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Where we share our weekly news debriefs and discussions with industry experts. These are lo-fi recordings aimed at giving our readers more opportunities to engage with our analysis and a view into some of the conversations that shape it.
Martin: Good morning, and
happy Monday everyone.
Welcome to The Grand Roundup.
We've got Kevin and Martin
here from Health Tech Nerds.
Today, on The Grand Roundup, we are
talking about Proper, Assort, and the
race to be the winning platform for
agentic voice AI for care delivery.
Boy, that's a mouthful.
Uh, a couple other fundraising rounds
that caught our attention, Alan,
Trase, Cadence, Hera, and Upside.
CityBlock is acquiring Homeward.
Kevin, I think you have
to read this next one.
Kevin: What's up, doc?
Martin: What, what, what is up with UpDoc?
And lasers, and later
on, we're welcoming Dr.
Jeremy Fries, CEO and founder of
Humata Health to talk about WISeR,
prior auth, and how to make payers
and providers sit and sing kumbaya.
But before that, uh, let's,
let's get into the Proper and
Assort, um, fundraising rounds.
So there's a- Prosper.
Prosper, excuse me.
You're
Kevin: going, you're going
proper on Monday mornings.
Martin: Uh, whoops.
Okay.
So Kevin, we had a couple of large
and notable fundraising rounds
last week in the same space.
What was going on?
Kevin: So two big rounds
caught our attention.
Prosper AI raised 30 million bucks.
Um, Andreessen Horowitz,
a16z led the round.
Others were, uh, also involved in
the round, and then on Wednesday,
Assort Health announced their latest
funding round, 120 million bucks,
Menlo Ventures and others at a 1.2
billion valuation.
Both, um, uh, talk about their, uh, growth
trajectory in the funding rounds, right?
They, Prosper reported that in the
last six months it's grown revenue 5X,
an impressive growth rate obviously.
Assort reported it has grown revenue
by 20X over the last 15 months.
If you go back from one of their
previous announcements, I think
it was in TechCrunch, it reported
that they were at a 3 million ARR.
Um, so if you do the math, uh, on
that, which was about 15 months ago I,
I believe, um, it implies they're at
around 60 million in ARR today, which
you can do the valuation comps on today.
It was, what caught my attention in
the funding rounds is, um, they both
included customer quotes, and the
customer quotes from each, uh, caught my
attention in, in how similar they sounded.
For Assort, talked about how,
"We evaluated every AI solution
on the market, and Assort was
onl- the only true platform."
This was from the CEO of
a dermatology practice.
For Prosper, it was, "We evaluated
seven different vendors through an
extensive RFP and live demonstration
process and concluded that Prosper AI
had the most comprehensive platform."
This was from a, a provider consortium
representing a group of providers.
I, I, I find those quotes really
hard to decipher personally.
I, you know, Martin, if, like, you're
putting together a press release, I can
imagine why you're doing that, right?
You wanna, you wanna convey to
the market that you are building
a platform in this space.
Um, a lot of these companies are starting
off as point solutions that are getting
in the door with organizations with one
specific use case, and you are telling
the narrative that, that you are going
to be the full end-to-end platform
offering for these organizations.
It makes sense from a positioning
perspective, it makes sense from a
financial model perspective, 'cause
that is how you get larger contracts.
That is how you justify these
really large valuations.
But the way in which we get these two
large funding rounds on back-to-back
days, and you have these two quotes come
out at the exact same time talking about
how medical groups are comprehensively
evaluating doing RFPs on the market and
coming to completely different conclusions
on what the only platform offering is,
it feels indicative of where things
are at to me in this space, right?
So that, that caught my
attention in the round.
What'd you make of it?
Martin: Yeah, feels a
little, a little frothy.
I think the It is interesting.
I would love to, to know, I would
love to see the scorecards from those
evaluations and see if they were going
head-to-head- Yeah ⦠or if, um, or
if not, you know, if there was a, a
d- sort of different competitive set.
I will say, outside of these
two companies, there are a lot
of companies that are sort of
adjacent to this agentic voice AI-
Kevin: Mm-hmm
Martin: that are thinking
about this space as well.
Some quite large, some quite small.
They're all sort of, I think, focused
on different niches, and I, I feel
like in the near term, there's really
plenty of space for all of them to keep
on posting impressive month-over-month
and year-over-year growth.
I mean, the, the, all of the
press releases cite the huge
amount of administrative spend
in American healthcare, and,
like, that's your TAM, right?
Uh, and there's a lot of that.
There's a lot of independent practices
and PE roll-ups and hospitals.
And so it does not seem impossible to
me that there is, uh, r- a few more
months or years where we can keep
getting press releases like this.
But- sure ⦠in the
long run, I don't know.
Like, that seems, I think, a little
bit harder, is, is that long run story.
Kevin: Yeah.
There, there are certainly
a lot of companies right now
going after this market, right?
Like, if you, if you type in Prosper
AI or Assort into Google, the
sponsored results indicate how many
companies are going after this space.
I just typed in Prosper AI.
They show up, Elise AI shows up,
SuperDial shows up, Sierra shows up.
Um, I see Align in other interviews.
I mean, it goes o- like,
it goes on and on, right?
Uh, which is indicative of, I
think, the activity in the market.
One of the interesting things that
I find about this space too is that
because it's patient-facing, we can
interact with these things, right?
Like, it is not hard to call
up these practices and- I think
you have ⦠see what theseâ¦
I, I, I have done this in the past, yes.
I, I do not believe it was appreciated
that I have done it, because I, I, as I
understand it, I jammed up a practice's,
um, potential visits, which I think is
another set of questions on, on how that
happens when these tools are supposed to
be AI to help prevent that from happening.
But nonetheless, like,
you can experience them.
And I, I think it'll be
interesting to keep an eye on
that over time, because I- Iâ¦
current state, it, it feels a bit
like an IVR solution to me, that I,
I, I get the bigger pitch of how AI
is gonna transform these practices.
When I call them up and I experiencing
the IVR solution, it doesn't, it
doesn't feel like that yet, you know?
And- I think that, plus the way in which
these press releases come out, plus
the amount of activity, it naturally
invites some skepticism to your point on
how durable this is over the long term.
Like, it feels to me, and I saw
this a little bit in the, in the
Prosper announcement, there clearly
is an opportunity for practices
where staffing is really challenging
today, and it, y- y- you can u- use
tools like this to drive revenue
growth and, and cost savings, right?
And that was one of the things I mentioned
in the newsletter this weekend, is like
they have a ton of really impressive case
studies of small practice that's seeing
a million dollars of revenue increase.
And if you can do that, and you
can show that increase in a matter
of weeks, like of course you're
gonna get the uptake, right?
It's, it's pretty impressive.
Martin: Speaking of uptake, should we go
to the dueling up into the right slides?
Let's do it.
These were like m- master class, and we're
building, we're building an awesome, uh,
a- awesome slide to show our, our growth,
and we're gonna cherry-pick our metrics
to make it look especially awesome.
So on the left, we have Assort Health'sâ¦
They did patient interactions with voice
AI, and like wow, that's an incredible
uptick in, in patient AI, and then, uhâ¦
Or patient interactions with voice AI.
And then on the right, Prosper
has their, um, their patient care
dollars managed by Prosper AI.
Mm-hmm.
Super impressive.
S- very steep up into the right curves.
Like I said, I think that there's enough
headroom in this market, and the market
structure is such that, um, on either
of these metrics, like if you land at
one PE-owned asset and you can expand
across those assets, you can, you know,
double, triple, quadruple year over
year relatively straightforwardly just
by going through and saying, "Hey, we
saved 100 grand for, for so-and-so.
We can do that forâ¦"
Or, "We added 100 grand in EBITDA.
We can do that for all of your practices."
Kevin: Yeah.
I, I can't imagine a more straightforward
pitch to a private equity group that
is, you know, owns some practices, and
to that end, we've seen some of these
organizations with jobs posted that
are purely about being a strategic
partnership leader for private equity
groups that own medical practices.
Like, like clearly is a key
part of the go-to-market mission
here that is, that is winning.
But if you're like, "Hey, you've got
front office issues in your practices.
This is resulting in phone calls
not being answered and wait times,
which is a bad customer experience."
It, yeah, it like, uh, it seems
like a win-win-win, right?
That, uh, answer your phones, make more
money as a practice, provide a better
patient experience, have access into your
providers in a way that you didn't before.
Like, uh, there's nothing
wrong about that, right?
Martin: No, I think to me the questions
are, number one, how many of these
platforms can the market support?
Yeah.
