HLTH ‘23: For Health Tech Firms, Eat Or Be Eaten?

HLTH ‘23: For Health Tech Firms, Eat Or Be Eaten? unknown

In a tough economic climate that continues to impact healthcare businesses and healthcare consumers alike, the annual HLTH Conference drew in over 10,000 attendees to Las Vegas to discuss all things at the nexus of technology and healthcare – what’s happening, what’s new, what’s next, and what’s top of mind for healthcare leaders navigating a down market among hosts of other challenges and priorities.

This year’s conference had perhaps a slightly more moderate tone than in years past. More than a few attendees questioned the ultimate impact that more than $100B invested into digital health over the past ten years has had, while others expressed skepticism over the exuberance around artificial intelligence and large language models (LLMs) in healthcare.

Walmart and Included Health announced an expansion of Walmart's virtual care efforts at HLTH

HLTH

Perhaps, as one venture capitalist noted, we’re still in the investment phase of digital health, and the impact is still to come. But judging by an increased emphasis around outcomes, continued survey results and new company launches, healthcare technology progress is still happening in spades.

Here are some of the announcements and discussions that caught my attention this year:

1.General Catalyst is in the market for a health system

In a bid to create a “more affordable, accessible and proactive system of care,” VC firm General Catalyst (GC) announced the launch of Health Assurance Transformation Corp, or HATCo. at HLTH ‘23.

With Hemant Taneja, CEO of GC, and Marc Harrison, former president and CEO of Intermountain Healthcare, at the helm, HATCo. will focus on helping hospitals and health systems make the long-sought transition to value-based care.

In service of these goals, and to demonstrate that “wild transformation” is possible, one of HATCo.’s primary initiatives is to own and operate a health system within one year.

“The only way to do it is to have our own system,” said Marc Harrison.

From its blog, HATCo. describes its intent of “acquiring and operating a health system for the long term where we can demonstrate the blueprint of this transformation for the rest of the industry.” The primary objective is to generate sustainable profits for the health system that span decades, instead of the typical 10-year turnaround of a VC deal, said Taneja.

“It’s an unusual move for a venture capital firm to be launching a business like this… going and buying a health system. But we think it’s necessary,” noted Taneja.

2.Walmart partners with Included Health to expand virtual primary care offering to employees nationwide

With nearly three years of results to support its progress and potential, Walmart at HLTH announced the expansion of its virtual primary care offering to all 1 million Walmart associates and their family members across the country, with a $0 copay for virtual visits. The program, delivered in partnership with Included Health, demonstrated impressive results over a pilot period, lowering Walmart’s healthcare spending by 11% among engaged employees.

Specifically, employees with diabetes saw a 24% reduction on average in HbA1c levels, and people with hypertension saw blood pressure reduced by 14% and total cost of care decreased by 11%. Walmart also saw hospital readmissions among people using the virtual primary care platform decrease by 26%, which Tripp attributed to Included Health’s model of primary care. “Primary care to us means selecting your own physician… who will not change, who you’ll work with on an ongoing basis, who may represent your community, speak your language, and more than anything else, drive trust with you,” Tripp explained.

The result of a merger between telehealth company Doctor On Demand and care navigator Grand Rounds, Included Health began working with Walmart back in 2016, providing urgent care virtually to Walmart employees in three states, compared to the 49 states that have access now. As Lisa Woods, Walmart’s vice president, physical & emotional wellbeing, noted at HLTH, the company’s expanded offering now includes physical therapy and digestive health, where Jan. 1 will see some basic at-home lab work included as well.

3.Platforms (multi-product and multi-sided) as an investment bright spot

When the market gets tough, the tough – and smart – invest in platforms. During “A Storm of Megadeals” panel discussion, VCs came together to discuss the shifting landscape and how their companies are making investment decisions against a backdrop of continued uncertainty – with ‘platform’ companies being an increasingly attractive option for VC investment. VCs in this context seemed to define ‘platform company’ as either multi-product companies that have reached scale or companies with network effects that serve multiple markets. Data suggests that platform companies with network effects in particular grow faster, generate greater returns, and are more competitively positioned than their ‘pipeline’ business counterparts.

