JPM24, Day 2: Hartford HealthCare touts outpatient strategy; Henry Ford Health pitches 'ambitious' $4.9B spending plan

It's officially a new year for the healthcare industry, as biopharma executives, investors, reporters and others make the annual trek to the Westin St. Francis in San Francisco for the J.P. Morgan Healthcare Conference.

We have you covered with the biggest headlines from Tuesday here, as well as across the site. And to keep up with the Fierce Biotech team, click here, or for updates from Fierce Pharma, click here.

Follow the Fierce team's coverage of the 2024 J.P. Morgan Healthcare Conference here

UPDATED: Tuesday, Jan. 9 at 7:00 p.m. ET

Outpatient penetration draws patients to Hartford HealthCare, execs say 

Maintaining quality and consistency across hundreds of convenient, low-cost outpatient sites is no small feat, but pulling it off rewards health systems with reputation boost that translates to higher volumes and increased revenues, Hartford HealthCare executives told peers and potential investors Tuesday.

The Connecticut system counts nearly 500 total care locations, but just seven of those are acute care hospitals. Unlike a typical multi-hospital health system, that beefy ambulatory network is driving 54% percent of Hartford HealthCare’s $4.9 billion in total annual revenue.

A fair amount of the network’s growth came within the past few years, when COVID-19 ruled out hospital expansions and highlighted consumers’ need for greater access to care.

“We recognized that folks wanted to be seen closer to their home,” Karen Goyette, EVP, chief strategy and transformation officer at Hartford HealthCare, said. “So what did we do when we couldn’t be doing construction in our inpatient areas? We doubled down on the outpatient area and we built 25 locations, [and] we’ve continued that through the last three years.”

The system went on to add 23 new care sites in fiscal year 2023 and plans for another 24, according to the presentation. Hartford HealthCare also believes that it “[doesn’t] need to own everything,” Goyette said, and was eager to cut partnerships with groups like GoHealth Urgent Care, Walgreens, OnMed and Amazon’s One Medical that are close to patients and bring new capabilities to the table.

Combining the brick-and-mortar expansion with technologies to support scheduling and access, Hartford HealthCare’s outpatient strategy “really opens the door to subscription medicine and direct-to-employer strategies,” she said. It also helps bring down costs for patients: procedures across the system’s 14 ambulatory surgery centers are 26% cheaper than at the average hospital outpatient department, endoscopies at seven GI centers about a third less costly, imaging at 31 outpatient centers between 55% and 70% cheaper, and all costs across 35 urgent care centers about 90% cheaper than the emergency department, the executive said.

Despite this, executives said that the lynchpin of their outpatient strategy is ensuring that the quality of care received across these locations in lock-step with what they’d receive at one of Hartford HealthCare’s hospitals (which have improved to “A” ratings from the Leapfrog Group since the late 2010s).

“If we differentiate ourselves and provide the best quality of care to our patients at the best location, closer to their home, we believe that our financial outcomes will be better,” Okey Agba, EVP and chief financial officer, said. “That’s why we’re growing. … When a patient visits one of our ambulatory clinics or visits one of our hospitals, they receive exactly the same experience from one place to another. And as a result of that, they recommend others, they recommend their families to us, and that helps us to improve volumes and then improve our financial outcomes.”

Hitting that goal is admittedly easier said than done. Speaking to fellow health systems in the room, Goyette said that the best way to maintain a high bar across different settings is a straightforward, aligned operating model.

“Whatever area or region or institute you’re in, [our leadership teams] all have the same goal in mind. It [makes] cascading the message throughout the organization very easy,” she said. “So many people talked today and yesterday about their strategic planning efforts—we refresh our strategic plan, but it’s basically one page, … it’s discussed every morning. If it’s not an initiative that doesn’t fly into that area, it is not up for discussion.” — Dave Muoio

UPDATED: Tuesday, Jan. 9 at 4:30 p.m. ET

Henry Ford Health outlines a trio of capital spending priorities

Henry Ford Health has plenty of pricey initiatives on its docket for the coming decade, but executives insist that their “ambitious” plans will come to pass and bear fruit Michigan patients.

The Detroit-based, integrated nonprofit system recently unveiled a partnership with Ascension Michigan that would yield a $10.5 billion, joint venture that includes 13 acute care hospitals, over 550 sites of care and about 50,000 employees.

Set to close this summer and currently undergoing regulatory review. Should all go according to plan and with the help of “investments along the way, Chief Financial and Business Development Officer Robin Damschroder told attendees that the integration will drive a 2-3% bump in operational synergies 10%-plus increase in capital efficiency and a 20%-plus increase in the organization’s debt capacity.