Number two, h- how do the employed
physicians of these practices feel?
Like th- there is a, there was a
Health Affairs article a little while
back which talked about how it's
like when private equity takes over a
practice, uh, patient access increases.
And it is a nice thing for a doctor
to have a slower, unoptimized
schedule, and having a AI-optimized,
completely full schedule is
less fun, as you could imagine.
And so I'm curious, like, what the dy-
how the dynamics of that shake out.
Mm-hmm.
And then the third question that I
have is, holy smokes, like we are,
we are pushing a lot to voice AI,
and the channel that, you know,
voice AI uses is the, the phone.
And right now that is a pretty
valuable channel because you know,
for the most part, or you historically
knew when someone called you or
texted you that it was a person.
And it was not spam.
And a reminder or something like
that seems like a great u- like a, a
reminder or a phone tree or a scheduling
thing seems like a great use of AI.
But like- Yeah ⦠if, if it is the case
that this stuff becomes cheap enough
that, like, scammers and political
fundraising phone calls and salespeople
start using it, then the channel just
gets a little bit muddier, right?
And so it's like, yeah, someone
calls in and they can get
scheduled, but your reminderâ¦
I get a lot of, you know, pa- uh, yeah,
patient reminder emails and phone calls
right now, and it's becoming one of
those things where, like, I see it,
I don't recognize the number, or I,
I assume that it is going to be a, a
robot and I just send it to voicemail.
So I don't know.
Those are my, I, I guess,
like, three questions.
Any reactions on those, on those three?
Kevin: That all tracks.
It reminds me of a few years back,
I remember hearing a startup story.
Uh, there's an organization that was
getting a lot of traction because they
had figured out how to spoof numbers
so that it looked like provider's
phone call or provider's number.
if you can spoof their
number, so you know, Iâ¦
There's gonna be all sorts of little stuff
like that that happens in the space that,
uh, we're gonna have to pay attention
to as we enter into this new world.
I, I think those are the right,
um, I think those are the
right questions to be asking.
The only other thing that comes to mind in
all of this is it was interesting to me to
see in the Assort press release that they
are now working with John Muir Health.
Which John Muir system in California,
notably back in like 2019, 2018,
entered into a huge outsourcing
deal with Optum for all of its rev
cycle and IT around core rev cycle
opportunities, but then also your
broader set of IT patient experience
opportunities, so on and so forth
Obviously there's advantage from
a contract size perspective if you
get into the health system market.
Health system have more patient revenue,
uh, and that should flow down to larger
contracts with these organizations.
I am-- We have, we have talked a lot
about the kind of private equity, small
medical practice, go-to-market mission
as being core to the narrative right now.
I'm curious to keep an eye on do they
go upstream into health systems more?
Do we see Assure starting to sell
more and more of these deals,
and what is the implication of
that for the market as a whole?
Because right now, to the previous
conversation, it seems like the
go-to-market playbook has been,
uh, a pretty well-oiled machine
of private equity practices that
wanna see that margin improvement.
You can show that immediately, off you go.
How you do that in a system like
John Muir, which is much larger,
presumably you're not seeing
that uplift in a matter of weeks.
I'll be really interested to keep my eyes
on that too, because that, that feels
like a different, different go-to-market
strategy entirely, a different,
different ball game, if you will.
Martin: Different pond to swim in
and different competitor set, right?
Like y-
Kevin: Uh-huh
⦠Martin: there, there are a lot of health
system focused agentic voice AI companies-
For sure ⦠or would like- Yes ⦠to be.
And so- Yeah ⦠that is like a, that is
gonna be a fascinating thing to watch.
I think another point you made in
the newsletter that has kind of
stuck with me is all of these things
are increasing healthcare costs.
It is aâ¦
The pitch is like, for not very much
money we can create more revenue, and
that is increases healthcare costs, right?
Like, that was spending that didn't
happen before and it's happening today.
It would be good spending.
I'm not saying that, you know,
it's not a, a derogatory thing.
But it is, like, increasing
utilization of the healthcare system.
There'll inevitably be pushback on
that from taxpayers, payers, et cetera.
And so that is one thing
that can kind of hem this in.
The other question that I have, and
we're getting a bit out over my skis
here, but one thing you read in, like,
the Wall Street Journal, and the FT, and
Bloomberg is companies are talking about,
"Holy smokes, my token spend is high."
Uh, they're, like, waking
up with these large bills.
I would imagine voice AI
is pretty token intensive.
Like, it, it, it- Yeah ⦠it strikes
me as a, a token intensive activity.
Maybe I'm wrong.
I wonder to what degree there
is a, a subsidy happening today,
and to what degree this is, like,
valuable versus a, a human call
center once the subsidy expires.
Kevin: Yeah.
I would love to see the unit economics
and gross margins of voice AI
versus humans in call center today.
And to your point, how much of voice AI
is being subsidized right now, and what
does that cost look li- Like, what are
you implying, assuming from a, a how
much costs go down over time to make this
actually work from a P&L perspective?
Iâ¦
It'd be, it'd be interesting
to have somebody come on and,
and describe that P&L for sure.
Martin: Yes.
Should we switch gears and
talk about some of the other
fundraising rounds from last week?
Kevin: Let's do it.
There were a lot of funding rounds
to go through from last week.
Martin: Yeah.
Um, okay, so first up is Alan.
Raised 480 million euros.
I think weâ¦
Yep, 555 million American
dollars at a $6.3
billion valuation.
This caught, I think, both of our eyes.
So the, the LinkedIn post
from, uh, Jean-Charles shared
some interesting stuff.
1.1
million members, 800 million in euros.
Sorry for switching back and forth.
In ARR, growing 53% year over
year, profitable in France.
Live across France,
Belgium, Spain, and Canada.
What do you make of this?
Kevin: I, I think it is cool to see it
in InsurTech that is gaining momentum.
Obviously, here in the States we, we had
our experience with Oscar, Bright, Clover,
Harken, um, there were a few others back
in like the 2015 to 2020 era, right?
It is really hard building a health
insurance company from the gRoundup,
um, and trying to grow that.
And so m- part of me, kudos to them, 1.1
million members is pretty incredible.
Um, that's cool to see.
The other is, the other side of the,
the spectrum here is it's a bit funny
to me to see comments like, "We're
profitable in France, live across
France, Belgium, Spain, and Canada."
It's like, how do you tell me
that you are actually unprofitable
organizationally without telling
me that, a sentence like that?
Because otherwise you would
have said, "We are profitable."
Yeah.
Like, so France, I would presume, given
how you pronounce, pronounced the, the
company name, I would have pronounced
it as an uneducated American, Alan.
Uh, presumably France is their core
market where a majority of their 1.1
million members are located.
Uh, they're in three other
markets that must be notâ¦
I, I, I mean, the profitability
of France must be marginal and
being offset by unprofitability in
Belgium, Spain, Canada as it expands.
And to me, that, like, it invites
the question, the issue that these
insurance companies have faced,
which is insurance just isn't a great
business at the end of the day, despite
how much time we spend talking about
health insurance and its role in the
American economy and so on and so forth.
Like, at best case scenario,
you're generating 3% margin
on your book of business.
More normal state, maybe they're
at, like, 1% margin, uh, in France
right now, and they're probably
at negative, I don't know, 3 to 5%
margin in those other, uh, countries.
It's just a hard business
to, to scale up and run.
I don't know.
Martin: Yeah.
Kevin: What do you think about it?
Martin: So I, I know the company because
the company that I worked at when I
lived in France used Alan for their-
Kevin: Can you, can you
pronounce it the French way?
Martin: Alan.
Alan.
Uh, no, I'm n- I'm not, uh, like any of
the actual French people are gonnaâ¦
Kevin: Is that, is that-
Martin: It's been a while.
Kevin: Is that the correct pronunciation?
Martin: Alan.
I, I-
Kevin: Yeah.
Martin: N- no.
You shouldn't ask me this-
Kevin: Okay.
Martin: Because my French is very bad.
We should ask an actual French person.
Um, but yeah, so, so the French
employees at the French company had
access to Alan, and they loved it.
So the way that, that French health
insurance works is you've got single payer
from the government, and you use that.
When, when you go to the doctor, you go
and you pay 100% of the cost up front.
Now, the, the, the cost is
a lot less than it is here.
It's like 25 bucks, uh, to go see a
primary care doctor, but you, you pay
100% of that up front and The government
reimburses their share, about 70%,
via direct deposit in a couple days.
And then if you have something like
Alan, a mutual, they reimburse the rest
of that 30%, like, th- your 30% to you.
