3/26/21 Weekly Update

Summarizing the week that was in the business of healthcare

Mar 26, 2021

Welcome to The Donut Hole’s weekly summary. The news doesn’t stop. Lucky for you, we are here to help you take in the week that was in the business of healthcare.

NEJM: Reflections on an interesting development: Private equity firms in the physician practice space

This week’s NEJM published a perspective piece on “Private Equity and Physician Medical Practices—Navigating a Changing Ecosystem” by Zhu and Polsky. The article outlines the disruption to the physical medical practice “ecosystem” by large private equity firms and how this has pushed health care away from patient-centered care towards administrative management. The main take-aways are:

Independent practices are in bitter competition with larger, well-funded groups. COVID-19 losses have only compounded the financial burdens
Benefits of private equity involvement to the patient can include improved patient experience and value of care delivery. Private equity firms can “scale up the platform” and bring to the newly acquired groups industry knowledge, efficiency initiatives, and improved management
Negatives to physicians may include new pressures, such as changes in the physician-compensation structure, less autonomy, new work conditions, lower job satisfaction, and ultimately worse career prospects
Unclear societal impact at this point. The potential benefit of better managed, financially stable physician practices are offset by pressures from the PE owners to increase elective procedures and “upcharge” to increase revenues

Potential impact on you: Ultimately, we agree with the authors that changes such as private equity investment in physician medical practices is merely a reflection of broader changes in the direction of medicine into a corporate enterprise. The consequences of this specific development are unclear at present, but given PE-owned practices’ motivation to maximize financial benchmarks, they are likely to come up short in the way of quality of care and patient outcomes.

Everlywell forms new at-home lab testing subsidiary through PWNHealth purchase

This is a really interesting acquisition from Everlywell, a leader in the at-home diagnostics space. The specifics of the deal are less important than the takeaway - that at-home testing is here to stay post-COVID and likely in a big way. Already, Everlywell’s various kits allow customers to order and take diagnostics tests for everything from food sensitivities to thyroid levels to STDs from the comfort of their home. The company recently closed a large funding round and has stated its intention to continue to expand its test menu and introduce virtual care offerings. This also comes on the heels of Quest’s investor day presentation in which they specially call out direct-to-consumer diagnostics as a huge opportunity for the $20B company.

Potential impact on you: The impact of increased at-home patient ordered testing is unclear but one likely result is a lower burden on primary care providers since some subset of patients will likely order their own tests for low acuity issues rather than come in for a visit just to get a lab order. Our concern with the rise of at-home testing is around accuracy. It is much more likely that an average person would mess up sample collection and storage than a trained lab technician. Everlywell and their competitors market validated tests and run CLIA-certified labs, but if the sample is compromised due to incorrect collection workflow then the reliability of the diagnostics won’t matter.

Apple-backed Stanford study suggests iPhone, Apple Watch could remotely monitor heart patients' frailty

A new study from Stanford found that iPhones and Apple Watches could enable at-home assessment of cardiovascular disease patients' frailty via sensor data and an app-guided version of the standard six-minute walk test. There are limitations to the study - only 94 participants completed the study, all but one of the participants were male, and the duration of the study was only six months. Nevertheless, the results support industry efforts to expand remote patient monitoring and bring it into standard of care. This study is part of a very broad trend that will take time to play out, but the results are exciting for patients suffering from chronic conditions.

Potential impact on you: Remote patient monitoring has the potential to revolutionize chronic disease management. The idea is that accurate, real-time, predictive metrics will enable proactive approaches to optimize treatment and management and reduce emergency department utilization and hospitalizations. While RPM exists today (and has been a huge buzzword during COVID), it is limited in most cases by the need for specialized diagnostic equipment, such as glucose monitors, blood pressure cuffs, etc., and a poor fit in current provider workflows. This study points to the possibility to leverage popular commercial technology patients already own and use (e.g. the iPhone and Apple Watch) to measure biomarkers. A better fit within provider workflows, unfortunately, seems like it will be the more difficult problem to solve.

Uber Health expands prescription delivery to 37 states with ScriptDrop deal

Uber continues to grow its Uber Health unit with a prescription delivery partnership with ScriptDrop, a technology start-up that which integrates with a pharmacy's software system to enable same-day medication delivery. The partnership is straightforward. ScriptDrop’s software will allow pharmacists to automatically order Uber drivers to pick up and deliver prescriptions as soon as they’re filled. ScriptDrop currently operates in 37 states and is still expanding. The solution allows its pharmacy partners, including Albertsons, Kmart, and Safeway, to better compete given that fast home delivery is quickly becoming the norm in the pharmacy space. CVS, Walgreens, Amazon Pharmacy, Ro, and others all offer similar delivery services to their customer.

Potential impact on you: Medication adherence is a major problem in the U.S., particularly for chronic diseases. A recent study found that prescriptions for hypertension and diabetes saw primary non-adherence (meaning the patients didn’t even fill the script) rates in excess of 25%. The various delivery options popping up will hopefully reduce this number significantly by removing the need for the patient to ever physically go to a pharmacy. Providers should keep these dynamics in mind when writing prescriptions and prioritize pharmacies with delivery capabilities if concerned about adherence.

ASCs gave medtechs alternate care sites amid pandemic hospital elective shutdown

This article outlines the continued shift of procedures from hospitals to ambulatory surgery centers (ASCs) during COVID. While hospitals were overwhelmed with COVID cases, ASCs were able to open up for elective procedures safely and relatively quickly. As a result, many procedures that have traditionally been performed in a hospital OR have moved to out to ASCs. This is especially true for orthopedic procedures like total knee and hip replacements. Many health system and medtech executives expect this trend to hold due to ASCs advantages - that most patients go home the same day as their procedure, costs are lower, and quality is as good, if not better, than hospital settings. Interestingly, though, Medicare patients end up with higher out-of-pocket costs with ASCs. ASC copays are uncapped, while copays are capped at $1,400 in hospital outpatient settings.

Potential impact on you: For those of you interested in or currently practicing in orthopedic surgery, ophthalmology, and other specialties with high ASC volumes, expect this trend to continue. If you’re focused on the hospital setting, it may be difficult to maintain patient volumes in the long run. Additionally, as technology improves, some lower risk procedures (e.g. carpal tunnel) may eventually even move from ASCs into the office setting. These lower cost sites of care result in less reimbursement per cases but increased efficiency may allow providers to make up the difference via higher volumes. It is also important for all providers to recognize the potential out-of-pocket cost difference for the patients between care settings.

Have a great weekend!

— Hannah and Caleb Bank, Co-founders

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