Call Notes & Replay | Executive Insights | Health Care Staffing (AMN) & Digital Health Remain Hot

Overview

Highlights

1. AMN can continue to perform well despite competition. New models like Wanderly/Avenue are emerging, but scale matters.
2. COVID-19-related labor demand is receding but delayed or deferred care is coming back and staffing for imaging/ultrasound and the operating room (OR) is picking up.
3. The hybrid models will take over, and that's positive for ONEM, OSH, privately-held ChenMed, and Cano. It's negative for TDOC and AMWL, but legacy providers are trying to adapt too, although the latter seem to be lagging and/or doing a poor job thus far. 
4. Health Care continues to march toward better consumer experiences and value-based, at-risk models.

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Lightly edited for length and clarity, emphasis added.

Background on Wanderly & Avenue

The businesses are interconnected. Wanderly is a digital staffing marketplace (contingent staffing/travel nursing focus), founded in 2017 by Zia Rahman and a group of staffing industry veterans that wanted to do something different/better. Longyear said, “If Uber and Kayak had a contingent staffing child, it'd be Wanderly.” The platform/marketplace allows nurses, for example, to easily compare and find assignments, store documents, etc. (a nurse can use the same profile to quickly apply to different agencies).

Avenue Health is a natural extension of the model that offers remote patient monitoring - RPM - coverage. Avenue has access to clinical staff and is a B2B2C model for medical groups, health systems, etc.; it also offers medication adherence support.

Starting with staffing, where are we in the demand cycle? We have an aggressive pent-up demand thesis and expect staffing and wages to be a big deal this year to next…

• January & February 2020 were business as usual. In March, demand for ICU staff – nurses in particular – went through the roof. Clients said, “We need as many ICU nurses as you can get us.” There was a ton of traffic for the jobs on the site, with a concentration in COVID hot spots, and people needed anyone related to the disease (ICU, respiratory therapists, telemetry nurses, etc.).
• Demand rotated over the summer – NY, MA, etc. declined and FL, TX, and AZ became hot spots. Pay rates cycled with that demand, rising and falling as you’d expect. Pay rates are the easiest way to attract contingent staff – typical supply/demand.
• Then, a “weird” thing happened. There was demand because of COVID, but the rest of the industry fell off. Facilities were not generating revenue because people were staying home and elective procedures were paused/deferred - budgets were crunched, and other specialties dropped off. In July-ish things got dangerously low outside of COVID specialties. Business picked back up in the fall when patients started coming back (visit volume and electives picked up).
• Visit volume and demand for staff are directly related. There were big dips in surgical/OR demand – for contingent staff - when electives shut down. Over the winter (2020), COVID got out of control again, and pay rates were out of control too – e.g., $8k-$10k per week for ICU nurses.
• Demand and pay rates rose through December and January - there were not enough travel or local contingent workers. Things are now leveling off - pay rates are down a bit. At the same time, there’s demand for other contingent workers – vaccinators for example, and clinic staff and an underlying nurse shortage compared to population growth.

It sounds like there’s a return to normal for some routine care, but other areas aren’t back to pre-COVID levels. How is volume tracking?

• We see volume/demand through the number of jobs posted by agencies/staffing providers on Wanderly. Surgery is not back to where it was. Pay rates for ICU were down a bit in March (at more manageable levels).

Aggregate hours/employees – it looks like we’re missing 600k-700k jobs, and the JOLTS data hit an all-time high. We see areas like imaging at depressed levels, and that’s where the diagnostic journey starts…