So your employer is paying them, I
don't know, 50 bucks a month, and
they're holding onto that, and then
when you go to the doctor they're
just basically h- handing that back.
And so the main way that Alan, you
know, the, Alan makes money is the float
on that 50 bucks a month or whatever.
The second way, and they, on their
website they have a helpful infographic
of, like, revenue and, and where it
comes from, is a per member per month
acc- uh, y- fee that they charge.
And it's just the float is, like,
gonna not be very much, right?
I mean, it's, like, gonna be, it's gonna
be pretty narrow and competed away.
The, uh, or, or, or bid away.
The, the per member per month fee buys,
like, oh, y- y- you can get glasses.
It's like a Warby Parker but, but French.
Um, you can get, like,
uh, musculoskeletal, you
know, alignment stuff.
Like, it is basically a platform
play saying, like, "Give us, you
know, $5 per member per month.
We will use that to bring some cool stuff
on the platform, but also, um, you know,
like, let people sort of use our platform
to get access and, and buy market share."
It does, it doesn't strike
me as a bad business.
Like, I, I think that in a, in a
single-payer or government world,
like, it is an, an interesting way
as an employer to, like, do something
that's cooler than the random old
mutual run by, like, three guys who
just like, you know, send you a check.
The valuation is what I think is,
is hard, which is six X revenue.
More than six X revenue,
almost seven X revenue.
Like, that's, that's a lot for
an insurance company that is, you
know, probably doing 1% margins.
Kevin: Mm-hmm.
Martin: Best case.
Kevin: Yeah.
Yeah.
Publicly traded insurance companies
right now in the US are sub one.
Martin: Yeah.
Kevin: Right?
Martin: I think, uh, Oscar is, like, .5.
Yeah.
So, so that's tough.
That's tough.
But cool company, interesting
to get a taste for what's
going on outside of the world.
People loved it.
People like- Yeah ⦠they, the
companies in France, startups in
France brag about having Alan versus
the other mutuals that you have.
So it is like a genuine
perk, but, you know.
Kevin: Yep.
If you were gonna try to articulate
the narrative that would get it to be
worth the multiple that it's at today,
what, what would the narrative be?
Is it more international expansion?
Martin: Uh, like my, my sort of cynical
take on, on French tech companies,
and I'm sorry Emmanuel Macron, is
like probably what Alan has is a
slide on this thing that's like,
"And then we're gonna go to the US."
Like, the $6 billion valuation
hinges on you entering a market where
you can do better than 1% margins.
And if your 1% margins are mostly, like,
employer opt-in fees- Mm-hmm ⦠like,
you need to be able to charge actualâ¦
You need to be able to make actual money
on your underwriting business, and the
place that you can do that is the US.
Um, so I don't know.
I mean, like, I, I, I think it's,
like, it's entering the US and-
I wouldn't recommend it.
Um, but it's kind of fun to think
about, like, Oscar, Oscar and Alan
are s- sort of some combination that
could, that could facilitate that.
It is just not gonna
happen at that valuation.
Yeah.
Because I think we looked, like Oscar's
at, like, an $8 billion valuation.
Kevin: Mm-hmm.
The benefit of being a private
market company these days.
Martin: Sure.
Kevin: You get priced at, like, the one
end of the spectrum versus public markets,
which get dragged out into the middle.
Uh, you know, uh, that's
how the markets are working.
Martin: There was, speaking of insane, not
insane, but eye, eye-popping valuations,
uh, $107 million seed round for Trase.
Kevin: Yeah.
This wasâ¦
I, I mean, that's a lot of
money at the seed round.
I, um- Yes ⦠uh, so Trase is another
company in kind of the agentic,
uh, AI operating system space.
It is coming out of a venture
studio called Red Cell Partners.
Red Cell Partners, um, the, the gentleman
who founded it, Grant Verstandig, um, sold
the business to Optum 10-ish years ago.
Kind of one of the big original, uh,
at least in this last digital health
startup life cycle, one of the big
exits in, in that time, Rally Health.
Um- Red Cell is focused on
regulated industries in general.
So I think it's, if you go to their
website, uh, it's healthcare, but
it's also cybersecurity, national
defense, um, type stuff as well,
and it seems like Trase is kind of
picking up that theme across healthcare
and other regulated industries.
Healthcare is clearly a
big part of the talk track.
In the press release, it talks about their
rollout with Duke Health, and I think
in particular the cardiology practice
at Duke Health, and they talk about how
they are automating, um, faxes inside of,
inside of Duke Health's cardiology group.
And to me it's like, that's a pretty
straightforward use case for how you'd
go in and deploy AI agents if you were
going into a health system and like,
how do we start making this better
and more streamlined using AI to help
improve operations of the system?
That seems like one of the
natural places to start, right?
Have AI just automatically read
through every fax you're getting
and you're sending out and, um,
and automating that data process.
I, Iâ¦
It's fascinating to me
to then juxtaposeâ¦
That, that seems like a really interesting
exercise of process improvement that,
that health systems should be doing.
Juxtaposing the startup raising 170
million, $107 million at the seed
round to support that is where I
start to go, what, like what is,
what are you using $107 million for?
Which I think will be fun
to continue noodling on.
Martin: Yeah.
Another large round, same sort of
similar order of magnitude, Cadence
raised a Series C led by Spark Capital.
Uh, what, what is the Cadence business?
It's also, by the way,
Duke, Duke on here again.
Kevin: Love to see Duke
logo everywhere these days.
Uh, Cadence has grown as a remote
patient monitoring platform, right?
It was kind of one of the leading
fee-for-service remote patient
monitoring platforms that's taken off.
That space in general, as we followed
along with, has started to receive more
scrutiny in terms of billing practices.
UnitedHealth notably tried to change
their policy on remote patient monitoring
on the whole, but walked that back
after some pushback on that policy.
But that's where Cadence's core
business has been, and, um, there's some
questions in there of, like, there's
a lot of good in the remote patient
monitoring space happening there.
There's also seemingly a, this
rising sentiment of concerns
over what's happening from a
billing perspective for practices.
I personally get a ton of emails from
just, like, random people suggesting
that I should, uh, adopt remote patient
monitoring solutions on top of Health
Tech Nerds because we could grow our
revenue from that, which seems indicative
of, of the concerns that, that, that
people have about this space when
those sorts of emails are just getting
mass blasted out to the industry.
Like, "Oh, hey, increase your
collections by X percent by having this
remote patient monitoring tooling."
I do not expect Health Tech Nerds to be
getting into remote patient monitoring,
nor peptides as we discussed last week.
But nonetheless, it is an indicator
when you start getting those emails of
perhaps the billing activity that is
going on in the broader market, when
those emails start coming through and
those pitches starting, start to happen.
Interestingly, Cadence in this
funding round, their, their narrative
is, is much broader than that.
I'd be curious your take on
the, the broader narrative
and, and how they pivoted it.
Martin: Yeah, I thought it was, I
thought it was a nice sort of story
and transition about, yeah, there,
there's like a little bit of a, an odor
associated with remote patient monitoring.
It, it, it feels, can feel a little
bit scammy, but they're, they're
talking about chronic care ma-
like chronic disease management-
Kevin: Mm-hmm.
Martin: That's fully
automated, leveraging AI.
And it, and they're specifically
calling out, you know, for
underserved rural areas.
Like, that is a narrative I
think that is very of the moment.
Um, we are going into an environment,
I just saw another story of a hospital
that closed a couple years ago in North
Carolina, and they'd been hoping to
get it back open, and it's still not.
Um, and it's like, yeah, those,
those people are gonna end up at
Duke when things degrade sufficiently
or they decompensate sufficiently.
And Duke would like to be able to
make some money offering them remote
care, and a part of that is gonna be
remote patient monitoring, even if
we call it something else that, that,
that feels a little bit less scammy.
So I, I, I- It is a, it is a, I think
that, that is maybe going to be the
theme for the next, e- for, for both
Cadence and for our next conversation,
is this is a thing that you hear
someone describe it and you're like,
"Oh yeah, makes a ton of sense.
We should definitely be doing that.
Medicare should definitely
be paying for that."
And it becomes an implementation question.
Like, how do we do it and make sure
that we're getting actual value for
the Medicare dollars, and it's not
just, um, like getting blasted out to
everyone, including Health Tech Nerds.
Not a Medicare, uh, billing
entity asking if we would like
to add it to our, our stack.
Kevin: Yes.
Cadence in the press release talked about
they're implemented at 20 systems today.
They're trying to grow to a h- they're,
they're at 100,000 patients today.
They have bish- ambitions to
get to 10 million patients,
um, in a future state, which
I, I think it's interesting to think
about how they, they get there.
