THCB

Categories

Tag: Signify Health

What does CVS’s new deal signify about Medicare Advantage?

Each week I’ve been adding a brief tidbits section to the THCB Reader, our weekly newsletter that summarizes the best of THCB that week (Sign up here!). Then I had the brainwave to add them to the blog. They’re short and usually not too sweet! –Matthew Holt

Meanwhile, it’s time for Matthew’s tidbits. A quick moment’s thought of course for the Queen, her family and semi-loyal subjects, of which I am (sort of) one. In fact in the last 7 days my ancestral homeland of the UK has got a new King, a new prime minister and a new manager at Chelsea FC. Still, two of three of those changes seem to happen about every 18 months so we shouldn’t be too surprised that they all happened at once.

Talking of changes, this week’s big American health care news was the other Matthew Holt pocketing a boatload of cash. Yes, Jess DaMassa is still hoping to upgrade her partner on Health Tech Deals without having to change the name on the intro (and ain’t shy about telling me!). The wrong Matthew Holt (from my bank balance’s perspective) has a fund called New Mountain Capital, which owns a lot of health tech assets. It was the majority owner of Signify Health–bought this week for $8bn by CVS, after being the subject of a bidding war between them, United & Amazon.

Signify is very interesting for what it does or doesn’t do. Almost all its business (having acquired and recently shut down a bundled care payments division) is now connected to sending nurses out to the homes of Medicare Advantage (MA) members on behalf of all the big payers (Aetna, United, Humana, etc) to do in-home health assessments of their members. Critics say that these assessments were used to upcode the health risk assessment factor (RAF) of those members, which causes CMS to pay more to those MA plans. MA’s defenders, including George Halvorson on THCB, say that this upcoding isn’t happening, or at least not in that way, and that the better care MA members get actually reduces overall Medicare costs.

Having read a lot and been talked at by both sides of this debate, it seems to me that both things are true. Many MA members have been “upcoded”, in many cases perhaps legitimately, and the CMS data–which is extremely murky & hard to parse–also seems to indicate that MA members’ treatment overall costs less than those in FFS. (I’ll spare you the CMS Trustees report but here is Milliman’s assessment–albeit paid for by MA proponents–using their data. MedPAC disagrees).

Signify brought in over $640m in revenue for those home evaluations in 2021 and is forecasting over $1bn in revenue this year at a healthy EBITDA. But that still means CVS is paying 8 times future revenue & maybe 30-40 times earnings. It will indeed be interesting to see if health plans remain so keen on these home evaluations if (as George Halvorson says) CMS has actually stomped on them being used for RAF upcoding. It’s also not clear if those MA plans competing with CVS/Aetna will be keen on using a company owned by one of their rivals–which might put its thumb on the scale in ways they can’t know about.

Of course, it might just be that what Signify is doing is radically improving the experience and health of those seniors in Medicare Advantage by discovering what health and social issues they have, and helping their plans and providers manage their care better. Wouldn’t it be great if all seniors could get this type of care and attention? And wouldn’t it be great if the taxpayer knew it was both helping improve seniors’ health and reducing our costs? The challenge for Medicare (and the rest of us) is to get to a place where the incentives are transparently only for improving health, and where Medicare Advantage plans are regarded across the board as actually doing only that.

We are not there yet.

#HealthTechDeals Episode 45: CVS buys Signify; Psych Hub; 98point6 & MedMinder

It’s been a week of endings for UK politicians, soccer coaches and tennis GOATs. And a big deal in health tech as CVS buys Signify Health for $8bn. Psych Hub raises $16m, 98point6 tacks on $20m more in a poss direction change & MedMinder tackles that hardest of all questions–Did I take my pill or not? Jess DaMassa almost lets me takeover, but we know who she really wants in charge! Matthew Holt

#HealthTechDeals Episode 9: Signify buys Caravan; Koneksa; Jasper; Vynca; Doximity

Jess & I are worried about Peleton’s CEO! Well that not worried. Signify Health buys Caravan Health for $250m ; Koneksa gets $45m; Jasper Health gets $25m; $30m for Vynca; & Doximity pays $82.5m for scheduling co Amion, while going gangbusters on its numbers. Matthew Holt

TRANSCRIPT

Jessica DaMassa:

Matthew Holt, you and our loyal listeners might recall how a few weeks ago I bring up the fact that no one is talking about Peloton and the fact that it’s killing TV characters left and right. Then what happens all of a sudden? Boom! Take out of Peloton. The stock has tanked. The CEO is gone. Thousands of people laid off. Am I the harboror of terrible things that are yet to come? It’s this episode, the February 10th episode of Health Tech Deals.