At the same time, Henry Ford is moving forward with a roughly $3 billion redevelopment of its flagship campus and the surrounding neighborhood. The project will include an overhaul and major expansion of Henry Ford Hospital, a more-than-100-year-old building, with “very contemporary” facilities; shared research and education space shared with Michigan State University; a top-rated rehabilitation hospital; and mixed-use retail, residential and green spaces.

The renovation will break ground in early 24 and target a 2027 opening day as well as a 2029 hospital grand opening, CEO and President Robert Riney told J.P. Morgan attendees. The effort is backed by partnerships with the university and the Detroit Pistons, as well as philanthropic contributions from the Tom Gores Family Foundation (run by the basketball team’s owner) and the Gilbert Family Foundation (which contributed $375 million, the largest single donation in the system’s history).

Finally, Henry Ford’s insurance business, Health Alliance Plan, and CareSource, a managed care health plan, are coming together in a 60-40 joint venture to expand Medicaid across the state of Michigan. The effort, toward which CareSource infused $52 million, received regulatory approval to move forward last summer and strategically positions Henry Ford to serve millions of government-covered residents and win an upcoming bid for a state Medicaid managed care contract, the CEO said.

Altogether, the projects position Henry Ford to spend about $4.9 billion in capital expenditures through 2023, Damschroder told the crowd of potential investors. With 66% coming from operations, 9% philanthropy (over $500 million), 10% liquidity financing ($300 million to $400 million in H2 2024) and 7% energy concessions (potentially $265 million by 2027), that leaves 8% of the capital funding, or about $300 million, for Henry Ford to obtain by 2026, she explained.

Taken together, the initiatives cover a range of patient and community needs that Henry Ford is capable of addressing on a practical and financial level, Riney said.

“We have a plan that is ambitious, deliverable and consistent with our diversification of what a health system needs to be,” he told attendees. “So, focused on vulnerable populations and population health, focused on tertiary and quaternary destination care, and also focused on the part of the economic vitality — because you can’t have population health without community health, and that includes economic health. We take our role in a very broad view, and we plan on continuing to deliver on that.” — Dave Muoio

UPDATED: Tuesday, Jan. 9 at 4:20 p.m.

Centene officially makes PBM switch to Express Scripts

As Americans across the country were counting down to the beginning of a new year, the team at Centene was preparing for the turn of the calendar to bring a major shift as its membership officially transitioned to Express Scripts as its pharmacy benefit manager.

CEO Sarah London joked during the company's session Tuesday that while the large, New Year's ball dropped in New York City, Centene was "making sure no balls dropped" for the company during the switch.

London said that while it's still early days, the company is seeing successful collaboration with the team at Express Scripts and the transition is progressing smoothly.

She said the insurer's team spent the better part of a year preparing to make the change, after announcing in November 2022 that it had selected the Cigna-owned PBM. The contract includes about 20 million Centene members and a value of about $35 billion.

Hear more from London and her thoughts on the changing political landscape around the ACA exchanges in a forthcoming story. — Paige Minemyer

UPDATED: Tuesday, Jan. 9 at 3 p.m.

Cityblock's growth story

Cityblock Health, a tech-driven provider for communities with complex needs, continues to chart strong growth and posted north of $1 billion in revenue in 2023, Toyin Ajayi, M.D., CEO and co-founder, told J. P. Morgan Healthcare Conference attendees Tuesday.

The seven-year-old company's revenue doubled in two years, from half a billion dollars in 2021, Ajayi said.

"We've grown this business significantly over time proving that there is demand from payers, that there is opportunity to continue to scale and that we can build out those unit economics in the face of really rapid growth. How do we do it? With a differentiated care model," she said.

Cityblock, which launched in 2017 out of Alphabet's Sidewalk Labs, delivers medical care, behavioral health and social services to individuals from historically underserved and marginalized communities, with a particular focus on Medicaid and dual eligible beneficiaries.

"What we do is that we enter into value-based contracts with health plans and managed care organizations across the country. We work with them to identify their highest-risk and rising-risk individuals focus on their Medicaid and dually eligible books of business to see who would benefit from enhanced care to improve their outcomes. And then we take on full responsibility, including financial risk for serving these members. We provide them with primary care, we provide them with wraparound social support, we provide them with mental health support, and we then, on the back end, share the benefit which is realized in reduced hospitalizations, reduced acute utilization, reduced medical spend and improved MLRS (medical loss ratio)," she said.

Cityblock's model is capital efficient while also delivering results that show it can improve outcomes for complex patients.

"We have an asset-light, bricks-and-mortar-light approach to market entry and to engage members which, again, enhances our path to profitability and enhances our unit economics," Ajayi said.