It, to your, to your point on current
state of health systems, it rhymes a
little bit with the narrative I feel
like we've heard from John Kao and others
at Alignment, where when he talks about
alignment and their conversations with
health systems, part of it is this works
really well with branded systems that are
over capacity from a beds perspective.
In which case, you wanna prioritize
commercial volume inside the hospital.
You wanna figure out how do you, how do
you provide remote type care to Medicare
Advantage, Medicaid populations that
pay you less so that you can manage
your profitability while being kind
of the holistic solution for, for your
market and take care of everybody.
And I can very much see how Cadence's
expanded narrative fits squarely
into a conversation like that.
It has been a conversation going
back a decade now, since I was in a
health system leadership role of like,
yeah, conceptually that makes sense.
Historically, health systems never
actually seemed to like really act on it.
You could have that conversation and yes,
talk about how if you're over capacity,
it would make sense to shift, you know,
Medicare, Medicaid, uh, uh, to commercial
inpatients and do more remote monitoring,
more upstream preventative care.
But it was hard to actually
like fully get there.
I am curious if the headwinds that are
now facing health systems are strong
enough that that is actually changing
that behavior, so that they are now
saying, "Oh yeah, like this is the, our
profitability situation is dire enough
that we need to act on this, and we're
going to act on it, and here's the handful
of ways in which we're gonna do it.
We're gonna think about what our
plan partnerships look like in MA.
We're gonna implement tooling like this
to help do more remote monitoring, um, out
in the community, keeping people at home."
It's a really interesting narrative,
um, that I'll be, we- uh, think
is worth keeping an eye on.
Martin: Absolutely.
Let's talk about Hera, which
is care coordination forâ¦
I mean, it feels to me like
sort of a similar narrative.
I think Hera conceptually, you
know, cool company, 27 million
led by Bain Capital Ventures.
They are serving seniors, they're
billing chronic care management
Medicare fee-for-service codes.
Um, so basically that is where a
provider is saying, you have, you
know, two or more chronic diseases.
We are going to help manage those chronic
diseases, um, and get reimbursed for it.
And typically, those are not
done by the provider, but done
by a, uh, billed incident two.
So in the case of Hera, they are using
1099s, paying them 30 to 60 bucks an
hour, and not required, but a plus they're
saying licensed clinical social worker
or master's level social worker or RN.
Um, I believe to bill those to Medicare
you have to be a healthcare professional.
That includes medical
assistants, um, which isâ¦
They, they let me get certified
as a medical assistant, so it's,
it's not that, uh, not that-
Kevin: Anybody could do it.
Martin: Basically anyone
could do it, yeah.
As long as you don't get
squeamish about doing blood draws.
Even if you do.
Um, I'm, again, I, I made it through.
They let me.
So I- it is one of those areas, we've
seen a, a handful of these, these
fundraising announcements recently.
Hera seems like a, a
sort of smart take on it.
They're also mentioned
partnering with health systems.
It- it's one of those things that you're
like, yeah, Medicare and chronic disease
navigation are confusing, and it would
be nice if we could have some people
who helped the people navigating them.
Um, a- and if we could pay them,
if we could pay for those services.
It also seems like an area that I, I,
I would not be surprised if we get med
pack reports in the next couple of years
about an explosion in CCM code billing,
and what are we gonna do about this
crisis in CCM billing, and maybe we
need WISeR but for CCM, and- You know?
And so I don't know.
That's, that's kind of my reflection
on it is, like, absolutely to me
seems like something that would be,
would be good to have, um, or nice-
Right ⦠if we could afford it.
And I, I do worry that the implementation,
not of any sort of one specific
company, but the sort of secondary
and tertiary, um, effects of this are,
like, in a couple months, Kevin, you're
gonna get an inbound saying, "Increase
your revenue for Health Tech Nerds
by adding CCM billing capabilities."
And we'll say, "Okay."
Kevin: Yes.
Uh, I, I mean, it'sâ¦
It almost seems like a natural
part of these narratives in the
healthcare market when you haveâ¦
Uh, I mean, when you go to these
companies' websites, it seems
unambiguously good to me to s- like, when
you read the narrative around, nobodyâ¦
uh, I'm on another company's website.
Nobody should navigate healthcare alone.
Yeah, you, you can't argue with that.
Healthcare is hard to navigate for
seniors going through health conditions.
Itâ¦
Like, I would want for my family
members to have access to a individual
who can help them navigate healthcare.
That seems unambi- like, y- yes, right?
Who's gonna say no to that?
And then the question becomes,
how do we societally implement
that as a health system?
Well, you implement these CCM codes.
That allows for billing for it.
You have incident two, so then
you can, you can bill under the
provider so that there's more margin
to collect, um, uh, for the group.
And you start to then get into these
scenarios where for good actors, it is
unambiguously a good thing, and for a
lot of these companies raising in the
space, uh, like, it'll be fun to watch
their journey, the impact they have.
Inevitably, to your point, it
also seems right for companies
saying they're doing the right
things who may or may not do that.
And that's just the dynamic of the
industry in all of this, right?
And it's a subjective belief of
like, is this actor good or bad?
Do I know these people?
Do I trust them?
A- and that's part of what makes
this industry so hard to grasp.
Um, because both of those things
happen at the same time under the
same billing program, and depending
on your view of it, uh, and how you
weigh the trade-offs of those things,
it can, it can go either way, right?
Martin: My modest proposal is in addition
to medical assistants and nurses, and
we should add MA brokers to the list-
Kevin: Ooh.
Martin: And let MA brokers ha-
add a little sideline in CCM.
'Cause they're already regulated
and much easier to regulate
than, like, a random person.
You can yank their, their ability to
sell MA, and they know the programs.
So that's my-
Kevin: Yeah.
It's, it's interesting to me because,
like, a, a general theory I have is the,
the core unit of scale in healthcare,
like the good thing, is a, a trusting
relationship between two humans.
That can be a patient-provider, but
that can also be a patient-MA broker.
If it's somebody that they trust who
is, um, equipped to help them navigate
the system, yeah, to your point, like
that, uh, to me that is a good thing.
The, theâ¦
And that is both the blessing and curse
of American healthcare is there's a
lot of people who, who are deserving
of trust who we should be supporting
and enabling to do more, and then
there are a lot of folks who see that
and take advantage of that trust, and
that is where we start to have issues.
And again, it's just ki- it's,
it's how the world works.
Martin: It is.
Well, let's quickly talk about
Upside, and after Upside I think
we got, we got a packed agenda.
But I do wanna hit on Upside,
'cause it is a fascinating business.
They raised $20 million, and they
are helping with housing instability.
I think youâ¦
When we were talking about them
and reflecting on them, they're
focused on the payer market.
They're saying, "Okay, there are these
payers that have money that they need
to spend," and housing instability
has a lot of sort of downstream
impacts on health outcomes and spend.
When I lived in Colorado, we used
to say that Denver Health, the
local safety net hospital, was the
most expensive hotel in the city.
It was like seven grand a night.
Um, and so if you can get someone
into stable housing versus at Denver
Health, then there is some, some, uh,
real savings to the payers and, and
then, you know, their Medicaids are
downstream from that, the taxpayers.
Um, so it's a, it's a good story if it-
Kevin: For sure.
Yeah.
I, as I understand it, they are working
largely with Medicaid plans today.
They're going to those Medicaid plans,
and, um, they are helping with housing
for folks under those plans that,
um, have instable housing situations.
What caught my attention, the
engagement numbers that they cite for
this population are striking to me.
Like, as I think about that
population, uh, from, like, traditional
healthcare payer/provider lens,
that is the hardest to reach of
populations in, in healthcare, right?
This is, like, the most complex
medical, social, um, group out there,
and they are citing that they are
connecting with 90% of eligible
members, so the members that the payer
are sending to them to connect with.
They are enrolling 85% of the 90% that
they connect with, and then they are
stabilizing housing for 50% of everybody
eligible who is sent to them, which
is really impressive numbers, right?
Now, I'm sure it's, it's small and
early days still, and to me, that'll
be the most interesting part of, of
this sort of model to watch, is how
does it scale up over time and how
do they consistently do it across
payer types with broader populations?
How big can that population get?
'Cause to me, this is always
the question with these kind of,
like, tip-of-the-spear, top 0.1%
cost, uh, populations is, uh, as you
expand that initiative from that, like,
top cost bucket to- populations that
cost less or aren't the persistent
super utilizer types, it becomes
harder to justify the financials.