• Anecdotally, I’ve heard from staffing folks that imaging/ultrasound is picking back up.
• OR has come back up a bit from nothing last summer. Facilities/providers will try to push patients back through the OR. Facilities want to recoup losses.
• Digital – how has recruitment changed? We’ve run surveys of the user base (generic nursing panel) and feedback is mixed on staying in practice. About 50% say “no big deal, fine,” and 50% say “yeah considering something else.” Something else could be virtual, tele care management, or other jobs virtually for nursing. CMIOs are thinking about the need for physical office space and whether having some nurses work from home to give people that opportunity makes sense.
  • Avenue posted a job for a Virtual Nurse in NY at a reasonable pay rate for a mid-range RN, and we received 75 applications in an hour. As awareness grows, we’ll see more supply available for these types of [digital] jobs.
  • Previously, people would get leads, nurses’ emails, etc. and it was manual and paper-based (i.e., inefficient) – with digital, Wanderly is empowering workers (they can find pay rates, best jobs, save time, manage documents and credentials, etc.) all online. Clinicians have become smarter buyers, which changes how agencies engage with the workforce. Healthcare is just slower.
  • Rising exposure to travel/contingent staffing has increased the available supply, but it’s hard to quantify. Wanderly has seen a >100% increase in its user base over 2020 – it over doubled since March – part through education and part seeing pay rates and being able to compare to staff jobs. Pay drives demand.

In terms of innovation - Cross Country and AMN - how do the different providers rank (difference public vs. private)?

• It’s an $18B - $20B industry (contingent staffing). There isn’t always public company transparency – there’s a wide range of smaller, regional players and MSPs looking to be middlemen.
• On the demand side, the big MSPs – AMN and Cross Country – serve the hospitals to engage w/ supply. Mobile apps rolled out, but what clinicians want is simple – what job pays the most in the region I want? The brand doesn’t matter too much once a clinician knows it’s a good player.
• People call it a commoditized business - older legacy staffing people think it’s relationship-based, but I’m not sure that’s the case.
• It’ll be interesting to see how consolidation impacts the industry and which technology innovations are valued. 

It seems like scale wins and transparency is tied to scale. When do you think a washout or consolidation phase happens? It seems like digital is brand new and there’s a long runway before everyone starts beating each other up over combinations.

• Scale is very important. If a nurse wants to go to three places and an agency/someone has all three, they likely win. The big players have them locked up with the jobs and can push them to smaller staffing networks to service local hospital systems.
• Hospital systems are becoming more sophisticated buyers using tech. Labor is the biggest spend - contingent and staffing. Most hospitals are operating on thin margins, so if you can save a system 4%-5% on contingent staffing spend, that’s tangible.
• The MSP and vendor management (VMS) models are newer. The prior manages contingent spend and sourcing of those clinicians to show up. VMS is newer and sometimes neutral. They get agencies and staffing to be suppliers, go to facilities, are a little cheaper, and have a data component.
• When you get more precise w/ data - who is filling what job where and know regional price trends - you can be more effective at reducing cost and getting clinicians into those roles. Tech isn’t just about cutting people out of processes - it’s about data and getting smarter/more sophisticated with a large area of spend.
• The raw data will change who becomes most dominant in healthcare staffing over the next 5-6-7 years. The data has been held by MSPs. If clinicians can see all the pay packages for the same job, it changes the game.
• Previously, a nurse might not have gotten the best pay rate if he/she just got one phone call. As the industry evolves, the AMNs might become more data driven, predictive in the use of analytics, and competition for who is managing contingent workforce will heat up based on who can show the best results (i.e., save me 3%-4%, demonstrate why different, that’s a recipe for success). Cost and value-based payment arrangements will influence that - focus on cost.

Can you give us a generic example of how the Avenue model works?