For Robb Vorhoff, managing director and global head of healthcare for General Atlantic, much of his firm’s investment this past year has gone to the host of new platform companies in their portfolio. “First and foremost, we’ve been focused on deploying capital into those (platform) companies,” said Vorhoff, adding that approximately 35-40% of the firm’s $5 billion annual investment was concentrated there.

Julie Ebert, a managing director on the national life sciences and healthcare team at Silicon Valley Bank, spoke about the draw of smaller companies to become part of a platform, noting that these kinds of “combinations” can be advantageous. “There’s evidence that companies are seeing the writing on the wall and trying to set themselves up for success.”

The message from Lynne Chou O’Keefe, founder and managing partner at Define Ventures? “Hope is not a strategy” and “get comfortable with being uncomfortable,” where O’Keefe also noted that her firm is seeing some of their largest and most successful portfolio platforms growing through acquisitions.

“Our more platform-like companies are acquiring assets. Unite Us acquired NowPow, as an example,” said O’Keefe, where Define is being “much more offensive” in that kind of thinking when it comes to growing portfolio platforms.

4.Employers feel the squeeze of GLP-1s for employee weight loss

According to an Accolade survey released at the start of the HLTH conference, the number of U.S. employers who cover obesity medications, including GLP-1 drugs, could nearly double next year. According to the 502 survey respondents, while 81% of human resource (HR) decision-makers feel that their employees would be interested, only 25% cover GLP-1s today.

One panel saw employers discuss the pros, cons and calls outs for employers covering or debating covering GLP-1s, including potentially requiring an enhanced prior authorization program to ensure employees are using the medications to manage diabetes as intended.

During the discussion, Andreas Mang of Blackstone's Equity Healthcare Division said their data shows 40% of GLP-1 did not have diabetes at the time of medication approval, suggesting potential inappropriate use without diabetes diagnosis.

Given the rapid 600% increase in spending on GLP-1 drugs over the past 4 years, Mang noted the tremendous cost pressure this puts on employers – and given some industries have as high as a 150% annual turnover, it doesn’t make economic sense to cover the drugs because employers won’t be the ones to see the long-term benefits of improved employee health.

5.Cautiously advancing LLMs and generative AI in healthcare

The integration of large language models (LLMs) and generative AI may have tremendous potential to improve various aspects of healthcare delivery, but the industry must proceed with overwhelming caution.

As Suchi Saria, a machine learning researcher at Johns Hopkins and CEO of Bayesian Health, discussed during a panel at the Engage at HLTH event, “With anything that is fully autonomous, you have to think about what the guardrails around it are,” even if that application isn’t directly related to provider clinical decision support.

For example, patient-facing administrative use cases, such as using generative AI to help patients triage symptoms, aren’t without risk and misinterpretation. As detailed by MedCity News, if an autonomous patient-facing LLM malfunctions or misinterprets a piece of data, it could potentially be dangerous, described Saria. An LLM-powered chatbot could recommend someone visit the emergency department for a condition they can better manage at home, or conversely, the chatbot might not recommend a patient seek emergency help for a situation that indeed warrants it.

To help validate healthcare use cases and gain alignment on AI enablement, standards and governance, a group of over 30 partners launched the Vision, Alignment, Learning, Implementation, and Dissemination of Validated Generative AI in Healthcare (VALID AI) collaborative, announced at HLTH. Dennis Chornenky, chief AI advisor at UC Davis Health and CEO of Domelabs AI, will serve as the executive director of VALID AI. The partnership will focus on investigating the potential for generative artificial intelligence to advance medical research and clinical care.

"Gen AI holds tremendous promise for health care but requires guardrails to ensure safety and efficacy,” said Chornenky about why the collaborative exists.

VALID.AI partnership participants are an array of providers, payers, nonprofit organizations, and research and technology companies in support of the mission, including Boston Children’s Hospital, Cedars-Sinai, Elevance, Ochsner Health, the University of California health systems, the American Cancer Society, the Center for Health Technology & Innovation – American Heart Association, and the Coalition for Health AI (CHAI).

These kinds of partnerships – from VALID AI. to HATCo. – are important to recognize and celebrate, because they underscore that healthcare transformation can’t happen without collaboration. Healthcare’s problems are too large for any one company or initiative to solve, and the industry is only as strong as its desire to work together towards a common goal: improve the quality and delivery of care for all.