And that is why I reference in the
newsletter, one of my favorite, favorite
articles on healthcare was, I think it was
2019 or 2020, Bloomberg was highlighting
what United was doing in Medicaid
housing, a program called My Connections.
Jeffrey Brenner was running it.
Jeffrey Brenner is Camden Coalition.
They did the RCT on the hot spotter model.
This is, like, the original
thinkers on these sorts of programs
for these sorts of populations.
And it highlights both the incredible
opportunity that we have for
helping these populations, and
also how hard it is to scale as
you get outside of that, like, 0.1%
of population that costs
over $50,000 a year.
Because when you start to add all
the costs together, uh, from these
initiatives, they become challenging.
Now, this is a slightly different
model, as I understand it, so it
doesn't have some of the same, um,
dynamics that, that My Connections did.
So the, the analogy isn't totally spot on.
But nonetheless, I think it's
interesting to, to learn from previous
efforts that have been in the space.
And I, like, it- that article does
a great job highlighting dynamics
at play in the housing market.
Yeah.
So I think it'll be a, a really
interesting company to keep an eye on.
Obviously, there are a lot of
general headwinds facing Medicaid
right now, but this actually strikes
me as a market where there seem
to be some interesting tailwinds.
Martin: Yeah.
Let's move on and talk a little bit
about some big news from last week.
Cityblock and Homeward are combining.
So Cityblock, uh, we got the
news sort of in rapid succession.
Endpoints, I think, broke the news
that they were talking, and then Axios
said that they had, uh, they had, uh,
you know, they had sort of signed.
They, they were moving forward with it.
Cityblock is, of course, the
Medicaid and duals business
focused on, um, urban environments.
They've had some good
success in the clinicalâ¦
on the clinical side of things.
They've reported some great outcomes.
We tried to tally up how many markets they
were in, and it's between seven and nine.
Um, last week, their website,
the website's differed.
But, uh, yeah, that's their focus, is, is
urban Medicaid and dual patients with a,
a model that is thinking about the patient
holistically, using that dual capitated
payment or the, the Medicaid capitated
payment to make some investments in stuff
that is, um, you know, f- more focused
on upstream or preventative health.
Homeward is focused, uh, sort of
similar in spirit, but focused on
rural areas and Medicare Advantage.
And so theâ¦
On its face, I mean, it seems like a
pretty sort of logical combination, right?
For sure.
Cityblock is adding MA as a, like,
general MA as a line of business.
They're diversifying from purely a urban
focus to urban and, and rural, and they're
adding, uh, some payer contracts and payer
partnerships, which should make business
development, um, a little bit easier as
they go and, uh, broaden that, thatâ¦
Like, they can bring the MA
business to their current payer
contracts, and they can bring their
Medicaid and duals business to
their, the, uh, Homeward contracts.
So makes sense.
I think part of this story we would be
remiss is saying both of these companies
were sort of high-flying companies
with, with sort of lofty valuations.
I'm gonna pull up the Forge
chart for, for Cityblock.
Um, but you can see, uh, that in the
sort of pandemic and post-pandemic era,
they, they raised at a pretty large
valuation, and then that got cut pretty,
um, pretty significantly last year.
And so it is aâ¦
I think part of this story is, like,
frothy market, a ton of, uh, like,
really high valuations, and now we're
kind of seeing the shakeout happen.
Kevin: Yeah.
I, I mean, I-- you can kind of see the
cautionary tale of s- SoftBank coming
into healthcare 'cause they saw massive
opportunity and led the, the massive
round in Cityblock at that point in
time, which it was indicative of the
market environment back then, right?
There was a lot of excitement around the
opportunity, rethinking how the industry
works, so on and so forth, and k- the
laws of gravity of the industry took
hold and, uh, you know, the last couple
years that we've been tracking along
have been challenging across Medicaid
funding, um, uh, in those environments.
And, you know, we were just talking
with Upside about some of the
tailwinds emerging for the market.
Uh, this has been where the headwinds
have, have hit really hard, right?
And I think it's been a tough road for
organizations like Cityblock and Homeward,
even in Homeward, kind of more MA duals,
but generally speaking, both under the
broader headline of value-based care.
Uh, Homeward had a similar s-
trajectory, uh, back in that 2022 era
where they launched with 20 million
and then five months later I think,
um, they were raising another 50
million at a 345 million valuation.
Like, that is r- really rapid growth
and heavy valuations for a really small
organization trying to do something really
hard, which is reinvent rural healthcare.
And, um, I think ultimately it serves
as a, as a reminder of how hard that
is despite the investor interest and
excitement in those models at the time
and I think for future entrepreneurs
thinking about the space, like it, it's
a, it's a good reminder of thinking
about funding alignment coming into
the model and, um, how to grow your
business sustainably over time.
Ultimately it, it strikes me as a
useful move for Cityblock to drive the
diversification as you mentioned, as
Cityblock attempts to kind of reach
the scale it needs to be a meaningful
organization in Medicaid markets serving
these populations, can't be displaced,
can't be kind of, um, jostled about
by local market issues and I'm curious
to see how this plays out for them.
I, I would love to see Cityblock succeed
and show that a company can do this in
the Medicaid market and work through
the, the headwinds of the last several
years and it'll be fun to keep an eye on.
Martin: Yeah.
I'll also say there's, you know,
the sort of near term headwinds in
call it urban Medicaid, right?
We talk a lot about how, uh,
the Rural Health Transformation
Program is $50 billion against
120 or $30 billion of cuts.
Um, it's the, the sort of, and th- that's
the headline for rural impact, but it's
about a trillion dollars in overall
impact on Medicaid, and that the rest
of that trillion dollars, right, the
trillion less 120, is in urban areas.
And so that is, that is headwinds
for the CityBlocks of the world,
um, and, and how they will digest
that, less so in the dual space.
Um, but it is, I think, uh, rural
is, is definitely an area of interest
right now, and so it, it strikes
me as sound to be adding some rural
capabilities at the moment when-
Kevin: For sure.
Martin: Large bites of the apple are
happening at, uh, on the, the urban side.
Should we talk about UpDoc?
Kevin: Yeah, let's do it.
So UpDoc last week announced a FDA
clearance for its LLM alongside 18
million in seed funding to go with it.
But they had a, a, a, a article worth
reading in Wall Street Journal Pro that
framed UpDoc as future of concierge
doctor, medicine between doctors
visits using LLM to manage care.
Um, and notably, it's the
first call it LLM that's been
approved by the FDA for that.
The interesting part of this is thatâ¦
So we went back and tried to
find the fi- the FDA clearance.
The, what we can find that's publicly
available is this 510K that was issued
in December, which is, is much more
narrowly scoped than what I would
think of as like a concierge doctor
when we're talking about that, right?
The, the 510K that was approved in
December is around adjusting insulin
doses, and it's based on a, a pre- the
510Ks are based on predicate devices, so
things that are out there on the market,
and the FDA looks at the thing that's out
there on the market and says, "Is your new
thing similar enough to that where we're
not worried about the clinical impact?"
If yes, you get approved,
uh, via this 510K.
And so it's looking at this predicate
device that's called the D-Nav system,
um, which itself was approved, I
think, in 2019, and says, "Yep,
you guys can, can do this UpDoc.
You can titrate insulin dosing in
this, like narrowly defined use case."
Which makes total sense to me.
I, I, I think it's great that
they got that approval for this
defined insulin dosing use case.
I think it is then worth keeping an
eye on how they intend to expand from
there to kind of this broader concierge
doctor use case, and how they think
about FDA approvals within the scope
of that because the FDA approval isâ¦
I, I don't fully understand it
as it works in this use case.
The Wall Street Journal Pro article was
talking about how after this clearance,
the Cleveland Clinic will now start a
six to 12-month pilot, uh, to determine
its impact on patient outcomes.
Which Martin, I, I, fundamentally,
I do not understand what is the FDA
approving if a health system like
the Cleveland Clinic says, "Okay,
now after the approval, we're gonna
do our study for 12 months on how
this impacts patient outcomes."
It just doesn't compute for me.
Like what the, what's the
point of the FDA approval then?
Beyond like a stamp that allows
you to put out a press release
Martin: I do not know.
Kevin: Yeah.
I- it's confusing to me, and this isâ¦
I, I, Iâ¦
We've talked in, in previous
newsletters and shows about how we're
in this really interesting regulatory
environment for clinical AI, and it's
not clear to me how this plays out yet.
But it does strike me that it makes more
sense to be following the route that
Utah's going with Doctronic and others
of test these things out live, learn how
they're working, and use that to build.
Which is ultimately what UpDoc
is now doing with the Cleveland
Clinic in a pilot, right?
