Team takeaways from HLTH:

HealthTech still has their AI goggles on, however they are less rose-colored this time around

As one might expect, many HLTH panels, discussions, and companies were focused on AI. While exciting demos took place and while much sentiment was shared about a long-term vision for its potential, discussions shifted to concerns of efficacy, bias, safety, governance, cost, energy demands, and ROI. A memorable quote was by the CEO of Cleveland Clinic, who stated that AI is “over-hyped in the short term but under-hyped in the long term.” The attention on AI continues and there certainly is much to be excited about, however near-term expectations seem to have shifted away from high touch patient care and medical science, to doubling down on alleviating the administrative burden and on healthcare logistics. GE Healthcare’s chief science and technology officer, Taha Kass-Hout, M.D., spoke about a new concept of digital twins for patient entries within health systems in order to optimize things like bed management and surgical scheduling. Moreover, talks of “human in the loop” were far more prevalent than in the past, with increasing focus on companies incorporating AI to upskill people in service tasks, providing critical oversight, in their “AI as a service” revenue models for applications like care coordination, billing, prior authorization, staffing, and scribing/documentation, which are obtaining desired efficacy and compliance while newer technology models continue to be proven out. But one way or another, AI will continue to be a prominent and exciting theme in healthcare.

Employers are exhausted of being sold to…unless you have something their employees will really use

The average engagement of direct to employer point solutions is only 5%. Such low utilization and engagement are increasingly becoming at odds with standard Per Employee Per Month (PEPM) pricing models adopted by many such solutions because an employer is paying for each of its members to have access to a service that 95% of them may never use! While this has been an attractive model for companies selling into fully insured employers, enjoying little to no variable costs with fixed and recurring revenues, the bar has clearly risen and appears to be staying that way. With the sticky state of Value Based Care (VBC), employers are actively shifting these contracts from PEPM to performance-based payments, such as revenue models based on utilization, outcomes, satisfaction, and shared savings, while at the other end of the spectrum, fee-for-service remains enticing for some solutions. Therefore, the path to winning business with employers, as communicated by the likes of unicorn startup Maven (which has achieved 60% target population utilization) is to lead with quality. While the HTLH panels largely surrounded selling into very large self-insured employers, our thoughts continue to point to a developing white space in the market, targeting the small-medium sized businesses that make up as much as 50% of the self-insured employer market and get overlooked by the big, well-funded direct to employer solutions. More on this to come...

Health policy is not a major focus of the upcoming election

There was certainly an election buzz at HLTH with multiple panels discussing health policy and potential implications of the upcoming election, which clearly has trickle down effects into the healthcare innovation economy. The common underlying theme was that, apart from reproductive health, regardless of whether Donald Trump or Kamala Harris wins the presidential election, this will likely be a relatively stable period for health policy and neither candidate represents a significant departure from our current policy trajectory. Past CMS Administrators, Seema Varma under Donald Trump and Andy Slavitt under Barack Obama, spoke about the future of the Affordable Care Act and the impact of the Supreme Court’s ruling ending Chevron Deference. “Unlike our most recent elections, healthcare is not the main event,” Slavitt said. Very likely, neither candidate will make significant or fundamental changes to the ACA and the recent end to the Chevron doctrine minimizes the authority of federal agencies to interpret the laws they administer. This certainly applies to programs within the Health and Human Services Department, and now means the pressure is on Congress to work together to pass laws and set policy with regard to things like price transparency and drug discounts. An area of possible departure between candidates may be in regard to Medicare Advantage, where Trump could undo changes enacted by the Biden Administration with regard to supplemental benefits and social determinants of health. Additionally, we could see a possible reinvigoration of individual coverage health reimbursement arrangements (ICHRA) if Trump is elected.