There is a massive market opportunity to serve Medicaid and dual-eligible beneficiaries with massive white space and tailwinds tied to value-based care, she noted. Cityblock's addressable market is comprised of 75 million Medicaid patients, 12 million dual-eligibles and 25 million complex Medicare patients, according to the company.

"We were one of the first companies to take the quite-proven playbook around value-based care for Medicare Advantage and apply it to Medicaid. And what we heard was, 6'Oh, my goodness, these folks are so hard to find. They're so complex. Hhow in the world could you build a business that is sustainable and scalable, that delivers margins serving these people?' We saw that not as an impediment to our growth, but as a call to action, a challenge and an opportunity," Ajayi told conference attendees.

Cityblock's growth also benefits from policy tailwinds, she noted. Medicare Advantage risk adjustment is coming under fire from The Centers for Medicare and Medicaid Services (CMS) and the landscape is shifting toward value-based care models that drive total cost of care and not just risk score growth.

"That plays right into our strength. That's what we do all day, every day," Ajayi said.

As health equity is increasingly is on regulators' and payers' radar, Cityblock is "purpose-built" to improve health outcomes for communities of color.

Cityblock's model also is high-tech and high touch. "There are companies certainly that spend time building out high-touch engagement models. We do that with AI-driven population segmentation and boots on the ground outreach," she said. — Heather Landi

UPDATED: Tuesday, Jan. 9 at 2:30 p.m.

Jefferson Health says LVHN merger would double its insurance business within 2 years

Jefferson Health’s newly announced integration with Lehigh Valley Health System (LVHS) didn’t begin as a merger discussion.

Rather, executives told attendees at the J.P. Morgan Health Conference, the nonprofits were initially exploring a plan to white label Jefferson’s government-focused health plan in Pennsylvania’s Lehigh Valley area.

“They said, ‘well, what about a full asset merger?’ recalled Jefferson Health CEO Joe Cacchione, M.D., recalled. “They had been in the market previously, [and now] we think we can get our projected five-year growth in the health plan [completed] within 18 to 24 months by doing the deal” with LVHS.

That expansion into a fresh market and a chance to align the payer business with LVHS’ care delivery services falls squarely into the 17-hospital academic system’s strategic vision to increase resiliency and “double down” on insurance, its executives said.

As of 2023, Jefferson Health Plans account for just 6% of the organization’s revenue mix, while its Thomas Jefferson University claims 22% and care delivery represents 72%, according to the system’s presentation to attendees. Instead, Jefferson wants to double both the health plan’s revenue and covered lives within five years.

“Lehigh presents an opportunity to short-circuit that and go a lot faster,” Jefferson Health EVP and Enterprise Chief Strategy and Administrative Officer Chief Mark Whalen said. — Dave Muoio

UPDATED: Tuesday, Jan. 9 at 1 p.m.

Cigna bullish on partnership-focused growth strategy

In the past two years at JPM, Cigna's top brass has emphasized that the insurer is approaching growth, especially in primary care and care delivery, with a focus on partnerships over big acquisitions.

CEO David Cordani pounded that same drum on Tuesday morning at the conference, that it's built its Evernorth business by acquiring the specialties that make the most sense, while partnering in other areas where it is seeking to expand its reach. Evernorth CEO Eric Palmer said that the company has bulked up in the virtual care space, behavioral health and home care without needing to scoop up slews of providers.

The strategy, however, aims to address fragmentation and drive a more seamless, cohesive experience for clients and patients.

"All of that's done in a way where we don't have to own the clinic," Palmer said.

Cordani added that Cigna and Evernorth have identified specific markets where acquisitions make sense, and will take steps in those regions. But it's not focused on buying up docs on a particularly broad scale, he said.

He did identify two key areas where the company sees potential for M&A paying off, including Cigna's government business. And while he didn't comment directly on it's rumored attempt to acquire Humana, or the potentially pending sale of its Medicare Advantage business, those two potential deals provide key context for Cigna's goverment strategy.

Cordani said that the insurer is "very attracted to the government services portfolio" even as it reportedly finalizes an MA sale.

We'll take a deeper dive into comments around the state of the pharmacy benefit management industry and Express Scripts' adaptations to a changing market in a story later today. — Paige Minemyer

UPDATED: Tuesday, Jan. 9 at 10 a.m.

We're back for another jam-packed day of conference sessions and wheeling and dealing at the J.P. Morgan Healthcare Conference.

What should you be keeping an eye out for on day 2? The Cigna Group kicks things off at 10:30 a.m. ET, and Centene is close on its heels at noon.

Aside from payer updates, even more nonprofit health systems are on the slate for today as well as presentations from tech companies like Teladoc. 

Stick with us here for headlines throughout the day. — Paige Minemyer