Like, they're gonna test it out for 12
months, see how it works and scales.
Like that, that makes more sense
to me than the, the FDA 510K, "Hey,
we're gonna have, uh, clinical
studies off 32 patients that are in
2023 and have approvals in 2026."
Like, I- it just, umâ¦
I don't know what I think of
the FDA's involvement here.
Martin: You can understand why there
would be a desire for, from the
startup community and the innovation
community for the FDA to preempt this
happening on a 50-state basis, right?
Yeah.
Uh, like going and navigating 50, 51,
um, state laws on AI regulation of
the practice of medicine and having
50, approximately 51 fights with, uh,
doctor, like, uh- Boards ⦠boards
of medicine in those states-
Kevin: Yeah.
Martin: Is, sounds deeply
unpleasant and expensive.
On the other hand, like, it is, I think,
how you build a sustainable, a, a sort
of a, a sustainable body of evidence for
how we regulate this thing, is not by
just, like, kinda one-shotting and hoping
that the FDA has thought of everything
and then, and then throwing out.
And not saying that that's what they're
doing here, but you can see why.
Kevin: Mm-hmm.
Martin: Uh, you can see
why there's the appeal.
I want to talk about lasers before
we, uh, invite our guest on, and
so I'm gonna stop us there and talk
about lasers, because holy smokes.
So how does, how do lasers work, Kevin?
Kevin: I, I still feel relatively
uneducated on the answer to this question,
having learned about lasers for the first
time in the past couple weeks, uh, after,
you know, a while working in the industry.
So the stop loss market has
been, has piqued my interest
for some time now, right?
We heard, I forget when the earnings calls
were, but Cigna and others were talking
about how stop loss market has issues
because, as the narrative goes in my
head, you've got this rise of high-cost
claims that have been happening because of
specialty pharma, because of more complex
inpatient, um, things like that, that are
driving up the number of claims that are
exceeding, call it, a million dollars.
And that is impacting the stop loss market
because that invokes stop loss coverage
and makes stop loss less profitable.
So we, we heard about that and how
groups like Cigna were trying to adjust
their stop loss plans to, uh, adjust
for driving profitability and stop loss.
So last, I think it was last week,
maybe two weeks ago, I saw, uh, a
story from Marsh & McLennan about
how they were effectively using a
laser to help employers manage, um,
and to help provide stop loss to an
employer for a high-cost, uh, group.
So effectively, what these
lasers- And is this, like, a
Martin: Laser pointer-
Kevin: Yes ⦠or- No.
The, the laser is a moniker for lasering
in on the one individual or handful
of individuals inside of an employer
who have a very high expected spend
for that year, and essentially carving
them out of the stop loss program.
So this is what Marsh- Marsh's
case study was 600-life employer.
There's one employee who they
expect to have a really high-cost
procedure in the next 12 months And
so for that employer, their options
were either, one, you pay a $1.3
million increase in premiums
for the entire plan, which
impacts everybody, right?
Or two, you implement this laser
for this one individual where you
essentially, the employer, has a super
high deductible where the employer has
to pay for it if the event happens.
The stop-loss carrier says, "W-
we want nothing to do with this,
this one employee and their event."
And in this case, Marsh & McLennan talks
about how they have a team that went and
looked at the data around this employee
and determined that they didn't think
that this employee was going to need
the procedure in the next 12 months.
And so they recommended to the employer
that you should get this l- you,
you should go the route of getting
this laser because you are not going
to be ultimately on the hook for
paying this because your employee
isn't going to have the needed care.
W- so Marsh & McLennan's case
study is, "Hey, look, we saved this
employer roughly a million dollars
because we were correct and patient
didn't need this care in the year."
Which Martin, to me, is like, o- on the
one hand, I a- I appreciate the innovative
spirit and ability to, to figure out
how to navigate this cost environment.
On the other hand, it like, it, it
breaks everything in my head about how
insurance should work and the, the, theâ¦
What cost pools do.
Because like, it, it effectively seems
like you are targeting the one really
high-cost person and saying, "Mm, no,
we're, we're not covering that anymore."
Which is likeâ¦
that's what insurance is here for, no?
Martin: It's so funny that they call
it lasering, because you really get
this mental image of, like, you'reâ¦
It's a 600-person all hands, and you're
like, "Yep, Steve, laser pointer.
He's, uh, yeah, he's been lasered."
Kevin: Yeah.
Martin: Yeah.
I, I think that we are seeing,
like, the promise of, you know,
maybe everyone will get on ICHRAs.
Like, that, that, that isâ¦
I'm, I'm still bullish in the long run
on ICHRAs, but clearly in the short
term, everyone is kind of being like,
"We gotta work on employer costs.
Like, that's our lever for,
for fixing this stuff."
We've seen a bunch of fundraising rounds
that are focused on the employer, uh, in,
sponsored insurance space, and I saw aâ¦
I think it was a JAMA article, and
it was like the, the, sort of the
secret weapon of fighting healthcare
costs, self-insured employers.
And this feels like, you know, it's like,
okay, every 10 years we're gonna do this.
Um, I remember when that was, like, theâ¦
I was doing a startup and I
was talking about the secret,
the secret weapon of this.
But yeah, we're, we're seeing lots
more interest, activity in the
self-insured space, ways to get smaller,
uh, smaller groups self-insured.
And you have to wonder, is, like,
with the introduction or the, the
spread of lasers, is that going to
be, continue to be a viable move?
Like, if you're like, yeah, you, you
could do self-insured for your 20-person
group, 'cause we'll bundle you up with
a bunch of other people, but hey, oops,
we bundled you with someone whoâ¦
Or you have a lasers, we're actually
kicking you out of the bundle.
Or your one person is not part
of the bundle- Yeah ⦠anymore.
And I don't know.
I, I, it seems like an open question.
Kevin: Yeah.
It's one of the things I was reading
that was explaining lasers and,
you know, there's all theseâ¦
You can imagine that somebody is, is
willing to work up different financial
versions of what a laser might look like.
There's your green laser pointer,
there's your blue one, there's various-
Martin: Yeah
Kevin: Degrees of intensity
of light, so on and so forth.
Uh, you can, you can make up
different versions of these.
But ultimately, the, the article was
like, this is a, it's a controversial
practice, both because of the
implications for the individual, but
also because- The, the Marshall McLennan
is the good outcome for an employer.
You don't, you don't bear the
costs associated with that.
In the, in the scenario where the
employee actually needs that care,
all of a sudden you've got the
employer now on the hook for, uh, a
significantly higher deductible that the
employer has as part of their policy.
And I justâ¦
It, it seems like we are in an
ever-evolving pass the bag of healthcare
costs from one group to another.
Cigna and the stop loss carriers get
annoyed because their profitability goes
down because the rise of high-cost claims.
What do they do?
They figure out ways to pass the bag
to the employers and say, "Oh, we're
gonna introduce these lasering policies
so you, employer, have to take the
risk on for that increased cost."
What is the natural next step in this?
Employers aren't just going to
accept that risk and take it on and
be like, "Oh, I as a small group
employer might now go out ofâ¦
go bankrupt because I have these
high-cost claims that might come through
because of one or two employees' health
issues that I have inside my business?"
Like, what are you, what are you
doing if you're a small business owner
and that's what's presented to you?
I, I, I, like, you know, you continue
passing the bag, which has really bizarre
implications for the insurability of folks
with these, um, high-cost conditions.
So I, I, I remember one of the
conversations we were having on
specialty and gene therapies about howâ¦
And this was in the, um, it
was in the 60 Minutes episode.
An employer didn't wanna cover the
cost of gene therapies for, uh, their
employees because it wasn't written
into their policies, and the state
Medicaid agency ended up paying for
it because they were, you know, um-
Martin: Payer of last resort.
Kevin: Payer of last resort.
And if that's, like, again, we're
passing the bag from group to group.
If that's the g- group we pass the bag to,
I- I've got bad news for what's happening
to healthcare costs and for states in
those groups because the underlying
high-cost conditions aren't changing.
Anywayâ¦
Martin: I think that is actually a great,
perfect segue for our guest today, Dr.
Jeremy Fries.
Welcome to the show.
How are you today, Jeremy?
Jeremy: Greetings, fellow nerds.
I just learned something.
That is fascinating.
I have to say-
Kevin: Have you heard of
lasering before, Jeremy?
Jeremy: Well, I kind of feel likeâ¦
I'm gonna use Martin's laser.
I kind of feel like there's one of these
pointed straight on Prior Auth right now.
So that's, that's the only
laser that I know, but, uh, no.