Continue reading…

INSIDE THE ACQUISITION: Signify Health Adds Caravan Health’s ACO-building Expertise for $220M

By JESSICA DaMASSA, WTF HEALTH

Get the details behind the deal! Signify Health (NYSE: SGFY) is acquiring Caravan Health for $220 million in cash and common stock in effort to create one of the largest networks of at-risk healthcare providers in the country. For all those who love healthcare payment model innovation, this is a story about scaling both value-based care and accountable care organizations (ACOs), and we have Signify Health’s CEO Kyle Armbrester and Caravan Health’s founder and Chairwoman Lynn Barr here to explain the model and market potential this creates for Signify Health.

Signify Health is best known for its value-based, care-at-home focused approach in the Medicare Advantage space, and Caravan Health brings both tech and expertise to support the creation of accountable care organizations (ACOs) and the ongoing smart management of their patient populations. Caravan got its start with “safety net providers” in rural areas and pioneered what’s known as the “Collaborative ACO” approach that pools smaller health systems together based on practice similarities (instead of geography) to achieve the right kind of patient scale needed to mitigate risk. This is really important to scaling ACOs nationally, as you’ll hear both Lynn and Kyle explain, and, of course, we ask Kyle to zero-in on how this will extend Signify Health’s reach into new markets as well.

Beyond the acquisition, we also celebrate Signify Health’s one-year IPO-iversary. The company rang the bell on the New York Stock Exchange (then stopped by WTF Health to talk about it!) on Feb 11, 2021. Looking past the Caravan Health acquisition and to what it will lead to next, Kyle and Lynn (who will now be activating even more payment model innovation as Signify Health’s VP of Innovation) get fired up about what’s ahead.

State of Connecticut’s New ‘Episodes-of-Care Health Plan’ Could Be Key to Scaling Value-Based Care

By JESSICA DaMASSA, WTF HEALTH

Signify Health (NYSE: SGFY) has called their approach “Value-Based Care 2.0” and, today, they’ve received an important designation from CMS that could set an exciting precedent for scaling up episodes-of-care, value-based models for the under 65 commercial health insurance market. The plan to receive this important approval as an Advanced Alternative Payment Model (AAPM) is the State of Connecticut’s health plan – a massive plan that covers the State’s 220,000 employees and retirees. To talk about what this first-of-its-kind approval signals for the future of value-based payment models are the State of Connecticut’s Comptroller Kevin Lembo and Signify Health’s CEO Kyle Armbrester.

What’s so important here is the combination of episodes-of-care (which is like value-based care-lite) and the under-65 market (which is not as rich with value-based care case studies as the over-65 Medicare market). That a State government with a massive population of covered lives AND a vested interest in helping keep local hospitals and health systems vibrant economic engines in the community is leading the way on this novel payment model design is significant. And, Comptroller Lembo gives us the details about how he’s viewing it as a win-win – after quite a few battles along the way. To win in health innovation, you’ve got to follow the dollar! Tune into this chat to see where it’s headed as episodes-of-care models get a huge boost from CMS.

Signify Health IPO: CEO Kyle Armbrester on $7.1B Market Debut

By JESSICA DaMASSA, WTF HEALTH

Signify Health’s CEO Kyle Armbrester stops by on IPO day! Hours after ringing the bell on $SGFY’s launch on the New York Stock Exchange, Jess DaMassa digs into the health tech company’s $7.1B valuation and plans to help providers, payers, and self-insured employers scale-up their value-based care offerings. Kyle calls it “Value-Based Care 2.0” and, for the uninitiated, does a great job of stepping back and explaining this healthcare payment model’s history and how Signify is building its next-gen approach from the groundwork laid over the past decade.

What’s unique about Signify Health’s model is that it’s not just relying on tech to make it easier to find where managed care organizations can help cut healthcare costs and drive better outcomes – they also provide in-home health services that send nurses, doctors, and social workers out into patient’s homes to physically look for potential roadblocks to recovery and wellness. It’s in this critical “last mile” where Signify is possibly making the greatest impact, connecting the social determinants of health (physical environment, social support networks, economic status, etc) back into the healthcare system in a way that not only helps patients, but is also aligned with how all the stakeholders along the care continuum are incentivized. (And that includes Signify, which goes at-risk along with their clients and only gets paid when they drive better outcomes and cut-out costs.) So, what is the ultimate opportunity for this kind of “deep healthcare” business? We get into Signify Health’s business model, the competition, and its plans for growth and M&A activity now that they’re backed by $564M in capital from their initial day on the public market.