Overview
We had a great discussion with Chris Deacon on October 8th. If you missed it and have yet to catch the replay, you can watch/read below (time stamps w/ abbreviated notes are below the video box).
Chris and Tom walked through what enabled NJ to save so much money on its health benefits program(s) under Chris' watch, as well as the pluses and minuses of point solutions and platforms, problem(s) with the status quo, and role that self-funded employers must play in driving change. We were looking for a state benefits director's opinions about the total addressable market for chronic care/digital health apps like Teladoc's Livongo (adoption, engagement, and ROI), and we learned a whole lot more. We continue to believe that the TAM for Livongo to sell into is relatively small compared to what's needed to hit expectations next year. We also think that advanced primary care (APC) models have room to grow and influence change because a) there's so much fraud, waste, and abuse in the system, b) primary care physicians control a whole lot of downstream spend/costs, and c) carriers and providers continue to allow for a rising cost environment.
CLICK HERE to access the associated slides (title and disclaimer).
Call Notes & Time stamps
Edited for length and clarity.
00:15 - Introduction
- Chris, an attorney by training, is relatively new to the health benefits world. Her work in NJ, where she oversaw the plan for all state employees and retirees and acted as a carrier to those school districts and local governments that opted in, resulted plan membership growth from 700k to 820k members during her tenure.
05:00 - State of NJ program & Cost Savings
- The state of NJ was well positioned to handle COVID-19 when it hit because of the move to an online platform that was up and running, as well as several digital solutions in place (Livongo's Whole Health solution, a primary care pilot, Hinge Health for MSK, and a weight loss/behavior modification program w/ Wondr Health). A reverse auction for PBMs helped save billions over the 5-year contract (lowest net cost). She also moved away from looking at discount analysis (quality of providers and steerage capabilities trump breadth of network).
09:16 - Apps... where are we in the adoption cycle of digital health apps? Is it real? How far off is deflation?
- Chris loves the word deflation. It's infuriating to hear capitulation around cost growth when the pie is $3T. There's an opportunity that this time is different because of the capital and talent are flying into the space, and COVID-19. Are we growing the pie or will we find value and shrink the pie? "Value" may be overused and vague in health care, but it's all about measurable health outcomes.
- Concerns - app overload/fatigue, consumer experience, lack of information
- The need for a "connector" - PCPs. PCPs control ~$500k in downstream costs per patient
15:40 - Teladoc & Livongo, is data integrated and are you positive on Livongo?
- Livongo is built around the member and it's one of the best member experience digital health solutions that's built around the member, not a solution. Important to measure
17:48 - ROI with Livongo et al. - how to measure?
- Be aware of beating inflationary trends, different definitions of engagement (should be tied to actual clinical outcomes), vendors that say engagement is easy, and self-selecting pools.
- Experience with Livongo was "good" - there was a lot of room to improve on engagement. It was plugged in through a carrier, so maybe plugging something in through an Alight, direct to member, vs. seeing an insurance card.
- 22:20 - Did you prove that it saved money? Yes, the state saved money, but you have to have a solid 12 months of credible data, and you continue to work to keep engagement high and keep the ROI coming. That's how you gain credibility w/ members.
24:39 - TAM for disease management apps
- 3%-6% of members end up being good candidates for the solutions (the pipes to connect points solutions and data are still missing).
28:54 - PMPM vs. per engaged member/guaranteed engagement
- Either way works - but employers must do the math. Need 30% to participate, vendors must put fees at risk. Everything must be at risk/guaranteed from here.
31:10 - Advanced Primary Care - savings opportunity and who gets paid
- Per attributed member, PCPs control ~$500k in value downstream hospital costs, annually. 30% is not an unrealistic estimate, but how is that saved? Is it a transfer of wealth to the PE firm that bought the practice or the health system, or is it saved and accrues to self-funded employers?
- The status quo - primary care devalued, urgent care everywhere - go straight to Rothman because insurance plans and providers allow it (w/ our a referral). "Everything looks like a nail to a hammer..." especially in fee-for-service.
- Future state - your Advanced primary care doctor knows everything about you and is quarterbacking things in the dangerous world of the US Medical Economy.
39:08 - Where is the buyer here?
- Amazon push with Crossover Health - digital front door primary care provider - great consumer experience, but they are probably not for a sub-100 employee company.
- Self-funded employers need to step up - "the house is on fire" - and some of the new ERISA rules around data transparency help.
41:35 - Discussion about the consumer and carriers vs. providers
- The reason status quo is so difficult to change is size and scale - Anthem is 33rd on the Fortune 500 list - employ 36k people, etc. Hospitals - these large players are politically powerful.
- The PBMs have been pulled into hearings more than most, but there's a big miss if all we're looking at is PBMs. TPAs - self-insured market has handed over fiduciary duty to carriers. The carriers and hospitals are not fighting over price. It's been in everyone's interest to see prices go up.
- Need to start talking about cost decreases y/y, not starting at a +3%.
47:35 - Are payers at risk because different groups will step in and take risk?
- Yes. But Chris calls payers "Carriers" not payers because it's not their money. That payer model is under threat because of the new models. Self-funded employers must have insight into what you're paying for and getting - data, disclosure of fees, etc.
- There's not a huge appetite for government to be disruptive here.
- Consumers are reliant on the self-funded employer to manage everything - when they manage health insurance/benefits like any other line item in their business, things may change.
54:48 - CHRO world/priorities
- Labor market is super difficult - benefits are important
- Unions could be a powerful voice to say, "That is our money."
56:38 - We're cautious on Teladoc from here, is there anything else you like or we should be looking out for? Closing thoughts.
- Chris plugged 4C Health Solutions - she left NJ because she hit the wall in terms of change, and enabling self-funded employers to do the work is what she wants to do. 4C has the pipes and platforms (agnostic to carrier and PBM).
- Payment review, accuracy, and financial controls are big.
- APC is big - Chris likes the Everside mode and Crossover Health. is cautious on/watching how the Teladoc/Livongo marriage plays out, and she likes Grand Rounds (but thinks they need to change the name of Dr. on Demand).
ABOUT THE SPEAKER
Christin Deacon is a Senior Vice President at 4C Health Solutions, which provides self-funded employers with a platform to understand, monitor, and control their claims data. Prior to her current role, Deacon ran one of the largest health plans in the country for the State of New Jersey, covering over 820k lives consisting of public sector employees, teachers, and uniformed professionals. First as a Deputy Attorney General and then Special Counsel to the Governor, Deacon exercised her legal dexterity in a variety of capacities, from complex transactions to appellate litigation. As a 4C employee in the Wilmington, Delaware office, Deacon will be returning to her roots where she began her legal career as a bankruptcy attorney barred in DE, PA, and NJ.
Deacon has been credited with saving the State of New Jersey hundreds of millions of dollars during her tenure with the health plan. From creative procurement methodologies to forward-thinking contractual arrangements and guarantees to population health initiatives, she has been described as a public sector entrepreneur that was always trying to improve the quality and affordability of healthcare for members and employers. Deacon graduated from Rutgers Law School in 2008 and the George Washington University in 2005 with a degree in International Affairs.
We welcome questions and feedback! -
Thomas Tobin
Managing Director
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