I've, I, I have not, so that's gonna
require some education on my part.
Kevin: Yeah, I was like,
I was mind blown by it.
Anyways, Martin, kick us off.
Martin: Well, yeah.
So we are Prior Auth respecters
and appreciators here.
And so we, uh, at Health Tech Nerds, so
we are really happy to have you to come
and, and talk about how you're helping
kind of make that a, a, a better process.
Can you give us a quick refresh?
We wanna start with WISeR.
Can you give us a quick refresh on the
WISeR model, what it's focused on, how it
works, and what Humata is implementing,
um, to, to kind of help that in Oklahoma?
Jeremy: Uh, first, good
to see you again, guys.
Yeah.
S- My name is Jeremy.
I run a prior auth company.
All we care about all day long is
solving prior auth for patients.
Most of our customers
are big health systems.
We help them submit better prior
auths to every plan in the country.
And we've decided to participate,
uh, and are proud to participate in
the WISeR program, which is a CMMI,
CMS-sponsored program.
We have the great state of Oklahoma,
where we help, uh, say yes immediately
using our artificial intelligence for
the very limited set of prior auth
codes, again, in under traditional,
uh, fee-for-service Medicare.
And folks submit to us.
If our AI can say yes immediately,
great news, you go forward
and deliver care immediately.
If we can't say yes immediately,
then we've got an army of doctors
and nurses that take a look at every
single one of those and give an answer.
And this, the, the program in general is
being done across six different states.
As I said, we, we have one state.
Uh, there are five other participants
that also each have one state.
And like I said, ours is
the great state of Oklahoma.
Went live in January of this year, so
we've now got almost six months under
our belt, which is kind of crazy.
Kevin: Jeremy, I was reading a, I think
a CBS News article you were quoted in
about rollout of WISeR, what's going
on in Oklahoma, and it included this
interesting example of a, I think it
was a cattle rancher in Oklahoma, who's
talking about how they feel like they
might need to go to Kansas for their
care moving forward because of concerns
about how the program's been rolling out.
Can you give listeners here, uh, from
your perspective, what's going on with
the program, the rollout, and what you
would say to cattle ranchers like the,
the gentleman who was referenced in the
CBS News article about their concerns
about access to care in the state?
Jeremy: Yeah, so, um-
A-as you, as you all have been talking
about, prior auth is a process in
the United States that is a, is
a laborious, friction-laden one.
And so we're on a mission to make
that as seamless and as streamlined
as possible for both providers and
payers, and firmly believe that the
only way that you're gonna solve this
problem for the patient who's stuck
in the middle is if you automate the
submission and you automate the decision.
And what that, you know, what that means
is a provider has to submit an auth,
and, you know, that's done through the
traditional channels if, you know, if
they're not using us or someone like us.
And y- you know, if, if, uh,
and that has, and that needs
to be done in advance of getâ¦
of delivering care.
And so what that means is practices, uh,
across Oklahoma, but frankly across the
entire United States, this is already
being done broadly across commercial
insurance, Medicare Advantage, et cetera.
And so practices need to plan, and they
need to submit their prior auths upfront,
and if that's the case, then we can give,
uh, we can give an immediate answer, and
care can be delivered forward immediately.
And so this process, uh, is not a new one.
It is new under these 20 codes, and in
some circumstances, providers, you know,
submit these maybe later than they should.
And when that happens, it, you know,
it takes some time to turn around.
The, uh, the great news is, in
that example, we turned it around
immediately, and, and care could
have been delivered immediately, but
it was, you know, elected not to.
So it does take, it does take
some preparation and planning on
the provider's part, um, so that
we can get to an immediate yes
and, and care can be delivered.
Martin: One of the things that's going on
right now is there's been a ton of media
attention on prior auth, as you mentioned.
There's a, a-
Jeremy: Yeah
Martin: Big old laser pointed at
it, specifically WISeR as well.
And I think in, in our view, or I,
I won't speak for Kevin, I'll say
in my view it feels like it is an
election year and so some of this is,
like, convenient and some of it is
there's just, like, a negativity bias.
Like, the, theâ¦
There are not stories about where
doctors are running out and saying-
Jeremy: Yeah.
"Yay, let's do prior auth."
Martin: Right ⦠"My, my prior
auth was approved instantly."
Uh, they're saying like, "Oh,
in this one case where maybe I
forgot to submit it on time."
All right, so, soâ¦
But taking a step back, you're
focused on prior auth all day, 24
hours a day, seven days a week.
It is a, I think, sort of in a,
as I mentioned in the lead-in,
we're prior auth respecters here.
We understand that, like, you can't
just say yes to everything, that,
that, th- that we wouldn't have any
money left for things like roads or, or
schools if we said yes to everything.
So how are you, like, how are you
managing or navigating this, like,
persistent sort of negative overwhelming
bias against prior auth and then
the sort of the necessary, like, th-
that sort of necessary component?
It's like, it's not like they
picked these 20 codes at random.
They were codes that, that,
that were sort of hi- Yeah.
So I'll, I'll kind of pass it over to you.
But that's, I, I think a question
on our mind is, like, how,
how are you navigating that?
Jeremy: Yeah, the, the mac-- uh,
you know, I'll call it the macro
environment around prior auth, I think
you've described very well, Martin.
It i- it is challenging, and
it's because of the way prior
auth has been done in the past.
And yet, if we're gonna save the
American healthcare system, we need
to be able to help control costs.
And, and we need to make sure that grandma
and moms and dads aren't having surgeries
that aren't, aren't medically necessary.
And so we need this balance of checks
and balances on both providers and
payers to make sure that we can get
the right care, but we can't keep doing
it like it's been done in the past.
The reason prior auth has such a bad name
is because it does delay care in today's
world, and it, and it does have all
the negative connotations for a reason,
so it needs to be done differently.
And that's what, that's the reason
that we're participating in WISeR.
We're trying to prove that
it can be done differently.
You can say yes immediately and get
care swiftly, and make, and make
sure to protect both the American
taxpayer from paying too much
for things that aren't necessary.
But you guys, there's a whole bunch
of patients across the United States
that are having things done to
them that aren't, aren't valuable,
aren't driving to better care, and
we know there's enormous variability
of care across the United States.
That's been known for decades and decades.
That's not new.
And so how do we balance this process of,
you know, saving the American taxpayer,
but also saving the American patient and
making sure that this process isn't done
like it's been for the last thirty years?
We need to do it with technology
in such a way that we can submit
instantly, we can make decisions
instantly so that care can get delivered
Kevin: Jeremy, I wanna ask you a question
on the, the adversarial relationship
between payers and providers, and how
much of that can be automated away.
Iâ¦
One of the most interesting Substack
articles I've read in the, in recent
weeks was from a, I think it was a spine
surgeon, and he was lamenting how Highmark
Health moved to their own internal AI
prior auth, um, approval process away
from eviCore, which he preferred because
eviCore had a human who interpreted the
ambiguity of some of, like, the spinal
biologics that were being used in favor
of the surgeon, whereas the AI was denying
it because it was, it, it interpreted
the ambiguity differently and did not
think it was, uh, appropriate for care.
To me, it was, it was a crazy
moment because, you know, eviCore
has been referred to as evil
core in various press over time.
Physicians in general do not like it,
and yet here is a doc being like, "I
actually prefer what happened in the
past because human was involved because
they would interpret the ambiguity in
my favor and ultimately approve care."
To me, it is, it was such a reminder
of the tension that exists in these
payer-provider conversations, how
goalposts are moved over time, and it
invites the question of how much can
be actually be automated away in these
tense negotiations and conversations,
and a little bit of what I hear going
on in Oklahoma is revolves around that.
How do you think about, as a company
working on resolving those issues via data
infrastructure, via real-time processing,
et cetera, how do you think about getting
in the middle of that conversation
and resolving it in a productive way?
And how much can actually be resolved?
Jeremy: I, uh, believe very
strongly in several things, but
two things that specifically, uh,
relate to what you asked, Kevin.
Number one, we need, we need dramatic
transparency in prior auth We need to know
what requires prior auth, what doesn't.
We need to know what the
rules of the game are, period.
That, that's a huge step forward.
That can be d- that can and
only be done with technology
to make it visible to folks.
Part of what we've done in Oklahoma
is, is show what the rules of
the game are right in our portal.
These, this is the existing NCD/LCD.
This is the clinical criteria that CMS
has set to drive that transparency.
So number one is transparency, and I do
think that technology, both willingness
from, you know, both parties, but
also technology helps drives that.