• First, Medicare funding of RPM started in 2018-19, and the codes were clarified in 2020 as they became more important.
• Providers are interested in upping FFS revenue. They see this as another service line that can offer a + clinical benefit (it’s evidence-based). So, 1) there’s a financial incentive and funding for programs, and 2) it’s evidence-based.
• 75% of US health care spending is chronic conditions - hypertension, diabetes, etc. – all cardio-metabolic problems – it’s a huge problem.
• Since 2007 when interest in RPM rose because of smartphones there have been thousands of clinical studies for high prevalence chronic conditions. The cornerstone of chronic disease care is the longitudinal relationship, or how patients are guided through a care journey (care plan, exercise, medication, etc. to contain/manage the disease). 
• RPM operationalized the approach – it’s scalable vs. a patient showing up in the office for 15 minutes once every three months and the doctor not knowing what’s going on in between. RPM can fill in and help manage these conditions (or reverse them in some circumstances).
• There are lots of SaaS vendors out there now. It’s easy to spin up an app, connected device(s), transmit data, etc. Then try to sell to providers at $5 PMPM – many have entered the market since 2018-19.
• The average PCP is overwhelmed dealing with in-person care (they have full schedules) and can’t manage patients outside the clinic as well, so it falls to the clinical staff. Avenue can manage the RPM/virtual operations (full-service solution) – patient outreach, enrollment and engagement, device setup, etc.
• It’s a hybrid (human + tech) model that facilitates workflows and transmits data. It’s not reactive… it’s a proactive, holistic program. Clinicians work from home.
• Also, Medicare patients like to have a “friend” to talk to - loneliness is an issue too.
• The PCP sees everything, sets the care plan (everyone is on the same page).

Is the revenue incremental to practice?

• Yes. It’s a market rate, but the provider has some activities to do, so there’s a margin there. It’s a B2B2C model, but it’s also a SaaS model.

It sounds like Avenue has an advantage in the market – partnering with PCPs. What’s the adoption cycle for something like a Livongo? Is it less or more from here?

• Have to think about the patient perspective vs. provider perspective - patients have been left to drift in the sea of healthcare for years. People hate their insurance companies, the hospitals, etc. If you give patients a positive experience, it means a lot. A tightly wound program with the PCP is important (trust and a cohesive experience, empowers patients). Providers don’t want to lose patients. Avenue is 100% integrated, a partner to the doctors.
• The “Livongos” of the world – I’ve heard patients like the app experience w/ Livongo. They can measure their own health, have access to a health coach, and seem to have good outcomes. However, they are mostly focused on the employer space.
• If you look at the distribution of chronic conditions, Medicare and Medicaid have the highest burden (oldest and poorest demographic). If you want to change health care and not just move spend around, you must work there. The reimbursement is reliable but a little more complicated than the employer market. Most RPM vendors are focused on employers.

The number of lives in the hybrid bucket is small, and there’s One Medical, Oak Street, Cano…

• Yes. We’re big proponents of the hybrid model. There are gaps in between PCP visits. ONEM is doing it, clinic-based plus virtual care w/ an app. They are a new entrant competing w/ traditional. Avenue is empowering existing providers in the community to compete w/ the One Medicals.
• If One Medical or Oak Street moves into a market with their really good care models (patients like them), apps, etc., the traditional providers are at a disadvantage; but they still have the largest share of the market and existing relationships. 

Thoughts on Epic's myChart? It seems to have improved recently…

• When EMR providers roll out apps... well, it's not their core competency - Epic, eClinicalworks, Cerner, etc. are built for billing and administrative tasks. They are not really for clinical workflows. That’s why doctors hate them.
• Given the demand for patient apps and need to transmit data back to EMRs, it would be logical for EMRs to make good apps. Epic doesn't have an incentive to build a useful app. Judy Faulkner said she thinks patients want us to manage it. Couldn't disagree more. Only 0.5% of Epic patients downloaded -myChart - well, it's horrible, the doctor has to use it, the health system has to roll it out. It's not built for patients.
• There's a concept called experiential knowing - until the patient sits there and looks at what impacts their own data, what medication helps, etc. they don't understand it. That's where myChart gets it wrong - the data for the doctors doesn't mean anything to the patients. 

The Avenue model vs. Teladoc/LVGO penetrating own book, vs. ONEM and hybrids - at what point does a large minority or majority of patients end up in the hybrid zone? Who wins?

