialized care to individuals with autism, people within the LGBTQ community and people of color.
Disruption through partnership
Google is an example of a company that has been looking not to replace legacy providers but to partner with them. Hut described a recent interview with Karen DiSalvo, chief health officer at Google, in which she expressed interest in collaborating with providers and consumers.
“[Google] wants you to be able to find a provider without having to navigate across platforms,” Hut said. “They’ve got a product that enhances the ability to find clinical information within the EHR. Also, something that’s in the discussion stage is a tool that would offer insights into social determinants of health as applicable to any specific patient you’re looking up in the EHR.”
Other companies are partnering with each other rather than with legacy hospitals and health systems. Stack gave the example of startup Hims & Hers partnering with primary care provider Carbon Health. The former has focused primarily on issues such as mental health, sexual health, hair loss and dermatology but brought in the latter to be able to round out their suite of services, he said.
“We’re seeing collaboration within a disruption environment too, which is very interesting to watch,” Stack said.
Failures and disbanded companies
Even those disruptors that no longer exist can provide lessons to healthcare providers, Stack said. Haven, a joint venture of Amazon, Berkshire Hathaway and JP Morgan, disbanded after three years, but each of those companies gained new information to take into future projects, Stack said. Google had backed out of a previous healthcare venture but is currently working to refocus. In addition, true failures like Theranos, the blood testing startup that ended with founder Elizabeth Holmes being convicted on three counts of fraud on one count of conspiracy to commit fraud, likely will have an impact on future healthcare disruption in the form of federal oversight, he said.
As startups and other disruptors continue to flood the market, Stack said legacy providers should pay close attention to ensure they’re not left behind. Healthcare organizations should be watching their communities and pay attention to who their payer partners are working with, he said.
“Every time I speak on disruption, people really enjoy the conversation,” Stack said. “Those are conversations that you need to be having in your organization right now. It’s important to keep your finger on the pulse of [disruption].”
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