And then number two, AI can,
can and should only be used to
say yes And I, I'm not-- I can't
speak to the Highmark example, the
accuracy or inaccuracy of that.
Kevin: Yep.
Jeremy: Um, that's not us.
But what I can tell you is our AI can
and will only be used to say yes, and
that means that if you've got the right
clinical information and it meets the
clinical criteria that CMS has set or
a payer has set, yes, go deliver care.
If the answer is, "Hey, it's not
quite right," then 100% it needs
to be adjudicated by a human, and
whether that's Evicore or Highmark
or, you know, somebody else, um,
but it needs to be done by a human.
So that's the way I thinkâ¦
The reason I think prior auth is the
use case that you can get providers
and payers to actually sit down,
guys, and I've seen it so many times.
In, in fact, just a couple
weeks ago in DC with Dr.
Oz, leading providers and leading
payers sitting down together say, "How
can we automate the 90 or 95%," or
whatever the number is that get to yes?
Because it's expensive and a pain in the
butt for providers, and it's expensive
and a pain in the butt for payers
when the answer should just be yes.
And so use computers to submit
better auths, use them to make yes
decisions, and then have the humans
involved on the ones that you have
to battle over, these 5 or 10%.
And that's the way-- And you deliver
transparency in that process.
That's the way prior auth turns from
being, you know, sort of the evil word
that it is today to something that
actually is done behind the scenes and
affects very, very few people because you
have that, you know, that friction area.
Martin: We had Zeke Emanuel
on a couple weeks ago.
He was, he wrote that article in The
Bulwark we really liked about how
we're all gonna have to make some
trade-offs to have- Yeah ⦠the
healthcare system that we want.
It, it strikes me that a platform like
Humata, like you're kind of sitting
at the center of asking the payers
and providers to come together and say
like, "We can do something positive
sum for everyone, but it's gonna
require some coordinated activity."
I'm curious, like where are the sort of
pockets where there's actually really
good alignment and it just takes getting
someone like you in the room between them?
And where are there areas where
there is just like, you know,
f- uh, still a lot of friction?
Like w- how, uh, d- does the, the, uh,
do the codes sort of like map onto that
80/20 where it's like these sort of codes
end up in the like a lot of friction and
need humans, and these ones are actually
areas where there's a tremendous amount
of room for, for this positive sum win?
Jeremy: Yeah.
Weâ¦
Well, first of all, I like to say, uh,
our goal is to be Switzerland between
the providers and payers, and just
get to the right answer, and get to
the right answer as fast and cheap as
possible so that care can get delivered.
And there is, there is a bunch
of varied variability, Martin,
but among different codes.
And, you know, as you, as you
referred to, these codes in
WISeR were chosen for a reason.
They're, they're ones where there's, you
know, reasonably known, uh, variability.
And when you have that variability,
there's, you need to have some oversight,
and that oversight means you have
to check some clinical information.
And so that process of checking
clinical information requires
effort on the provider side and
effort on the payer side today.
And so the, the, theâ¦
I mean, my answer would be all across
the board, all of these prior auths,
uh, there's most of them get to yes.
The number of yeses depends on
a back surgery versus a, a head
CT, but most of them get to yes.
And so how can we be transparent, use AI
to submit better auths and make better
decisions, faster decisions, and then let
the, let the humans on both sides, you
know, sort of duke it out on the, on the
few percent that need to be discussed.
So that that spine surgeon you referred
to, Kevin, uh, can talk to a spine
surgeon on the payer side and say, "Hey,
this is why I think it should be done."
"Okay, I agree.
Let's move on."
I'll have to say having done that for
a decade, and, uh, uh, I mean, having
done that as a provider at Mayo Clinic
for a decade, that's still not fun.
Like, uh, there were still many, many
times where it should've, you know,
it should've just been yes and didn't,
didn't get to that point of needing
the doctor to doctor phone call.
Kevin: Yeah.
Jeremy, I wanna ask on, as I think
about Humata in general, uh, outside
of WISeR program, as I understand
it, you're working a lot with health
systems, provider organizations on,
on prior auth side of the world.
Jeremy: Yeah.
Kevin: It sounds like in WISeR, in
particular, um, part of the challenge
is getting providers aware of the
process, how they go through the
process, how they submit information.
At least as I, like, sit here, I'd be
curious if that's your take as well.
Jeremy: Yeah.
Kevin: But it, it seems like an
interesting, on the one hand, you're
normally working with providers
and rolling out via providers.
In this one scenario, one of the
challenges, getting providers
aware, trusting in the tools, using
the right processes, workflows.
Is that, is, is the explanation
for that as simple as the starting
point of the implementation?
In one scenario, it's CMS as payer
saying, "Hey, we're doing this," versus
provider saying, "We wanna do this."
And how do you think about kind of the
trust-building exercise that has to
happen with providers in the market to
get them using these tools in the, in
the right process, right manner, right-
Jeremy: Yeah.
Kevin: Portal, all that kind of stuff?
Jeremy: I mean, I see the w- I see the
world through the lens of a doctor.
And so, uh, when we were awarded that,
that contract in, in Oklahoma, you
know, the second CMS allowed us to
start talking to folks, we did so.
And doing webinar, just as you said,
doing webinars, doing individual
phone calls with providers.
You know, literally everything that
we could think of to make sure that
they knew that, you're right, this
was a new process where they had to
s- they had the choice of, they could
either submit the prior auth before
care is delivered, or they can submit
clinical information with the claim.
One, uh, so they still had the same
process that they could do, but they
could choose to do the submission upfront.
And, uh, one of the things I'm really
proud of is in the few short months
since we've been live, providers
in Oklahoma could submit these auth
directly to CMS, or they could submit
it to Humata, a company that they had
never heard of before this process.
And this last month, every single
auth was submit directly to us
through our portal, except for one.
Except for one.
And, and that's because we've worked so
hard at providing that sort of physician
and health system customer service so that
they know, here's the proce- Again, how do
you bring transparency to this pr- process
that is typically not transparent, and
just, and give them a, a technology tool
that is pretty seamless and easy to use.
And then, oh, by the way, when you
get transparent visibility in the
portal and you get an immediate
answer, turns out that's pretty cool.
Martin: That's an impressive
stat, all but one.
I would love to know what that one doctor
is like, "No, I really prefer faxes.
I really think that-
Jeremy: I love a fax machine.
We love a fax.
The fax is pretty easy.
Yeah, I mean, you just
push a button, you know?
But yes, thank you.
But we're pretty proud of that.
Martin: Um, that's all
the time we have today.
This was very informative.
Thank you so much for giving
us an update on WISeR, fighting
the good fight on prior auth.
Where can folks find you if they
wanna learn more, if they're a health
system thinking this sounds like a
great, a great thing, or a doctor?
Jeremy: Love to have a conversation.
We're at humatahealth.com,
and I'm at jeremy@humatahealth.com.
Thanks for having me, guys.
Martin: Jeremy, thanks so much.
Kevin: Appreciate it very much.
Good seeing you.
Jeremy: See ya.
Bye.
Martin: Um, someone in the
community pointed outâ¦
So there's been obviously some, some
congressional pushback on WISeR, and
someone in the community pointed out that,
um, in the absence of WISeR, doctors will
just be doing prior auth by faxing their
MAC, their Medicare Administrative, uhâ¦
And, and so you won't actuallyâ¦
Instead of a nice u- user ex- venture
funded user experience like Humata, uh,
you will get, uh, a fax machine, so,
always fascinated to see how, you know,
the, it's like the, the reaction happens,
but then it's like, well, I don't know if
you're gonna like what, what happens next.
Kevin: Yes.
It isâ¦
It's gonna be an interesting conundrum
to see how it gets worked out over time.
You know, it's, as you mentioned, it's
an election year, and it seems like
there are a lot of, a lot of talking
points in DC to be had around prior
auth at the moment, which, to Jeremy's
point, I can imagine why working in
the industry, it feels like you got
the laser pointed on you at the moment.
Martin: If you wanna chat about
this stuff, the best way to do that
is to go to healthtechnerds.com,
sign up for an HTN Pro
membership, and join the Slack.
We'll be chatting about prior auth,
about WISeR, and about, uh, Assort
versus Prosper, all things like that.
And if you're not already, sign up for the
newsletter, healthtechnerds.com/subscribe.
You know, I'm, I'm a little biased, I'm
on the line with my boss here, but I
think it's a great read- ⦠every Sunday.
So, uh, that's my pitch.
Kevin, thanks for your time today.
Have a great rest of your Monday everyone.
We'll see you soon.
Kevin: Yep, see y'all.
Bye.
Martin: Bye.