• It's important to segment the patient population - age brackets. Avenue is focused on Medicare. 10k people per day are turning 65 and there are lots of chronic conditions. It's a big patient population. In the employer market, there are chronic conditions in those age 50-65 - obesity-related, Type 2 diabetes, hypertension - and that's where Livongo and Omada are effective at offering good experiences. Employers are looking for anything to help manage spend. 
• Health care is local and always will be. The payer matters and can dictate where a member/patient gets care. 
• Big national telemedicine has historically been for acute episodes of care: TDOC, MDLive, Amwell. They work for people that need a quick discussion with a doctor while at work for a quick Rx. I think it's irresponsible to try and manage chronic conditions long term if a doctor isn't seeing the same patient.
• The Teladoc acquisition of Livongo was smart because they can be a full-service virtual care provider and generate recurring revenue, but with health care being local, the main PCP is affiliated with a hospital and there's a local benefit of offering telemedicine and RPM. Patients will pick the convenient choice, and the first-mover, where the relationship is, is the health system. If your PCP sends you an email, has your records, and offers RPM, knows local diabetes education/nutritionist, etc., the ability to manage everything locally is very powerful. Local is starting to come into digital now. The big telemeds locked up with the BUCAHs - Cigna just bought MDLive.

It seems like the whole thing is converging on the patient experience… 

• Yes, it is. Going back, the experience of care has been horrible. That's why people started measuring patient satisfaction. the new price transparency rule could be a game-changer. In-person only is detrimental to patients - it can be an undue burden.
• Most health systems expect ~20% of services to go virtual: RPM, general telemed, follow-ups, hospital at home. It offers a better experience, can be safer, and there's a clinical benefit.
• The growth of value-based payments is important. Adding the risk element forces provides to be selective about where dollars are invested. The majority of health care is still FFS.
• Providers that take on risk, which is what payers want, will be successful over the next 5-7 years. Talk to UNH or whoever, the first question is, "Will you take on risk?" The majority of business for Teladoc and Livongo is selling to employers (and devices). Outcomes and evaluations matter more. 
• Quality metrics are increasingly shifting to experience, satisfaction, and outcomes. Star metrics are important for providers but it's more than just making sure boxes are checked. Did you check A1C and the patient's foot? Great. Did you also make sure the outcomes are good? Oak Street, ONEM, and ChenMed are similar models that take full risk. If they take care of patients, they make a ton of money. 

ABOUT THE SPEAKER

Robert Longyear is VP of Digital Health and Innovation at Wanderly and Avenue Health, a Wanderly company. He is the author of Innovating for Wellness, a book that explores the intersection of health policy and health technology innovation. His second book on remote-patient monitoring and virtual care will be published by Routledge, Taylor & Francis in the HIMSS series in 2021.

Robert has worked across the healthcare industry for a number of organizations including Medicaid Health Plans of America in policy analysis, Wellcare Health Plans in clinical quality improvement, and the Institute for Medicaid Innovation (IMI). At the Institute for Medicaid Innovation, he led two projects in conjunction with major Medicaid health plans looking at national best practices in high-risk care coordination and social determinants of health data collection at the point of Medicaid enrollment. In his career in health technology, Robert was Director of Product at a pharmacy-focused mHealth technology company where he took the company to a contract with the United States Air Force and lead the submission of three NIH SBIR grant proposals. In biotechnology, Robert worked for Synergene Therapeutics, while in school, studying the pharmacokinetics of nanotechnology-delivered p53 gene therapy in solid tumors. Robert has consulted for several innovative biotechnology and digital health companies from start-ups to market leaders.

His research work has been published by the Institute for Medicaid Innovation, NEJM Catalyst, and the American Psychological Association Practice Innovations. His main focus is on innovations for healthcare delivery and care management as well as the application of digital health technologies to healthcare services, broadly. Specifically, Robert has expertise in remote-patient monitoring, virtual care, and the use of digital experiences to solve problems in healthcare services.